NXP chips in for Singapore fab

NXP and Vanguard International Semiconductor have announced a 7.8-billion -dollar joint venture to construct a 300mm fab in Singapore. The Dutch chipmaker will own 40 percent of the Visionpower Semiconductor Manufacturing Company (VSMC), which will manufacture 130nm to 40nm mixed-signal, power management and analog products, targeting the automotive, industrial, consumer and mobile end markets. The underlying process technologies will be licensed from TSMC, which is a major shareholder of Vanguard and NXP’s principal manufacturing partner.

“NXP continues to take proactive actions to ensure it has a manufacturing base that provides competitive cost, supply control and geographic resilience to support our long-term growth objectives,” says NXP CEO Kurt Sievers. “We believe Vanguard is well suited and fully understands the complexities involved in building and operating together with NXP a 300mm analog mixed-signal fab.”

NXP chose Singapore largely because of the skilled workforce and because the company already has a joint-venture factory with TSMC there, Sievers told Bloomberg, referring to the SSMC joint venture that was incorporated in 1999 by NXP’s parent company Philips and TSMC.

Loans

Though operated by Vanguard, VSMC will function as an independent foundry providing proportional capacity to both equity partners, with an expected output of 55,000 300mm wafers per month in 2029. The joint venture will begin construction of the initial phase of the wafer fab in the second half of 2024, with initial production available to customers during 2027.

The total cost of the initial build-out is anticipated to be 7.8 billion dollars. VIS will inject 2.4 billion dollars for a 60 percent equity position in the joint venture and NXP will contribute 1.6 billion dollars for the remaining 40 percent equity position. Both partners have agreed to contribute an additional 1.9 billion dollars, which will be utilized to support the long-term capacity infrastructure. The remaining funding including loans will be provided by third parties.

Gear

Currently, Vanguard operates four 200mm wafer plants in Taiwan and one in Singapore. To withstand increasing pressure from Chinese competitors, the firm is compelled to move to 300mm wafer sizes. Furthermore, “geopolitical tensions have heightened non-China customers’ demand for out of China, out of Taiwan production sites,” market researcher Trendforce writes in a note. Other Taiwanese companies are also accelerating their overseas expansion to improve regional capacity flexibility and competitiveness.

NXP is feeling “strong” pressure to diversify its manufacturing base as well, Sievers said to Bloomberg. “With all the geopolitical turmoil, we clearly have requirements from customers from the different regions for local manufacturing.” The Dutch chipmaker has also taken a 10-percent stake in a 10-billion-euro fab with TSMC, Infineon and Robert Bosch. That facility will manufacture 28/22nm planar and 16/12nm FinFET CMOS, primarily geared toward the automotive market.

Main image: two workers inside NXP’s fab in Austin, Texas. Credit: NXP