$7.8 Billion Investment: TSMC Affiliate VIS and NXP to Build 12-Inch Fab in Singapore, Targeting Mass Production by 2027

VIS will hold a 60% stake in the joint venture, while NXP will hold the remaining 40%.

Introduction

In a landmark move to bolster their positions in the semiconductor industry, Vanguard International Semiconductor (VIS), an affiliate of Taiwan Semiconductor Manufacturing Company (TSMC), and NXP Semiconductors have announced a joint venture to build a new 12-inch wafer fab plant in Singapore. The project, with an initial investment of $7.8 billion, is set to commence construction in the latter half of 2024, with mass production aimed for 2027.

The construction is expected to begin in the second half of 2024, with initial production targeted for 2027 .The fab will focus on producing mature chips using 130-nanometer to 40-nanometer technologies, catering to the automotive, industrial, consumer and mobile electronics sectors.VIS will hold a 60% stake in the joint venture, while NXP will hold the remaining 40%.

This collaboration is significant for a couple of reasons:

  • It bolsters Singapore’s position as a major chipmaking hub in Southeast Asia.
  • It helps address the ongoing global chip shortage, particularly for less advanced chips that are still essential for many devices.

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Background for VIS NXP Fab

The semiconductor industry is experiencing significant shifts driven by geopolitical factors and evolving market demands. TSMC, a global leader in semiconductor manufacturing, has been actively seeking to diversify its production capabilities to mitigate risks associated with concentrated manufacturing hubs. NXP Semiconductors, a prominent player in the automotive, industrial, and consumer electronics markets, is looking to secure a reliable and cost-effective manufacturing base to support its growth objectives. This joint venture is a strategic response to these trends, aiming to enhance regional capacity flexibility and competitiveness.

Production Details:

  • Focus on mature chip technologies (130nm to 40nm) licensed from TSMC.
  • Targeted production capacity: 55,000 wafers per month by 2029.
  • Applications: Automotive, industrial, consumer electronics, and mobile devices.

Operational Details:

  • VIS will be responsible for managing the fab’s operations.
  • The project is expected to generate around 1,500 new jobs in Singapore.

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Joint Venture Details

VIS and NXP will establish VisionPower Semiconductor Manufacturing Company (VSMC) in Singapore to manage the new fab. The facility will focus on producing 130nm to 40nm mixed-signal, power management, and analog products, catering to the automotive, industrial, consumer, and mobile markets. The process technologies for these products will be licensed and transferred from TSMC to the joint venture.

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Construction and Production Timeline

The initial phase of construction will start in the second half of 2024, pending regulatory approvals. VIS and NXP plan to begin initial production by 2027, with full-scale production expected to reach 55,000 300mm wafers per month by 2029. The venture is anticipated to create approximately 1,500 jobs in Singapore.

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Financial and Operational Aspects

The total initial investment for the fab is projected to be $7.8 billion. VIS will contribute $2.4 billion, securing a 60% equity stake in the joint venture, while NXP will invest $1.6 billion for the remaining 40% equity.

Additionally, both companies will jointly contribute an extra $1.9 billion to support long-term capacity infrastructure. The remaining funding will come from third-party loans. VIS will operate the fab.

Strategic Significance

VIS Chairman Leuh Fang expressed enthusiasm about the partnership. He said the project aligns with VIS’s long-term strategies. It demonstrates a commitment to meeting customer demands and diversifying manufacturing capabilities. NXP President and CEO Kurt Sievers emphasized the benefits of the collaboration. He stated it ensures a competitive manufacturing base with cost control and geographic resilience. This supports NXP’s long-term growth objectives.

Geopolitical and Market Implications

According to TrendForce, this investment reflects the ongoing shift in global supply chains away from China and Taiwan. Taiwanese companies, including VIS, are accelerating overseas expansions to enhance regional capacity flexibility and competitiveness. The semiconductor supply chain has been diversifying to mitigate geopolitical and pandemic-related risks, forming distinct segments: China’s domestic supply chain and a non-China supply chain.

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Impact on Capacity Utilization

TrendForce also noted that US tariff increases have driven more orders from American customers, accelerating the shift.Consequently, Vanguard anticipates a rise in its capacity utilization rate to about 75% in the latter half of this year. This surpasses initial expectations. There has been a significant increase in inquiries for capacity at Vanguard’s existing Singapore Fab 3E plant. This indicates strong potential support for the new plant. Customer demand and order transfers show strong backing for the new fab’s capacity.

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Conclusion

The collaboration between TSMC affiliated VIS and NXP to build a new 12-inch fab in Singapore is a strategic move to strengthen their positions in the global semiconductor market. With substantial financial backing and a clear production timeline, the joint venture aims to address growing demands in the automotive, industrial, consumer, and mobile sectors while navigating geopolitical shifts in the supply chain. As construction begins and progresses, the semiconductor industry will be closely watching the development of this significant project.

Editorial Team
Editorial Team
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