A Taiwan chip fabrication (fab) company is eyeing Singapore as a location to build a new manufacturing plant worth at least US$2 billion (S$2.73 billion).

Vanguard International Semiconductor (VIS), a Taiwanese chipmaker company with fabs in Taiwan and Singapore, is considering building its maiden 12-inch chip fab plant in Tampines, Nikkei Asia reported on Oct. 23.

If VIS goes ahead with the decision, it will be the company's "most advanced" plant in Singapore.

What is VIS & what do they do?

VIS is a company manufacturing chips, the general term for semiconductor component products. Its headquarters are in Taiwan, and it also has a presence in Singapore.

The world-leading Taiwan Semiconductor Manufacturing Company (TSMC) holds a minority stake of 28.3 per cent in VIS.

TSMC manufactures chips for companies like Apple, and is also a major supplier to leading chip companies.

8-inch vs 12-inch chips

VIS currently operates 8-inch chip facilities, which are considered less advanced than 12-inch chips.

Currently, 12-inch wafers are preferred as they have more output than 8-inch wafers. Most chipmaking equipment are nowadays only suitable for 12-inch wafers.

Inches refer to the diameter of the wafers that the chips are built on. These chips, or semiconductors, are a key component in electrical devices, including phones and laptops.

While Taiwan is best known for making cutting-edge chips, VIS' new 12-inch wafers are intended for automotive-related purposes like the "electrification of cars".

Why S'pore?

If VIS goes ahead with its decision to build the plant in Singapore, the new facility will likely be in the vicinity of its current office in Tampines.

The investment will require at least US$2 billion (S$2.73 billion), Nikkei Asia reported. It will also be the company's "most advanced" plant in Singapore.

Singapore is reportedly in contention for one of the new plant locations because of the increasing global demand for mature chip supplies outside of China.

"The move also addresses customers' needs to have some capacity in different locations, rather than only in Taiwan," a VIS supply chain executive told Nikkei Asia.

Strong demand for chips, good environment in Singapore

He added that there is expected "strong demand" for chips due to geopolitical tension. U.S. President Joe Biden's administration recently further tightened export controls on on chip sales to China on Oct. 18.

Another Taiwan chipmaker, United Microelectronics Corp., is already building a US$5 billion (S$6.85 billion) chip plant in Singapore.

The chip industry here is "strong, competitive, and vibrant", Deputy Prime Minister Lawrence Wong said on Sep. 12.

Singapore has "carved out a niche in the production of specialty chips" in "daily" devices, despite not being the world's cheapest investment location, he explained. Last year, Singapore's semiconductor output made up 11 per cent of the global market.

Wong was speaking at the opening ceremony of a new chip manufacturing plant of another semiconductor company, GlobalFoundries.

S'pore not confirmed as location for plant

However, due to issues over limited land, water, and electricity resources, Singapore may not be the best location for the plant. VIS is also considering building it in Japan or Taiwan, reported Nikkei Asia.

Singapore “cannot afford to engage in a subsidy arms race” and outbid the U.S, China, Japan, and the European Union, Wong also said in his GlobalFoundries speech.

He added that these countries (and the EU) have rolled out "massive" subsidies to attract chipmakers.

VIS' final decision is still underway.

Top image from Pixabay.

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