TSMC Cuts 28nm Capacity Over 25%

According to multiple Taiwanese media reports citing supply chain sources, surging artificial intelligence (AI) demand is prompting TSMC to accelerate the conversion of mature-node manufacturing capacity into advanced process production. The company’s primary 28nm manufacturing site, Fab 15A at the Central Taiwan Science Park, has reportedly reduced monthly wafer starts from approximately 200,000 wafers at the beginning of 2026 to around 150,000 wafers today, representing a decline of more than 25%.

For years, Fab 15A has served as one of TSMC’s key production hubs for 22nm and 28nm semiconductor technologies. Industry sources indicate that the reduction is not driven by weakening demand for mature-node chips, but rather by a strategic capacity realignment. The facility is expected to undergo equipment replacement and production line upgrades, with portions of the site gradually transitioning to support 4nm manufacturing.

At the same time, TSMC is reportedly reallocating part of its remaining 28nm capacity toward advanced packaging-related applications, particularly interposer technologies, while reducing exposure to lower-margin orders in an effort to improve overall profitability.

Industry observers suggest that TSMC is pursuing a dual-track strategy. On one hand, the company is tightening 28nm supply to encourage migration toward more advanced nodes such as 12nm. On the other hand, it is increasing investment in next-generation technologies, including 2nm, A14, SoIC (System on Integrated Chips), and silicon photonics, aiming to enhance capital efficiency and raise average wafer revenue.

Responding to market speculation about significant cuts to 28nm production, TSMC issued a statement on June 22, emphasizing that its strategy for mature-node technologies remains unchanged. The company stated that it will continue optimizing its mature-process capacity portfolio, focusing on higher-value and strategically important markets while ensuring sufficient manufacturing resources to support customer growth.

Although the company’s official response appears to differ from industry rumors, analysts believe the two perspectives are largely aligned. Rather than abandoning mature-node technologies, TSMC is selectively reallocating mature-process resources toward higher-value specialty processes and strategic applications such as interposer production, while freeing manufacturing capacity for rapidly growing advanced-node demand.

Market analysts note that 28nm technology remains a critical manufacturing node for products such as display driver ICs, power management ICs, and automotive semiconductors. Demand for these applications is expected to remain resilient in the coming years. As TSMC gradually tightens 28nm supply, customers seeking to diversify sourcing risk may increasingly turn to alternative foundries.

Among the potential beneficiaries, UMC is considered well-positioned due to its comprehensive 28nm platform and ongoing development of 22nm technologies, which could help it capture orders for OLED display drivers, Wi-Fi chips, networking processors, and automotive applications. VIS (Vanguard International Semiconductor), while still primarily focused on 8-inch wafer production, is accelerating construction of its new 12-inch wafer facility in Singapore, which could provide additional capacity for transferred orders. Meanwhile, SMIC has significantly expanded its 28nm manufacturing footprint in recent years and currently operates more than 100,000 wafers per month of 28nm capacity. Including capacity under construction and ramp-up projects, its total 28nm production capability could eventually exceed 200,000 wafers per month.

The latest developments highlight a broader industry trend: as AI-driven demand reshapes semiconductor investment priorities, leading foundries are increasingly reallocating resources from mature nodes toward advanced manufacturing and packaging technologies, creating new opportunities for second-tier foundries to capture mature-process market share.