Taiwan Semiconductor Manufacturing Co.-backed Vanguard International Semiconductor Corporation and Dutch chip designer and manufacturer NXP Semiconductors will build a $7.8 billion wafer manufacturing plant in Singapore. 

Vanguard will have 60% stake in the joint venture — VisionPower Semiconductor Manufacturing Company — while NXP will hold 40%, according to a joint statement released Wednesday.  

The VSMC plant will produce wafers for the automotive, industrial, consumer and mobile device markets, the companies said. TSMC will license the underlying manufacturing technologies required for the project to VSMC. 

The new plant, whose construction is expected to start in the second half of 2024, with wafers to be shipped to customers in 2027, is expected to create about 1,500 jobs in Singapore, the joint statement said. 

Wafers are a thin slice of semiconductor material used to make microchips.

NXP will invest $1.6 billion in the Singapore plant while Vanguard plans to invest $2.4 billion, the statement said. The firms will also provide an additional $1.9 billion to support the long-term capacity of the plant, with the remaining funding provided by third parties.

“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, president and CEO at NXP.

Vanguard, which made a $236 million acquisition of a less advanced wafer facility in Singapore from New York-based contract chipmaker GlobalFoundries in 2019, said the new plant will help it diversify its manufacturing operations.

Singapore has attracted investments from several semiconductor companies, aided by its business-friendly environment.

GlobalFoundries opened a $4 billion chip fabrication plant in Singapore last year, with its president lauding the government’s industrial policies. In 2022 Taiwan’s United Microelectronics Corp invested $5 billion into its Singapore microchip factory.

Neighbour Malaysia has also emerged as a hotspot for semiconductor companies, with investments from American chip giants Intel and GlobalFoundries. Other companies have also laid out plans to start operations in the country. 

TSMC, the world’s largest semiconductor foundry, has been building new plants in countries like Japan and the U.S. as its customers seek to de-risk from Taiwan amid intensifying U.S.-China tensions.  Last year, NXP invested in TSMC’s first chip plant in Dresden, Germany, TSMC’s first plant in Europe.