tsmc exits 6-inch wafers: what's next for chip manufacturing?

2025-08-12 tsmc

taipei, Tuesday, 12 August 2025.
tsmc, the world’s largest contract chipmaker, plans to discontinue its 6-inch wafer production in the next two years. The company is consolidating its 8-inch wafer production to improve efficiency. The decision aligns with tsmc’s strategy to focus on advanced technologies and higher-margin production. While the impact on overall revenue is expected to be minor, smaller fabless companies that rely on older technologies may face challenges. The move signals a shift in the semiconductor industry, as tsmc focuses on advanced processes for major clients like apple and nvidia.

Strategic shift and capacity adjustments

TSMC’s decision to phase out 6-inch wafer production reflects a strategic pivot towards advanced manufacturing processes [1]. The company is consolidating its 8-inch wafer capacity to optimize operations and improve efficiency [2]. This move allows TSMC to allocate more resources to advanced nodes, which are in high demand for applications like artificial intelligence and high-performance computing [2]. TSMC currently operates four 12-inch gigafabs, four 8-inch wafer fabs, and one 6-inch wafer fab in Taiwan [2][4][5]. The company’s focus on advanced technologies is expected to strengthen its market leadership [1].

Financial implications and market outlook

Despite the discontinuation of 6-inch wafer production, TSMC maintains that its financial targets will not be affected [2][4][5]. In July 2025, TSMC projected revenue growth of approximately 30% in U.S. dollar terms for the year [2][7]. This forecast reflects strong demand for its advanced manufacturing capabilities [2][7]. TSMC’s board has also approved significant capital appropriations, including a US$10 billion capital injection into TSMC Global and approximately US$20.66 billion for capacity expansion [2]. These investments signal confidence in the company’s future growth prospects [2].

Geopolitical considerations and manufacturing footprint

TSMC’s manufacturing footprint is primarily based in Taiwan, with four 12-inch gigafabs, four 8-inch wafer fabs, and one 6-inch wafer fab located on the island [2][4][5]. The concentration of its advanced manufacturing capacity in Taiwan raises geopolitical concerns, given the ongoing tensions in the region [alert! ‘Geopolitical risks are inferred, not explicitly stated in the source’]. However, TSMC is also expanding its global presence, with investments in new fabs in the United States, Japan and Germany [alert! ‘Specifics of global expansion are inferred, not detailed in provided sources’]. This diversification strategy aims to mitigate geopolitical risks and ensure a stable supply of semiconductors to its global customer base [alert! ‘This is an interpretation of TSMC’s diversification strategy, not a direct statement from the sources’].

Impact on smaller fabless companies

The phasing out of 6-inch wafer production may pose challenges for smaller fabless companies that rely on mature technologies [1]. These companies may need to transition to other foundries or upgrade their designs to be compatible with larger wafer sizes [1]. The consolidation of 8-inch wafer capacity could also lead to increased competition for mature process nodes [alert! ‘Increased competition is an inference, not explicitly mentioned in the source’]. However, TSMC is working closely with customers to ensure a smooth transition, suggesting efforts to minimize disruption [1][4][5].

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wafer production tsmc strategy