Investing 7.8 billion! NXP and World Advanced jointly build a factory, more than half of the product
On June 5, NXP and 8-inch wafer foundry World Advanced announced plans to jointly establish VSMC joint venture in Singapore to build a 12-inch wafer fab. The plant is expected to start construction in the second half of 2024 and enter mass production in 2027.
Invest $7.8 billion
The fab will use 130nm to 40nm technology to produce mixed signal, power management and analog products to support the needs of terminal markets such as automobiles, industry, consumer electronics and mobile devices. The relevant technology licensing and technology transfer are expected to come from TSMC and be operated by World Advanced.
The joint venture is expected to start construction in the second half of 2024 after obtaining approval from relevant regulatory authorities. The joint venture will be an independent wafer manufacturing service plant that provides a certain proportion of production capacity for both partners. By 2029, the monthly production capacity of the fab is expected to reach 55,000 12-inch wafers.
The investment amount of the first wafer fab is about US$7.8 billion. World Advanced will invest US$2.4 billion and hold a 60% stake; NXP Semiconductors will invest US$1.6 billion and hold a 40% stake; World Advanced and NXP Semiconductors have also pledged to invest a total of US$1.9 billion in long-term capacity deposits and royalties, and the remaining funds (including loans) will be provided by other units. At the same time, after the wafer fab is successfully mass-produced, the two parties will consider building a second wafer fab.
Kurt Sievers, President and CEO of NXP, said that the company will continue to take positive actions to ensure that the joint venture has cost competitiveness, supply chain control and geographical resilience to support long-term growth goals. We believe that World Advanced is very suitable and fully understands the complexity involved in 300mm analog mixed-signal wafer fabs, and can become a partner to build and operate with NXP. The joint venture partnership established this time is fully in line with NXP's hybrid production strategy.
Fang Lue, chairman of World Advanced, said that the company is very happy to cooperate with NXP Semiconductors, a global semiconductor leader, to build our first 12-inch wafer fab. This plan is in line with the company's long-term development strategy, and at the same time demonstrates World Advanced's commitment to meeting customer needs and further diversifying its manufacturing capabilities.
More than half of the production capacity has been booked
Due to the high production costs in Singapore, foreign analysts are paying attention to the quotes for the new plant. Fang Lue, chairman of World Advanced, said that before the new plant started construction, far more than half of the production capacity had been booked by customers. It is not convenient to say more details about the quote, but the contract has covered it. Fang Lue revealed that the decision to take action this time was made after careful evaluation and consideration by the company, which will help the company demonstrate its capabilities and occupy a favorable position in the supply chain. Since the technology transfer comes from TSMC, World Advanced is expected to provide 8-inch to 12-inch production capacity for the plant from 2027. We also thank NXP and major shareholders and important customers for their support. We believe it is a win-win decision for all parties.
World Advanced currently has only 4 plants in Taiwan, China and 1 plant in Singapore, all of which are 8-inch wafer fabs. As global 8-inch production capacity is gradually running out of new capacity due to equipment shortages, customers are forced to transfer their products to 12-inch factories for manufacturing. In addition, the 12-inch wafer factories with greater cost advantages are competing strongly for products originally manufactured with 8-inch wafers, resulting in low visibility of long-term demand in the 8-inch market and a gradual decline in market voice, forcing the world's advanced wafer foundry industry to enter the 12-inch wafer foundry market in order to find a way out.
