NXP Semiconductors and TSMC-backed Vanguard International Semiconductor (VIS) plan to form a joint venture to build and operate a manufacturing site in Singapore, the latest diversification move by players in an industry hard hit by supply-chain woes in recent years.

If all goes to plan in terms of regulatory approvals, the VisionPower Semiconductor Manufacturing Company JV aims to begin building the plant in the second half of this year and commence production in 2027.

The companies stated the JV will produce “130nm to 40nm mixed-signal, power management and analogue products” targeting mobile, industrial, automotive and consumer markets, with process technologies to be licensed from TSMC.

It will provide each parent with manufacturing capacity proportionate to their stakes. NXP Semiconductors and VIS predicted the site would turn out 55,000 300mm wafers per month in 2029 and create around 1,500 jobs in Singapore.

The companies expect the initial building phase to cost $7.8 billion in all, with VIS to contribute $2.4 billion for a 60 per cent equity position and NXP Semiconductors $1.6 billion for the remaining 40 per cent.

VIS and NXP Semiconductors will provide a further $1.9 billion to cover long-term capacity infrastructure, with outstanding funding “including loans” to be sourced from third parties.

NXP Semiconductors president and CEO Kurt Sievers said the plan was in part prompted by a desire to ensure “geographic resilience” in its supply chain, alongside a focus on cost-effective production, words largely echoed by VIS chair Leuh Fang, who referred to a need to diversify its manufacturing resources.

Chip companies are increasingly seeking to vary their production bases after a gruelling trade war between China and the US along with the effects of Covid-19 (coronavirus) took its toll on a supply-chain heavily reliant on the former nation.