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Vanguard, NXP to Build $7.8B Singapore Wafer Plant

Vanguard International Semiconductor Corporation, with backing from TSMC, to construct a $7.8B wafer manufacturing plant
June 7, 2024

Vanguard International Semiconductor Corporation, backed by Taiwan Semiconductor Manufacturing Co. (TSMC), is teaming up with Dutch chip designer NXP Semiconductors to build a $7.8 billion wafer manufacturing plant in Singapore. This ambitious project highlights the global push to diversify semiconductor supply chains and strengthen manufacturing resilience.

The new facility, named VisionPower Semiconductor Manufacturing Company (VSMC), will be a joint venture with Vanguard holding a 60% stake and NXP owning 40%. According to a joint statement released on Wednesday, the plant will focus on producing wafers for the automotive, industrial, consumer, and mobile device markets. TSMC will license essential manufacturing technologies to VSMC for this initiative.

Construction of the VSMC plant is slated to begin in the latter half of 2024, with the first wafers expected to ship to customers by 2027. This project is also set to create approximately 1,500 jobs in Singapore, underscoring the region's growing importance in the semiconductor industry.

Wafers, the essential thin slices of semiconductor material used in microchips, are critical components in various tech applications. NXP will invest $1.6 billion in the plant, while Vanguard will contribute $2.4 billion. An additional $1.9 billion will be provided by the firms to support the plant's long-term capacity, with the remaining funding coming from third-party investors.

Kurt Sievers, President and CEO of NXP, emphasized the strategic importance of this investment. "NXP continues to take proactive actions to ensure it has a manufacturing base which provides competitive cost, supply control, and geographic resilience to support our long-term growth objectives," he said.

For Vanguard, this new facility marks a significant expansion of its manufacturing capabilities. The company previously acquired a less advanced wafer facility in Singapore from GlobalFoundries for $236 million in 2019, and the new plant will further diversify its operations.

Singapore's business-friendly environment has made it a magnet for semiconductor investments. GlobalFoundries opened a $4 billion chip fabrication plant in the city-state last year, and Taiwan’s United Microelectronics Corp invested $5 billion in a microchip factory in 2022. Neighboring Malaysia is also attracting semiconductor investments from major players like Intel and GlobalFoundries.

TSMC, the world's largest semiconductor foundry, is expanding its global footprint with new plants in Japan and the U.S., as customers seek to mitigate risks associated with Taiwan amid rising U.S.-China tensions. Last year, NXP also invested in TSMC’s first chip plant in Dresden, Germany, marking TSMC’s entry into Europe.

The Vanguard-NXP partnership for the VSMC plant in Singapore is a strategic move that will not only bolster their production capabilities but also reinforce the global semiconductor supply chain's resilience and predictability.

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