Vanguard International Semiconductor Corp (VIS, 世界先進) plans to form a joint venture with NXP Semiconductor NV to build its first 12-inch fab in Singapore with an initial investment of US$7.8 billion, Vanguard said yesterday.
Vanguard, which is among the world’s top 10 foundry service providers and operates five 8-inch fabs in Taiwan and Singapore, would invest US$2.4 billion to secure a 60 percent stake in the joint venture, VisionPower Semiconductor Manufacturing Co, and operate the fab, it said in a statement.
NXP would own the remaining 40 percent by investing US$1.6 billion, it said.
Photo: screen grab from Vanguard International Semiconductor Corp’s Web site
Vanguard and NXP have agreed to contribute an additional US$1.9 billion to support the new fab’s long-term capacity infrastructure, said the statement, which did not mention Singaporean government subsidies.
“This project aligns with our long-term development strategies, demonstrating VIS’ commitment to meeting customer demands and diversifying our manufacturing capabilities,” Vanguard chairman Leuh Fang (方略) said.
“As the fab will churn out chips two or three years from now, we are not making strategic investments only for the market’s ups and downs in the short term,” Fang said in response to a reporter’s question about the timing of such a massive investment amid ongoing inventory corrections in the automotive chip segment.
More than half of the new fab’s capacity has been reserved by multiple customers based on long-term supply agreements, he said.
The new fab would fulfill customers’ needs for new chip designs, rather than cater to orders shifted from Vanguard’s 8-inch fabs, he said.
“NXP continues to take proactive actions to ensure it has a manufacturing base that provides competitive costs, supply controls and geographic resilience to support our long-term growth objectives,” NXP chief executive officer Kurt Sievers said in the statement.
The joint venture would begin construction of the fab in the second half of this year, with production scheduled for 2027, it said.
The fab would have installed capacity of 55,000 12-inch wafers a month by 2029 and reach break-even point when output reaches 30,000 wafers per month, Vanguard said.
The project would create about 1,500 jobs in Singapore, it added.
The fab would support 130-nanometer to 40-nanometer technologies for the production of mixed-signal, power management and analogue products, targeting the automotive, industrial, consumer and mobile end markets, it said.
The underlying process technologies would be licensed and transferred to the joint venture from Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), it said.
TSMC has a 28.32 percent stake in Vanguard.
The joint venture comes as global supply chains shift “out of China, out of Taiwan,” with Taiwanese companies accelerating their overseas expansion to improve capacity flexibility geographically and their competitiveness, Taipei-based market researcher TrendForce Corp (集邦科技) said in a report.
Vanguard, which had gross margin of 24 percent last quarter, said it expects the new fab to dilute its gross margin by 4 to 6 percentage points from next year to 2028.
The new investment would also affect the company’s cash dividend payout, it said.
Vanguard plans to distribute a cash dividend of NT$4.5 per share this year.
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