Vanguard International Semiconductor Corp. (VIS), a subsidiary of Taiwan Semiconductor Manufacturing Co. (TSMC), may speed up the production timeline for its new US$7.8 billion chip manufacturing plant in Singapore.

The facility, originally set to begin production in the first half of 2027, could now start operations as early as late 2026, according to VIS Chairman Fang Leuh.

Fang attributed the potential acceleration to increased customer demand resulting from geopolitical uncertainties.

The Singapore plant is a joint venture with Dutch company NXP Semiconductors.

It will focus on producing mature chips for automotive and industrial applications.

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🔗 Source: Bloomberg

🧠 Food for thought

1️⃣ Semiconductor firms accelerate geographic diversification amid rising tensions

VIS’s decision to potentially fast-track its Singapore facility reflects a broader industry trend of semiconductor companies diversifying manufacturing locations to mitigate geopolitical risks.

This aligns with the industry-wide push for “supply chain sovereignty” that emerged after COVID-19 disruptions, with 64% of semiconductor executives citing geopolitical tensions as medium to high-impact risks to their operations 1.

Taiwan’s strategic vulnerability is particularly acute, with TSMC producing over 50% of the world’s semiconductors, creating a concentrated risk point that both customers and manufacturers are increasingly working to address 2.

The CHIPS Act in the US, European Chips Act in the EU, and similar initiatives in Japan and South Korea demonstrate how governments worldwide are incentivizing domestic semiconductor production as a national security priority 3.

This geographic diversification strategy is happening despite the significant cost implications, with new semiconductor fabrication plants typically requiring investments of $10-20 billion, showing how seriously companies are taking these geopolitical risks.

2️⃣ Mature chip production gains strategic importance in diversification plans

While cutting-edge nodes attract headlines, VIS’s focus on accelerating mature chip production in Singapore highlights the critical importance of these technologies for automotive and industrial applications.

In 2022, mature process nodes (28nm and above) still accounted for approximately 65% of global semiconductor revenue, making them vital to supply chain security despite not being at the technological frontier 4.

The automotive industry is particularly dependent on mature chips, with the 2020-2021 shortages causing over $210 billion in lost revenue for global automakers, creating powerful incentives for customers to support manufacturing diversification 1.

China’s semiconductor self-sufficiency efforts have primarily succeeded in mature node production while advanced nodes remain challenging, creating a competitive landscape where geographic diversification of mature nodes has become increasingly strategic 4.

The joint venture between VIS and NXP specifically targets these mature technology applications, positioning the Singapore facility as a critical alternative source for customers concerned about concentrated manufacturing risks in Taiwan.

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