TSMC to Fully Exit 8-Inch Foundry

Driven by soaring AI demand, the semiconductor industry is seeing a shortage in advanced process and packaging capacity. TSMC (2330-TW, TSM-US) is responding by reallocating resources and focusing on higher-value businesses. Industry sources reported today that TSMC plans to fully exit the 8-inch wafer foundry market, recently notifying clients that production will be shifted to GlobalWafers, an affiliated company—a move expected to significantly boost GlobalWafers' performance.

Experts anticipate that as TSMC gradually repurposes its 8-inch fabs, it will free up valuable factory space. Meanwhile, GlobalWafers will gain access to TSMC's extensive 8-inch wafer capacity, enabling it to increase market share and seize the growing opportunities driven by AI power component demand.

GlobalWafers has not officially commented on the handover. However, Chairman Fang revealed at last week's investor call that TSMC remains a key strategic partner, and the company aims for mutually beneficial cooperation in the ongoing partnership.

In recent years, TSMC has benefited from the rapid growth of AI chips, which has led to tight capacity in advanced process and packaging. CoWoS capacity has doubled for several consecutive years, and SoIC capacity continues to steadily grow. Yet, labor shortages, extended project timelines, and rising construction costs have made existing fab "ready-to-run" capacity a critical, scarce resource.

As major cloud service providers continue AI-driven capital investment, TSMC initiated structural adjustments in 6-inch and 8-inch mature process operations last year. Through capacity consolidation and resource transfer, more manpower and equipment are being directed toward advanced process and packaging lines.

TSMC has confirmed plans to exit both 6-inch and GaN markets by the end of 2027. The GaN business, in particular, will be licensed to GlobalWafers, giving it dual GaN-on-Si and GaN-on-QST process capabilities.

Additionally, TSMC sold 8-inch equipment to GlobalWafers twice last year. As this equipment comes online, some IC designers have already migrated production. With today's reports of a full 8-inch wafer transfer, GlobalWafers is poised to strengthen its position in the 8-inch market and capitalize on the booming AI power component segment.