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NXP to use joint ventures to diversify chip supply

NXP Semiconductors NV said it is seeking to diversify its manufacturing capacity geographically to further enhance chip supply resilience together with its Taiwanese foundry partners amid the uncertainty of geopolitical tensions and natural disasters.

NXP made the remarks after it announced a new joint venture with Vanguard International Semiconductor Corp (VIS, 世界先進) on Wednesday.

The companies plan to invest US$7.8 billion to build a 12-inch fab in Singapore, and the joint venture, VisionPower Semiconductor Manufacturing Co, would begin construction of the fab in the second half of this year at the earliest.

“Chip storage is one of the key topics we need to address,” NXP chief technology officer Lars Reger told a media briefing on Thursday.

To prevent a recurrence of the chip supply disruptions of 2021, automakers requested chip supplies from two different continents or from two foundry vendors, Reger said.

NXP is also boosting its in-house capacity and seeking external supply from foundry partners, he added.

Similar to the creation of the joint venture European Semiconductor Manufacturing Co (ESMC), the aim is to have a significant share to secure and have a supply capability in place, Reger said in response to a question about the company’s rationale behind the Singapore investment and NXP’s capacity outsourcing strategy.

ESMC is a joint venture between Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), NXP, Robert Bosch and Infineon Technologies AG. The fab, which would cost more than 10 billion euros (US$10.83 billion), is to produce 16-nanometer and 28-nanometer chips when it starts operations in 2027.

TSMC produces NXP’s S32 series chips using its 5-nanometer technology at a fab in Taichung, Reger said.

Aside from geopolitical tensions, natural disasters are also put into consideration, he said.

Severe flooding in Germany one-and-half years ago damaged a copper wire factory and caused a deficiency of chip supply, Reger said. The copper wires are key materials for wire bonding interconnects, a chip packaging solution.

The fab in Singapore is to produce power management chips used in cars and robots, rather than complementary metal-oxide-semiconductor image sensors, which already have a sufficient supply in the market, Reger said on concerns over potential overcapacity.

“Don’t be irritated by the current recession we have,” Reger said.

Asked why it selected Singapore as the place to build its first 12-inch fab with VIS, Reger said talent acquisition is one of the major reasons.

“There’re not many ecosystems that can offer good talent,” he said.

Taiwan, South Korea, Singapore, south Germany, France and some locations in the US are semiconductor hot spots to build fabs today,” Reger added.

NXP also has experience in working with partners in Singapore, as it had formed a joint venture with TSMC, Systems on Silicon Manufacturing Co (SSMC), in the city state more than 20 years ago, Reger said. SSMC produces analog chips, including power management chips. Taipei Times

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