Singapore offers substantial subsidies to entice TSMC to build 12-inch fab locally

Monica Chen, Hsinchu; Jessie Shen, DIGITIMES Asia 0

Credit: AFP

TSMC is reportedly slowing down its new fab project in Germany, due to growing doubts about whether the pure-play foundry will receive adequate EU subsidies in light of the region's financial constraints, energy crisis, and other concerns. At the same time, the Singapore government is actively trying to persuade TSMC to locate a 12-inch fab there by offering significant incentives and subsidies, according to industry sources.

In response, TSMC said that it is still working with customers and partners to assess the feasibility of building a fab in Europe. The foundry also stated that it does not rule out the possibility of expanding into other regions, but there are currently no plans to do so.

Singapore has already made incentives available to entice foundries such as TSMC to establish local wafer fabs. This time, the government is offering substantial subsidies, such as free land, water, and electricity, as well as tax breaks and sufficient manpower, which may persuade TSMC to construct a new 12-inch fab in Singapore, the sources indicated.

Singapore is where Infineon and other European automotive IC IDMs locate their regional operations. These customers may instead agree with TSMC to establish a fab in Singapore, rather than Europe, to meet their immediate demand, the sources said.

In fact, TSMC is well-versed in Singapore. In 1998, the Taiwan-based foundry formed a joint venture with Royal Philips Electronics (now NXP Semiconductors) and EDB Investments of Singapore to build an 8-inch fab locally in Singapore. The fab began production in 2020. Dubbed SSMC, the fab is now a joint venture between NXP and TSMC after the latter two companies bought out EDB Investments' stake in 2006.

Vanguard International Semiconductor (VIS) is also considering locating a 12-inch fab in Singapore due to the country's highly appealing subsidies, according to the sources. VIS previously acquired an 8-inch fab in Singapore from Globalfoundries.