A TSMC subsidiary is eyeing Singapore for its most sophisticated chip facility.

Taiwan Semiconductor Manufacturing Co.'s affiliate is approaching a decision to construct its most sophisticated chip facility ever in Singapore.

Vanguard International Semiconductor, a specialist contract chipmaker, plans to construct its first 12-inch chip factory in order to meet demand for automotive-related semiconductors. TSMC holds 28.3% of the company's stock.

The international expansion plan follows VIS's $236 million purchase of a more mature 8-inch chip factory in Singapore from GlobalFoundries in 2019.

"It intends to capitalize on the high demand for relatively mature chips for car electrification and other types of electronics." "The move also addresses customers' needs for some capacity in different locations, rather than just in Taiwan," according to one supply chain executive familiar with the company's thinking. "VIS also sees increasing demand for mature chip supplies in places outside of China due to geopolitical tension."

Semiconductors have become a subject of national security for a number of nations, and corporations in Taiwan, the hub of Asia's chip sector, have been under growing pressure to diversify manufacturing away from the island.

VIS's investment in Singapore will be its greatest in years. According to people knowledgeable on the topic, the investment will be at least $2 billion. This year, VIS's capital expenditure would be less than 10 billion New Taiwan dollars ($309 million), compared to NT$19.4 billion in 2022.