June 23, 2026 /SemiMedia/ — Supply chain sources said TSMC is significantly reducing 28nm production capacity as it redirects more resources toward advanced process technologies and advanced packaging, a shift that could reshape the mature-node foundry market.

The monthly wafer input at TSMC’s Fab 15A, a key production base for its 28nm process, has reportedly fallen from about 200,000 wafers at the beginning of the year to around 150,000 wafers in June. Supply chain sources estimate that TSMC’s 28nm output has declined by more than 25% so far this year.

Industry observers said the capacity reduction is not simply the result of weaker demand. Instead, it reflects TSMC’s broader production restructuring as the company focuses more heavily on advanced nodes, next-generation technologies and higher-value packaging-related applications.

Fab 15A, which has been responsible for 28nm and 22nm production, is reportedly being converted into a 4nm production site. Existing equipment is being phased out and replaced with new tools, while the adjacent Fab 15B continues to serve as an important 7nm production base.

TSMC is also building Fab 25 in Taichung, which is expected to become a production center for its next-generation A14 process. The first phase of civil construction at the site has reportedly been completed.

Analysts said TSMC is pursuing a dual-track strategy. The company is reducing exposure to mature processes such as 28nm while encouraging some customers to migrate to 12nm. At the same time, it is increasing investment in 2nm, A14, SoIC and silicon photonics.

As TSMC reduces lower-margin mature-node capacity and allocates more resources to advanced-node and interposer-related requirements, some 28nm customers are looking for alternative foundry suppliers.

UMC is seen as one of the main beneficiaries. The company has 28nm and 22nm platforms that can support OLED display driver ICs, Wi-Fi chips, networking products, consumer semiconductors and automotive components. If TSMC continues concentrating resources on 12nm and below, UMC could become a more important long-term alternative in mature-node manufacturing.

Vanguard International Semiconductor is also expected to benefit. The company is building a new 12-inch fab in Singapore, which could allow it to absorb part of the demand shifting away from TSMC’s mature-node capacity. Previous market estimates suggested that about 80% of TSMC’s roughly 5 million 8-inch wafer capacity per year could gradually move to VIS over the next several years.

Industry analysts said TSMC’s capacity adjustment reflects a clear shift away from lower-margin mature-node business toward advanced manufacturing and high-value packaging technologies. As AI, high-performance computing and advanced packaging demand continues rising, TSMC is likely to allocate more capital and production resources to areas with higher returns.

At the same time, demand for mature nodes remains significant. Display drivers, networking chips, automotive semiconductors, industrial control devices and consumer electronics still depend heavily on 28nm, 22nm and other mature processes. TSMC’s reduced presence in some mature-node capacity could create more room for UMC, VIS and other foundries focused on these markets.

Over the longer term, competition between TSMC and Samsung Electronics in advanced nodes is expected to intensify. TSMC is accelerating investment in 2nm, A14 and advanced packaging, while Samsung is also working to ramp 2nm production and strengthen advanced packaging capabilities. As TSMC further focuses on high-end technologies, the global foundry market may see both stronger advanced-node competition and a redistribution of mature-node orders.