NXP, Vanguard to Build $7.8 Billion Singapore Chip Wafer Plant as Tech Firms Hedge Against China

NXP Semiconductors NV is teaming up with a company partly owned by Taiwan Semiconductor Manufacturing Co. to build a $7.8 billion chip wafer plant in Singapore, marking a boost for the island nation’s tech ambitions.

TSMC-backed Vanguard International Semiconductor Corp. and NXP will begin constructing the facility in the second half of this year, with production starting in 2027, the two companies said Wednesday in a statement. Taiwan-based Vanguard will own 60% of the joint venture and the Netherlands-based NXP the rest.

The outlay is the latest win for Southeast Asia as global tech firms try to diversify the locations of their manufacturing bases, which have historically been highly concentrated in China and Taiwan. Chip customers are demanding this diversification as insurance against geopolitical risks such as escalating tensions between the US and China disrupting operations in Taiwan. Meanwhile, governments are pouring billions into new domestic factories, through initiatives such as the Chips Acts in the US and Europe.

“With all the geopolitical turmoil, we clearly have requirements from customers from the different regions for local manufacturing,” NXP Chief Executive Officer Kurt Sievers told Bloomberg in an interview. “That trend to geographically diversify is very strong.”

Southeast Asia is emerging as a force in technology manufacturing, helped by relatively low labor costs, ample technology talent and its proximity to major Asian consumer markets. Amazon.com Inc., Microsoft Corp. and Nvidia Corp. are among the companies spending billions of dollars in the region of nearly 700 million people, as China turns more hostile to US firms and India remains practically and politically challenging to navigate.