The small Southeast Asian city of Singapore continues to attract multi-billion dollar semiconductor investments, muscling in on larger economies trying to grab their own share of the critical chip supply chain.
Vanguard International Semiconductor, a chipmaker backed by Taiwan Semiconductor Manufacturing Company, will team up with the Netherlands’ NXP Semiconductors to invest $7.8 billion in a new chip wafer plant in Singapore. The companies expect to begin construction later this year, with production coming online in 2027.
The plant will make mature chips, used for power management functions in cars, industrial products, and consumer goods, instead of the leading-edge chips used in cutting-edge phones and data centers. The facility is expected to create about 1,500 jobs.
A spokesperson from Singapore’s 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 position as a critical global node for semiconductors.”
Singapore has a long history in semiconductor manufacturing, hosting its first chip facility in 1968. Electronics makes up almost half of the country’s manufacturing sector, which in turn contributes about 20% to its GDP.
The investment from Vanguard and NXP trumps earlier investment pledges from other chipmakers.
Two contract chipmakers, GlobalFoundries and UMC, announced $4 billion and $5 billion investment plans 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 looking to invest.
Chips are an increasingly thorny commodity amid worsening relations between China and the U.S. Customers increasingly want manufacturing from different regions, and the trend to “geographically diversify is very strong,” NXP CEO Kurt Sievers told Bloomberg.
Chipmakers are investing in other Southeast Asian countries as well. Malaysia, which already has a developed semiconductor industry, is pitching itself as neutral territory for chipmakers trying to avoid geopolitics.
