TSMC is leaving the gallium nitride (GaN) wafer foundry business and will stop GaN production by 31 July 2027, according to reports in early July 2025 that the company confirmed. GaN was a small, low-margin line for TSMC under heavy price pressure from Chinese foundries, and the company is putting the capacity and people towards advanced packaging and leading-edge nodes, where AI demand is strongest. This is a dated news post from 6 July 2025; a short update follows at the end.
Key takeaways
- TSMC will gradually exit GaN wafer foundry services over two years, ending by 31 July 2027.
- Reported reasons: limited scale, low profitability and price competition from Chinese GaN makers.
- The freed capacity is reported to be heading towards advanced packaging, which serves AI accelerators.
- Navitas Semiconductor, reportedly TSMC's largest GaN customer, has moved to Powerchip Semiconductor Manufacturing Corp (PSMC).
- Customers can place last-time buys to secure wafers until the end of July 2027.
The announcement
Hsinchu, Taiwan, 6 July 2025. Taiwan Semiconductor Manufacturing Company (TSMC), the world's leading contract chipmaker, has announced its exit from the GaN wafer foundry business by 31 July 2027, as part of a strategic shift towards advanced packaging technologies. The decision, driven by market dynamics and low profitability in GaN production, marks a notable change for the company as it moves resources to meet growing demand for leading-edge semiconductor solutions.
The news first emerged through a Navitas Semiconductor announcement and Taiwanese press reports. In a statement carried by the press, TSMC said it had decided "to gradually exit the gallium nitride business over the next two years".
Why TSMC is stepping away from GaN
Intense competition from Chinese foundries and the limited scale of TSMC's GaN operations are the key reported factors. GaN is a wide-bandgap semiconductor, with a bandgap of about 3.4 eV against 1.1 eV for silicon. That lets GaN transistors switch faster and handle higher fields in a smaller area, which is why GaN is valued in power electronics such as fast chargers, data-centre power supplies, renewable energy systems and, increasingly, electric vehicles.
TSMC's GaN production, reported to be mainly at its Fab 5 in Hsinchu, is a small part of its portfolio: approximately 3,000 to 4,000 6-inch wafers per month, according to industry reports. According to industry analysts, GaN's low margins combined with price pressure from Chinese competitors made the segment less viable for TSMC's long-term strategy.
Worked example: how small is GaN for TSMC?
Illustrative numbers. A 6-inch (150 mm) wafer has an area of about 177 cm2, while a 12-inch (300 mm) wafer has about 707 cm2, four times as much. So 4,000 six-inch wafers a month are equivalent in area to roughly 1,000 twelve-inch wafers. TSMC's total capacity is usually quoted in the millions of 12-inch equivalent wafers a year, so GaN was a very small fraction of its output. Area is only a rough proxy, since mature 6-inch wafers sell for a small fraction of the price of leading-edge wafers, which makes GaN's share of revenue smaller still.
The quoted rationale
A TSMC spokesperson was quoted in some reports as saying: "The GaN wafer foundry business no longer aligns with our focus on high-growth, high-margin opportunities. We are committed to supporting our clients through a smooth transition while redirecting our resources to advanced technologies." We could not trace this wording to an official TSMC release; the confirmed TSMC statement is the shorter one quoted above.
Transition to advanced packaging
TSMC is reported to plan the reuse of Fab 5 for advanced packaging technologies, including Chip-on-Wafer-on-Substrate (CoWoS), Wafer-on-Wafer and Wafer-Level System Integration, with work said to start from 1 July 2025. These technologies are critical for high-performance computing, such as AI accelerators, 5G infrastructure and next-generation GPUs, where TSMC sees stronger growth. CoWoS capacity in particular has been one of the main bottlenecks on AI accelerator supply, so any space and staff that can be moved to packaging has high value.
The company's financial guidance at the time pointed to strong revenue growth for 2025: the earlier version of this post said 24 to 26%. TSMC had guided to growth in the mid-20s per cent in US dollar terms in April 2025, and on 17 July 2025 raised it to about 30%.
Impact on clients and industry
TSMC's largest GaN customer, Navitas Semiconductor, has already secured an alternative supplier in Powerchip Semiconductor Manufacturing Corp (PSMC). Navitas plans to move its 100 V GaN products to PSMC, with production expected to start in mid-2026, and PSMC is expected to make GaN parts across a range from 100 V to 650 V. Both TSMC and PSMC use GaN-on-silicon technology, which eases the transfer. TSMC is supporting the handover by offering a last-time buy option, allowing customers to secure GaN wafer supply until the end of July 2027.
Industry observers note that TSMC's exit could reshape the GaN market, potentially benefiting competitors such as PSMC and Chinese foundries. However, TSMC's lead in advanced nodes (3 nm, 2 nm) and packaging means the financial impact of leaving GaN will be minimal. Some reports quoted Dr. Wei-Chen Lin, described as a semiconductor analyst at the Taipei-based Market Intelligence & Consulting Institute, as saying: "TSMC's focus on advanced packaging aligns with the industry's shift toward heterogeneous integration." We could not verify this quote at its source.
Who gains and who has to move
| Company | Position after TSMC's exit |
|---|---|
| Navitas Semiconductor | Moving GaN products to PSMC; buying remaining wafers from TSMC under the last-time buy |
| PSMC | Gains a major GaN-on-silicon customer |
| Other TSMC GaN customers | Must find and qualify a new foundry before July 2027 |
| Chinese GaN makers | Face one less large competitor in foundry GaN |
| Integrated GaN makers (own fabs) | Little direct effect, possible new customers |
Broader market context
The decision comes amid wider problems in the GaN market, including oversupply and price erosion driven by Chinese manufacturers. Posts on X highlighted TSMC's strategic recalibration, with some users noting that GaN's niche status and high capital costs make it less attractive for a company of TSMC's scale. Meanwhile, TSMC's move towards advanced packaging reflects the growing importance of chiplet-based architectures and AI-driven demand.
The exit does not mean GaN is fading. Demand for GaN in fast chargers, data-centre power and, over time, EV onboard chargers keeps growing. It means GaN is shifting towards specialist and integrated device makers, and towards foundries for which a few thousand wafers a month is a significant business.
Common misreadings of this news
- "TSMC is leaving power semiconductors." It is leaving GaN foundry services, a narrow line, not power electronics in general.
- "GaN has failed." The exit is about TSMC's margins and focus, not about the technology's prospects.
- "Supply will stop overnight." The exit is phased over two years with last-time buys.
Looking ahead
TSMC's exit from GaN underlines its disciplined approach to portfolio management, putting segments with higher growth and profitability first. As the company increases investment in advanced packaging and next-generation nodes, it remains well placed to keep its leadership in the global semiconductor industry.
Update
In its July 2025 earnings call, TSMC raised its full-year 2025 revenue growth outlook to about 30% in US dollar terms, driven by AI demand. Check TSMC and Navitas investor pages for the latest on the GaN transition and the PSMC production start.
FAQ
When does TSMC stop making GaN wafers?
By 31 July 2027, after a two-year wind-down with a last-time buy option for customers.
Why did TSMC exit GaN?
Reports point to limited scale, low profitability and price pressure from Chinese competitors, with resources moving to advanced packaging and leading-edge nodes.
Where is Navitas moving its GaN production?
To Powerchip Semiconductor Manufacturing Corp (PSMC) in Taiwan, which also uses GaN-on-silicon technology.
Sources
- TSMC statement to the press, July 2025 (listed in the earlier version as TSMC Press Release, 6 July 2025)
- Navitas Semiconductor Investor Update, July 2025
- Market Intelligence & Consulting Institute, Semiconductor Market Report, Q2 2025
- Social media platform discussions, accessed 6 July 2025
- TrendForce, TSMC to Exit GaN Production by July 2027, Reportedly Repurposes Fab for Advanced Packaging, July 2025
- TSMC, Q2 2025 earnings conference, 17 July 2025
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