- Micron’s landmark commitment to invest US$24b over the next decade in its Singapore wafer fabrication facility reaffirms the city-state's strategic position as a global semiconductor hub and presents stronger tailwinds for Nordic (SGX:MR7), in our view.
Micron’s semiconductor investments present opportunities for Nordic.
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- As an existing provider of hydraulic solutions through its subsidiary, Envipure, we believe that Nordic is uniquely positioned to capture these opportunities. With the facility’s targeted operational commencement in 2H28, we anticipate that this project will have a medium-to-longer term impact on Nordic’s growth profile rather than an immediate one.
Strategic investments to lower cost.
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- By targeting an 800-bed capacity, we project potential annual cost savings of S$4.0m based on an assumption of S$420/bed monthly, which was the median market rate provided by the Ministry of Manpower (MOM) in 1Q23. This equates to 27% of FY24 administrative expenses, suggesting a sizeable uplift to net profit margins.
- While compelling, the project is contingent on regulatory approvals and construction timelines, meaning the benefits will likely materialise in the medium-to-long term.
Enhancing synergies between subsidiaries.
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