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Key Points

Taiwan Semiconductor Manufacturing Company (TSMC) has announced its strategic decision to exit the Gallium Nitride (GaN) semiconductor market within two years. The move comes after significant price pressures from Chinese manufacturers eroded profit margins in this critical technology segment. TSMC Chairman CC Wei finalized the withdrawal after comprehensive market evaluations and recommendations from senior leadership. The company assures clients of a smooth transition and maintains confidence in its overall 2025 sales projections despite this market adjustment.

Key Points: TSMC Exits GaN Chip Market Amid China Competition Surge

  • TSMC will phase out GaN semiconductor business in two years
  • Strategic withdrawal driven by intense Chinese market competition
  • Navitas Semiconductor shifts GaN orders to Powerchip
  • Company expects no impact on 2025 sales guidance
2 min read

TSMC to withdraw GaN semiconductor business in 2 years

World's largest chipmaker TSMC strategically withdraws from GaN semiconductor business after market profitability challenges from Chinese manufacturers

"We are working closely with clients to ensure a smooth transition - TSMC Statement"

Taipei, July 4

Taiwan Semiconductor Manufacturing Co. (TSMC) has decided to phase out its GaN (Gallium nitride) semiconductor business in two years, a move analysts said was due to competition from China, which has eroded the product's profit margin, Focus Taiwan reported.

In a statement Thursday, TSMC, the world's largest contract chipmaker, said the decision was made after a comprehensive evaluation that took into account its long-term development strategies and market conditions, the news report said.

TSMC's announcement came after US-based Navitas Semiconductor said earlier this week it has set up a strategic partnership with Powerchip Semiconductor Manufacturing Corp. (PSMC) and will shift its GaN orders from TSMC to PSMC over the next 12 to 24 months.

The GaN (gallium nitride) compound semiconductor, composed of gallium (Ga) and nitrogen (N), is part of a so-called third-generation of semiconductors used largely in 5G communications and electric vehicle production.

As per the Focus Taiwan report, TSMC said it is working closely with its clients to ensure the transition period will proceed smoothly and try its best to satisfy demand from its clients over the next two years.

The gradual withdrawal from the GaN market is unlikely to affect its sales guidance for this year, the company said, as per the news report.

TSMC has forecast its sales will grow 24-26 percent in 2025 in US dollar terms despite the impact of American tariff policies and a stronger Taiwan dollar.

According to local news media reports, TSMC first used its six-inch fab and then an eight-inch fab for its GaN product line, but China's massive injection of funds into the product line in recent years has caused a plunge in global product prices.

The reports said TSMC Chairman CC Wei finalised the decision last week at the suggestion of Kevin Zhang, the company's senior vice president for business development and global sales, and TSMC informed its clients of the decision.

Navitas said PSMC is expected to manufacture its GaN portfolio with voltage ratings from 100V to 650V in a facility located in Zhunan, starting with production of the 100V family first in the first half of 2026, according to the Focus Taiwan report.

- ANI

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Reader Comments

P
Priya S
Very concerning development for global tech supply chains 😟 GaN is crucial for EV and 5G tech. Hope this doesn't create over-dependence on Chinese manufacturers. India's semiconductor mission needs to accelerate!
R
Rohit P
TSMC is making a smart business move here. Why compete in a segment where China is dumping products? Better to focus on advanced nodes where they lead. Indian companies should also specialize rather than trying to do everything.
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Sarah B
While I understand the business rationale, this withdrawal could impact innovation in the long run. When big players exit, it reduces competition and may slow down technological progress in GaN applications.
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Vikram M
China's semiconductor strategy is like their highway construction - build massive capacity first, worry about profits later. Not sustainable but effective in pushing out competitors. India needs to play this game differently with focus on quality.
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Ananya R
The transition period of 2 years shows TSMC's professionalism. They're not abandoning clients suddenly. This is how responsible companies operate. Hope Indian semiconductor firms take note of such best practices 🤞
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Karthik V
With GaN being important for green tech like EVs, maybe this creates an opportunity for India to enter this space strategically. We have the talent, just need the right policies and investments.

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