By Sherry Qin


Vanguard International Semiconductor is teaming up with Nasdaq-listed NXP Semiconductors to build a $7.8 billion plant in Singapore as chip makers seek to diversify their manufacturing bases.

Taiwan-based Vanguard, partially owned by Taiwan Semiconductor Manufacturing Co. and Dutch chip maker NXP will set up a joint venture and build a manufacturing facility to supply the automotive, industrial, consumer and mobile markets, the two companies said Wednesday in a statement.

Construction is slated to start in the second half of 2024, with initial production is expected to be available to customers in 2027.

Vanguard is a specialty contract chip maker that operates only 8-inch wafer fabs in both Taiwan and Singapore. NXP is one of the largest chip suppliers to the automotive industry, which accounts for more than half of the Dutch chip maker's revenue.

The new facility, which will be operated by Vanguard, will allow Vanguard to build its first, more advanced 12-inch fab by leveraging the technologies of TSMC, the world's largest contract chip maker.

Taiwanese chip makers have accelerated efforts to diversify their geographic presence in the face of an escalating technological rivalry between the U.S. and China, which could disrupt production.

Earlier this year, United Microelectronics Corp., Taiwan's second-largest chip maker after TSMC, said it would invest $5 billion in a new microchip factory in Singapore. TSMC has built plants in both Japan and the U.S., and in April landed up to $6.6 billion from the U.S. government to help fund its $65 billion investment on factories in Arizona.

Vanguard will inject $2.4 billion into the joint venture, representing a 60% equity interest, while NXP will contribute $1.6 billion for the remaining 40% stake.

Vanguard and NXP have agreed to contribute an additional $1.9 billion to support the facility's long-term capacity infrastructure. The remaining funding, including loans, will be provided by third parties to the joint venture.

Countries and companies worldwide are investing billions of dollars to establish dominance in the semiconductor sector, an industry that is expected to top $1 trillion by the end of the decade, according to forecasts by the chip-industry consulting firm International Business Strategies.


Write to Sherry Qin at sherry.qin@wsj.com


(END) Dow Jones Newswires

06-05-24 0641ET