Ninth month of expansion masks rising costs, longer delays and feedstock uncertainty.

Singapore’s factories are riding a powerful wave of AI-related demand, even as the Iran war and a blocked Strait of Hormuz squeeze energy supplies, push up costs and strain critical industrial inputs.

PMI Signals Strongest Expansion Since Early 2025
Singapore’s purchasing managers index (PMI) rose to 50.7 in April from 50.5 in March, its highest level since February 2025 and the ninth straight month in expansion territory. A reading above 50 indicates growth in factory activity. The key electronics sector, which makes up about 40 per cent of national manufacturing, registered a PMI of 51.7, extending its expansion streak to eleven months. Stephen Poh, executive director at the Singapore Institute of Purchasing and Materials Management, said the latest readings reflect the global AI super cycle bolstering electronics and semiconductors, with additional support from precision and transport engineering.

AI Super Cycle Drives Electronics And Chips
Demand for AI infrastructure is lifting orders for memory chips, servers and related components. DBS senior economist Chua Han Teng noted that robust capital expenditure plans worldwide are supporting external demand for AI related products, underpinning the near term outperformance of Singapore’s electronics cluster. Semiconductors alone account for about 20 per cent of manufacturing output. OCBC Bank chief economist Selena Ling said stronger expansion in new orders and new export orders shows that overall manufacturing and electronics demand conditions remain solid despite global uncertainty.

Middle East Conflict Strains Energy And Inputs
Beneath the positive headline figures, manufacturers are grappling with severe supply chain constraints linked to the Iran war. The effective closure of the Strait of Hormuz, a route for about one fifth of the world’s oil and gas, has driven up energy costs and hindered deliveries of industrial essentials such as petrochemicals, plastics, aluminium and sulphur. In March, Iranian missile strikes on Qatar’s Ras Laffan Industrial City disrupted helium output, cutting roughly 30 per cent of global supply. Helium is indispensable for producing advanced chips, including those that power AI systems, adding another bottleneck to semiconductor supply chains.

Petrochemicals Under Pressure As Lead Times Lengthen
Chua warned that petrochemicals are likely to remain under pressure for as long as feedstock supplies stay constrained and there is no clarity on reopening Hormuz. Ling said the Middle East conflict is “likely taking a toll” via supply disruptions and higher energy and petrochemical related costs. The PMI’s supplier deliveries sub index contracted at a faster pace for a fourth consecutive month, pointing to lengthening lead times. At the same time, the order backlog index expanded and input prices rose, indicating that factories are facing rising cost pressures even as they work through accumulated demand.

Manufacturers Stock Up While Staying Cautiously Optimistic
Ling observed that increases in the input purchases and imports sub indexes suggest that manufacturers are stockpiling materials to buffer against worse disruptions from the war. The future business sub index remained in expansion for a sixth month, showing that firms are still generally upbeat about growth prospects. Yet economists caution that if the conflict drags into the third quarter, higher energy prices and wider supply chain effects could erode margins, particularly in oil refining and petrochemicals, which are significant components of Singapore’s industrial base. Similar signals are emerging in Asia’s manufacturing powerhouses, with China and Japan reporting April PMIs boosted partly by precautionary stockpiling and concern over future delays and cost increases.

Singapore’s manufacturing sector is proving resilient, with AI driven electronics and precision engineering offsetting petrochemical and input cost headwinds, but the Iran war’s impact on energy and critical materials is beginning to bite. For Indonesians and Singaporeans, the data underline both the opportunities from the global AI boom and the vulnerabilities that arise when key shipping lanes and feedstocks are disrupted, reinforcing the need for diversified supply chains and careful policy to sustain industrial growth.

Sources: Straits Times (2026) , Business Times (2026)

Keywords: Singapore PMI April 2026, Electronics Cluster 51.7, Global AI Super Cycle, Helium Supply Disruption, Strait Of Hormuz Blockade, Petrochemicals Feedstock Constraints