Due to the impact of international situations and uncontrollable factors, the global semiconductor supply chain is undergoing a shift. According to a report from WeChat account DRAMeXchange, the Southeast Asian region, with its advantages in labor and development conditions, has become the preferred location for major global companies. Countries such as Malaysia, India, and Singapore have been targeted by many manufacturers, who are rapidly setting up operations to secure a foothold.

On June 5, Taiwan-based contract chipmaker Vanguard International Semiconductor Corp. (VIS) announced to team up with Netherlands-based semiconductor supplier NXP Semiconductors N.V. to set up a joint venture, VisionPower Semiconductor Manufacturing Company (VSMC), and build a 12-inch fab in Singapore.

The fab will have an investment of approximately USD 7.8 billion. VIS will invest USD 2.4 billion and take a 60% stake, with NXP to invest USD 1.6 billion and a 40% share. The fab will be operated by VIS.

Besides, both parties have promised to allocate a total of USD 1.9 billion of long-term capacity security deposit and usage fees, with the remaining funds (Loans included) to be provided by third parties.

VSMC will run as an independent wafer manufacturing service provider, offering a certain proportion of its capacity to both partners. By 2029, the fab’s monthly 12-inch wafer capacity is expected to reach 55,000 pieces, which is projected to create around 1,500 jobs in Singapore. Following the successful mass production of the first fab, both sides will consider building a second one.

This fab will use 130nm to 40nm technologies to produce mixed-signal, power management, and analog products for markets including automotive, industrial, consumer electronics, and mobile terminals. Relevant technology licensing and transfers are expected to come from TSMC. VSMC will commence construction of the first fab in 2H24 , pending approval from relevant regulatory authorities, and it is expected to start mass production in 2027.

Currently, VIS has five 8-inch fabs, respectively located in Taiwan and Singapore. Three of them are based in Hsinchu (Taiwan) and one in Taoyuan (Taiwan). In 2023, the average monthly capacity was about 279,000 8-inch wafers.

On this collaboration with NXP, VIS Chairman Fang Leuh stated that both parties wish to own a 12-inch fab as they currently only have 8-inch fabs. More than half of the new fab’s capacity has already reserved upon long-term commitments from customers, including NXP. He also noted that setting up a fab in Singapore offers several advantages.

Since VIS is held by TSMC, industry experts believe that the establishment of the new VIS fab is driven in part by the need to meet the demands of TSMC’s mature process customers. Mature processes above 90nm account for a small single-digit percentage of TSMC’s revenue but retaining all customers is also necessary to match orders from various manufacturing capacities.

As such, VIS will take over TSMC’s customer orders. Influenced by multiple factors, the order transfer effect is expanding, and VIS has recently received new orders from several customers, like Qualcomm and MPS. That means order transfer effect in 2H24 has become evident.

It is worth noting that Singapore is being seen as a critical hub of the Asian semiconductor industry. It currently boasts a complete semiconductor industry chain, covering design, manufacturing, packaging, test, equipment, materials, and distribution, with more than 300 semiconductor-related companies already established.

According to another report from WeChat account DRAMeXchange, multitudes of semiconductor companies, including Texas Instruments, STMicroelectronics, Infineon, Micron, GlobalFoundries, TSMC, UMC, VIS, and ASE, have set up branches or expanded production in Singapore.

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• [News] TSMC Affiliate VIS and NXP to Invest USD 7.8 Billion for 12-Inch Fab in Singapore, Expected Mass Production by 2027
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(Photo credit: VIS)

Vanguard International Semiconductor (VIS), an affiliate of TSMC, announced today a joint venture with NXP to build a 12-inch fab in Singapore. According to its press release, the construction is set to begin in the second half of 2024, with mass production expected by 2027. The initial investment for the fab is approximately USD 7.8 billion.

VIS stated in the official press release that it will establish a joint venture company, VisionPower Semiconductor Manufacturing Company (VSMC), with NXP in Singapore to build a 12-inch fab. The joint-venture fab will support 130nm to 40nm mixed-signal, power management and analog products, targeting the automotive, industrial, consumer and mobile end markets, of which its underlying process technologies are planned to be licensed and transferred to the joint venture from TSMC.

The company further stated that the joint venture will begin construction of the initial phase of the wafer fab in the second half of 2024, pending receipt of all required regulatory approvals, with initial production available to customers during 2027.

The joint venture will operate as an independent, commercial foundry supplier, providing assured proportional capacity to both equity partners, with an expected output of 55,000 300mm wafers per month in 2029. The joint venture will create approximately 1,500 jobs in Singapore. Upon the successful ramp of the initial phase, a second phase will be considered and developed pending commitments by both equity partners.

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

“VIS is pleased to work with leading global semiconductor company NXP to build our first 300mm fab. This project aligns with our long-term development strategies, demonstrating VIS’ commitment to meeting customer demands, and diversifying our manufacturing capabilities,” said VIS Chairman Leuh Fang.

“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,” said Kurt Sievers, NXP President and CEO. “We believe VIS is well suited and fully understands the complexities involved in building and operating together with NXP a 300mm analog mixed signal fab. The joint venture partnership we intend to create with VIS perfectly aligns within NXP’s hybrid manufacturing strategy.”

Regarding this move, TrendForce posits that it reflects the trend of global supply chains shifting “Out of China, Out of Taiwan”(OOC/OOT), with Taiwanese companies accelerating their overseas expansion to improve regional capacity flexibility and competitiveness.

TrendForce noted that the semiconductor supply chain has been diversifying over the past two years to mitigate geopolitical and pandemic-related risks, forming two major segments: China’s domestic supply chain and a non-China supply chain. Recent US tariff increases have accelerated this shift, leading to increased orders from American customers.

Consequently, Vanguard’s capacity utilization rate is expected to rise to approximately 75% in the second half of this year, exceeding initial expectations. Additionally, inquiries for capacity at Vanguard’s existing Singapore Fab 3E plant have significantly increased, indicating potential support for the new plant’s capacity from customer demand and order transfers, according to Trendforce.

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(Photo credit: VIS)

On November 9th, EMS (Electronic Manufacturing Services) giant Wistron, through its Malaysian subsidiary WMMY, disclosed the successful completion of the sale of consumer electronics production facilities in the Selangor and Sungai Way Free Trade Zones.

The company is set to sell the properties, which include factories and land in these two free trade zones, to semiconductor major NXP for approximately 1.85 billion Malaysian Ringgit (equivalent to roughly USD 392million).

Wistron announced that its subsidiary WMMY (Wistron Technology Sdn. Bhd.) signed a “Letter of Offer to Purchase” with the unrelated entity NXP Malaysia Sdn. Bhd. According to Malaysian regulations, when buying or selling a property, the buyer can place a deposit and sign a preliminary contract with the seller.

However, within 14 business days, a formal sales agreement needs to be signed between the buyer and the seller for the transaction to be completed.

Wistron had declared through its subsidiary WMMY back in September of this year that it intended to divest its property (including factories and land) in the Selangor and Sungai Way Free Trade Zones in Malaysia in response to external economic changes and global strategic considerations.

At that time, the specifics of the transaction, including the counterpart and amount, were undetermined. The company had only established that the total transaction amount should not be less than 185 million Malaysian Ringgit (approximately 39.2 million USD). The deal presented by NXP aligns with these conditions, thus facilitating the progress of the factory sale.

Wistron has initiated several factory sales in recent years, including the iPhone assembly plants in Kunshan, China, and India, as well as the consumer electronics plant in Malaysia. The Kunshan facility was sold to Luxshare, a Chinese manufacturer, while the Indian plant was acquired by Tata Group, an Indian electronics corporation. The Malaysian plant, in this instance, is sold to the semiconductor giant NXP, and the transaction is projected to conclude within 14 days.

NXP currently operates six wafer fabs in the United States, the Netherlands, and Singapore, with four assembly and testing facilities situated in Taiwan, China, Thailand, and Malaysia.

The company specializes in producing application processors, communication processors, wireless connectivity SoCs, RF amplifiers, security system ICs, various analog products, and MCUs (microcontrollers).

Wistron’s manufacturing facility in Selangor, Malaysia, is mainly responsible for material fabrication, manufacturing, industrial engineering, production management, mechanisms, quality assurance, and production management.

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(Photo credit: Wistron)

Semiconductor inventory adjustments are showing positive signs, with the MCU market, which was among the first to bear the brunt of price pressure, now leading the way as Chinese companies have recently ceased their aggressive price-cutting strategies to clear their inventory. In fact, some MCU product lines have even begun to see price increases.

According to reports from Taiwan’s Economic Daily, MCUs are widely used across various key sectors, including consumer electronics, automotive, and industrial control. The recent increase in pricing suggests a resurgence in end-demand, indicating that the semiconductor industry is on the path to recovery.

Prominent global MCU manufacturers include Renesas, NXP, and Microchip, all of which play essential roles in the global semiconductor industry. On the other hand, Taiwanese companies such as Holtek, Nuvoton, Elan, and Sonix represent the local landscape.

Industry experts attribute the current developments to the COVID-19 pandemic, which caused disruptions in the supply chain throughout 2020 and 2021, leading to a frenzied rush to secure semiconductor components. This resulted in a surge in orders and significant price increases for ICs. However, 2022 marked a change in the industry landscape as demand weakened in various end-user applications. MCUs were hit hardest, and manufacturers’ inventories climbed steadily, reaching historical highs, with some industry leaders acknowledging that their inventory levels reached several months’ worth of supply.

To address the challenges posed by these soaring inventories, the MCU industry faced its darkest period from the fourth quarter of last year to the first half of this year. Chinese MCU manufacturers resorted to aggressive price cuts, even drawing renowned IDMs into the price-cutting competition. Fortunately, recent market conditions have started to ease the inventory-clearing phase. Chinese MCU manufacturers, who could no longer bear losses, have stopped selling below cost and have even made slight price adjustments to return to a more reasonable pricing range.

Unnamed Taiwanese MCU manufacturers revealed that as the attitude of Chinese companies towards price-cutting has softened, the pricing gap between products from Taiwanese and Chinese companies have gradually narrowed. Moreover, there are indications of small, urgently needed orders coming in, which will facilitate faster inventory reduction.

Leading semiconductor companies TSMC, Robert Bosch GmbH, Infineon, and NXP Semiconductors have jointly to invest in the European Semiconductor Manufacturing Company (ESMC) GmbH, situated in Dresden, Germany. This strategic move aims to bolster the region’s semiconductor manufacturing capabilities, particularly catering to the burgeoning automotive and industrial sectors. The establishment of ESMC marks a significant stride towards the realization of a 300mm fabrication facility, pending the final decision on public funding, as part of the European Chips Act framework.

The planned fab is expected to have a monthly production capacity of 40,000 300mm (12-inch) wafers on TSMC’s 28/22 nanometer planar CMOS and 16/12 nanometer FinFET process technology, further strengthening Europe’s semiconductor manufacturing ecosystem with advanced FinFET transistor technology and creating about 2,000 direct high-tech professional jobs. ESMC aims to begin construction of the fab in the second half of 2024 with production targeted to begin by the end of 2027.

The prospective joint venture will see TSMC holding a substantial 70% ownership stake, while Bosch, Infineon, and NXP will each possess a 10% equity share, contingent upon regulatory approvals and meeting specific conditions. Total investments exceeding 10 billion euros are anticipated. Operational oversight of the fabrication facility will reside under TSMC’s purview.

However, industry analysts at TrendForce have highlighted potential challenges that lie ahead for TSMC’s groundbreaking endeavor. One such challenge pertains to the looming labor shortage issue in TSMC’s US fabrication facility, which is projected to reverberate globally. Moreover, navigating the intricacies of implementing subsidy policies in accordance with the European chip legislation and anticipated administrative procedures is expected to introduce a layer of complexity to the venture.

(Photo credit: TSMC)