Why would a TSMC factory in Singapore make sense?

$Taiwan Semiconductor(TSM.US)$ When it comes to Singapore, the country is a home to many major chip manufacturers as its pool of skilled talent and well-established ecosystem of suppliers have attracted semiconductor companies. Major chip makers like US-based Global Foundries Inc. and Micron Technology Inc. as well as Germany’s Infineon Technologies AG have a large presence in the Southeast Asian city-state.

To top it off, in 2021, GlobalFoundries announced that it plans to build a US$4 billion chip plant in Singapore slated to be operational by next year. On top of that, in February, Taiwan’s United Microelectronics Corp., the world’s fourth-largest contract chip maker, disclosed plans to spend US$5 billion to expand its production in Singapore.

Singapore’s trade and industry minister Alvin Tan said in January that the country accounts for about 5% of global wafer fabrication capacity. Semiconductors are “the fastest-growing segment of the electronics industry,” he added. The city-state has been attempting to shore up its electronics sector, having set a target to grow its manufacturing industry by 50% by 2030, with the semiconductor segment featuring strongly in the effort.