TradingKey - On September 28, Nikkei reported that TSMC (TSM)-backed Vanguard International Semiconductor (VIS) opened its first 12-inch wafer fab in Singapore. Driven by sustained growth in demand for artificial intelligence infrastructure, the new plant's capacity was largely locked in by customers around the time production began, and the company has also begun considering building a second fab locally.

Operated by VisionPower Semiconductor Manufacturing Company (VSMC), a joint venture between the two parties, the facility is located in eastern Singapore with an estimated total investment of approximately $7.8 billion. The fab is planned to utilize 40-nanometer to 130-nanometer specialty processes. At full operation, its monthly capacity can reach up to 44,000 wafers, and it is expected to create around 1,600 jobs.

VSMC commenced trial production in June this year and is expected to enter volume production in early 2027. Construction took approximately 20.5 months from groundbreaking to completion, significantly faster than the typical timeline of over two years for traditional fabs. Vanguard International Semiconductor stated that the yield rate for the first batch of test chips reached over 99%, indicating stable initial operations on the production line.

In addition to automotive, industrial, and consumer electronics chips, the new plant will also participate in producing interposers required for advanced packaging. Interposers connect GPUs, HBM, and other different types of chips, serving as a vital component of advanced packaging and AI accelerators, with end demand coming from AI chipmakers such as Nvidia (NVDA), Google (GOOGL), and Broadcom (AVGO). As AI server demand continues to expand, supplies of interposers and mature specialty processes are becoming increasingly tight.

Vanguard International Semiconductor Chairman and VSMC Chairman Leuh Fang stated that the tight global semiconductor supply situation may continue for some time, and the company initially should have built two fabs in Singapore simultaneously. With capacity at the first fab selling out rapidly, management has begun researching a second facility, which may adopt process technology more advanced than current production lines.

However, the technological route, construction timeline, and investment scale for the second fab have yet to be finalized. Fang noted that different process nodes require significantly different equipment configurations and capital investments, making it premature to discuss a specific budget at this stage.

TSMC currently holds an approximately 19% stake in VIS and is its largest shareholder. The launch of VSMC in Singapore not only expands Vanguard International Semiconductor's overseas manufacturing capacity but also provides further support for TSMC's advanced packaging supply chain.

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