TSMC is shedding legacy fabs and moving to larger wafers.
www.eetimes.com, Aug. 13, 2025 –
After shaking the gallium nitride (GaN) power electronics world by announcing its intention to quit wafer fabrication, TSMC has thrown another stunner—Taiwan’s mega-fab plans to phase out its 6-inch wafer manufacturing over the next two years. This came to light after the company issued a statement of clarification to a news outlet in relation to its plans on the facility.
Following this decision, TSMC has already notified customers that its Fab 2, which produces 6-inch wafers, will cease production in 2027. The company will later provide final wafer schedules and plans to assist them with transfers to other fabs. Currently, TSMC has one 6-inch wafer fab, four 8-inch wafer fabs, and four 12-inch fabs in Taiwan.
TSMC didn’t disclose what it plans to do with the phased-out 6-inch wafer plant, which has inevitably led to speculation on whether the pure-play fab will sell the entire facility or just the tools. There was also a view that TSMC could spin off its 6-inch wafer fab or license production to a partner.
However, local media reports suggest that TSMC plans to convert this fab into an advanced IC assembly site to complement advanced packaging operations for 300-mm wafers manufactured on advanced nodes.
It’s worth noting that TSMC was an early mover in GaN production, introducing wafers of this wide bandgap (WBG) technology at its 6-inch fab in 2014. It even expanded GaN wafer fabrication to its 8-inch fabs in 2021 to boost capacity. But a lot has changed in the foundry economics since then.
First and foremost, semiconductor outfits now prioritize larger wafer sizes for improved efficiency and cost-effectiveness. Take NXP, for instance, which plans to close its four 8-inch wafer fabs—three in the United States and one in the Netherlands—as part of its transition to more efficient 12-inch wafer fabrication.
While legacy nodes still account for a significant share, transitioning to larger 300-mm wafers results in more dies per wafer, faster cycle times, and improved efficiency.
Second, and equally critical, is price pressure from fabs in China, which are aggressively expanding capacity to capture market share of wafers manufactured on mature, legacy nodes. The intense competition and low ASPs have arguably led to TSMC’s prior exit from the GaN wafer fabrication business.
In other words, TSMC is positioning itself for long-term growth rather than protecting its current revenue streams. The world’s largest contract chipmaker is doubling down on large wafers for advanced nodes to bolster efficiency and growth.
TSMC claims to have made this call after a careful review of market conditions and says that it aligns with the company’s long-term strategy to optimize production efficiency. The Hsinchu, Taiwan-based chip manufacturing giant also vows to work closely with customers to ensure a smooth transition. Moreover, it asserts that phasing out 6-inch wafer fab operations won’t impact its financial health in any way.
All this happens while TSMC is cautiously and tactfully cruising the muddy waters of global geopolitics. The relocation of resources to higher-output 200-mm and 300-mm fabs demonstrates TSMC’s focus on advanced nodes and cutting-edge chip manufacturing technology. That, in turn, also translates into Taiwan’s competitive edge in today’s increasingly turbulent geopolitical environment.
It also demonstrates TSMC practicing the “Only the Paranoid Survive” mantra coined by Intel co-founder Andy Grove during the 1990s.
Ironically, Intel’s major competitor in the foundry business is exhibiting the importance of paranoia and constant vigilance in the hyper-competitive semiconductor industry.