Vanguard International Semiconductor Corp. and NXP Semiconductors NV will be constructing a $7.8 billion wafer fab in Singapore, with the aim of breaking away from reliance on China globally and benefiting from efforts to achieve diversification in order to realize its technological ambitions.
In a statement released on Wednesday, Vanguard and NXP announced that the joint venture, upon approval from relevant regulatory authorities, will begin construction of a 12-inch wafer fab in the second half of this year. The fab will utilize technology ranging from 130 nanometers to 40 nanometers and is scheduled to commence production in 2027, with a projected capacity to deliver 55,000 12-inch wafers by 2029.
The wafer fab will produce a variety of products including mixed-signal, power management, and analog products to support the demands of end markets such as automotive, industrial, consumer electronics, and mobile devices. It is expected that the technology licensing and transfer will come from Taiwan Semiconductor Manufacturing Company (TSMC).
Headquartered in Taiwan, Vanguard will invest $2.4 billion and hold a 60% stake in the joint venture, while Dutch NXP will invest $1.6 billion for the remaining shares.
As of February, TSMC holds approximately 28% of shares in Vanguard. Vanguard will be responsible for operating the wafer fab in Singapore, with plans to create 1,500 job positions.
In order to mitigate the risk of supply chain disruptions and ensure business continuity and stability, global tech companies are attempting to diversify the locations of their chip manufacturing bases to avoid overreliance on countries like China with geopolitical risks.
Kurt Sievers, CEO of NXP, stated in the announcement, “NXP will continue to take proactive steps to ensure that our production base offers competitive costs, supply control, and geographical flexibility to support our long-term growth goals.”
With China becoming increasingly hostile towards US companies and India still presenting challenges in practice and politics, Southeast Asia is emerging as a new force in the tech manufacturing industry, due to relatively low labor costs, abundant technical talent, and proximity to major consumer markets in Asia.
Countries in Southeast Asia from Vietnam to Thailand are attracting more tech investments, with companies like Amazon, Microsoft, and Nvidia investing billions of dollars in this region with nearly 700 million people. Malaysia has pledged over $5 billion in financial support last week to attract chip manufacturers to enter the country.
Following Taiwan Semiconductor Manufacturing Company, United Microelectronics Corporation, the second-largest chip manufacturer in Taiwan, is also expanding in Singapore. The company is constructing a $5 billion wafer manufacturing fab in Singapore, further establishing the region as a hub for advanced technology production.