Singapore wins $7.8 billion chip plant from TSMC and NXP-backed company

The small Southeast Asian city of Singapore continues to attract multibillion-dollar investments in semiconductors, putting pressure on larger economies trying to get their own share of the critical chip supply chain.

Vanguard International Semiconductor, a chipmaker backed by Taiwan Semiconductor Manufacturing Company, will partner with Netherlands-based NXP Semiconductors to invest $7.8 billion in a new chip wafer plant in Singapore. The companies hope to begin construction later this year and production will begin in 2027.

The plant will make mature chips, used for power management functions in cars, industrial products and consumer goods, rather than the cutting-edge chips used in next-generation phones and data centers. The facility is expected to create around 1,500 jobs.

A spokesperson for the Singapore Economic Development Board, a government agency focused on promoting the country as an investment destination, said the new chip joint venture is testament to Singapore’s “attractiveness for semiconductor manufacturing and its position as a hub global critical for semiconductors.

Singapore has a long history in semiconductor manufacturing and hosted its first chip facility in 1968. Electronics accounts for almost half of the country’s manufacturing sector, which in turn contributes around 20% of its GDP.

Vanguard and NXP’s investment exceeds previous investment promises from other chipmakers.

Two contract chipmakers, GlobalFoundries and UMC, announced investment plans of $4 billion and $5 billion for Singapore in 2021 and 2022, respectively. Both companies have cited Singapore’s stable government and pre-existing semiconductor infrastructure. The country also offers tax incentives to manufacturers who want to invest.

Chips are an increasingly thorny product amid worsening relations between China and the United States. Customers increasingly want manufacturing in different regions, and the trend to “diversify geographically is very strong,” NXP CEO Kurt Sievers told Bloomberg.

Chipmakers are also investing in other Southeast Asian countries. Malaysia, which already has a developed semiconductor industry, presents itself as neutral territory for chipmakers trying to avoid geopolitics.

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