Market rumors recently surfaced that TSMC has verbally informed downstream customers that it will close its final 6-inch wafer fab in 2027, dedicating production lines to advanced packaging. TSMC issued a statement stating that it has decided to gradually exit the 6-inch wafer manufacturing business over the next two years and continue to consolidate 8-inch wafer production capacity to improve operational efficiency. This decision will not affect previously announced financial targets.

Market rumors indicate that a power IC design company has received verbal notification from TSMC that TSMC will cease operations at its last 6-inch fab by the end of 2027.

In response to these market rumors, TSMC issued a statement stating that it will shift resources to advanced packaging, which continues to be in short supply. The closure of its 6-inch fab is based on both the market and TSMC's long-term business strategy. TSMC is working closely with customers to ensure a smooth transition and is committed to continuing to meet customer needs during this period. TSMC will remain focused on creating value for its partners and the market. TSMC's stock price closed flat today, unaffected by external news.

If TSMC closes its 6-inch fab in 2027 and shifts its focus to advanced packaging, exiting the mature 6-inch process market, orders for PMICs and other mature process ICs previously placed with TSMC will likely shift.

TSMC has reportedly verbally informed its power IC design customers that it plans to cease operations at its 6-inch fab in 2027. This will impact power management ICs (PMICs) previously used in related mature processes, leading to a wave of order transfers. TSMC's World Advanced Semiconductor is likely to benefit the most.

TSMC has only one remaining 6-inch fab in Taiwan, and last year, rumors surfaced of consolidating its facilities with three 8-inch fabs. This represents another significant market shift following TSMC's announcement of its exit from the GaN market, signaling that the company is concentrating its resources on higher-margin businesses such as advanced processes and advanced packaging.

Major manufacturers gradually abandon 6-inch

On March 22, 2024, German silicon wafer manufacturer Siltronic AG announced plans to gradually cease production of polished and epitaxial small-diameter wafers at its Burghausen facility, with complete cessation of smaller wafer production expected on July 31, 2025. Siltronic currently produces wafers with diameters of 300 mm, 200 mm, and smaller wafers (SD) with diameters less than 150 mm.

"Siltronic's smaller wafer production began in Burghausen in 1968. Smaller wafers have contributed significantly over the years. However, the wafer industry has undergone significant changes due to structural shifts and innovations. Demand is increasingly shifting towards larger diameter, higher-performance wafers. With an average annual production growth rate of 6% for 300 mm wafers projected, SD wafers are approaching the end of their lifecycle. This has led to a significant decline in production, which has recently had a negative impact on earnings, prompting this decision," commented Dr. Michael Heckmeier, CEO of Siltronic AG.

The small-diameter wafer division employs approximately 400 people, approximately half of whom are on fixed-term and temporary contracts. Siltronic aims to reduce its core workforce in a socially responsible manner through demographic shifts and partial retirements, while avoiding layoffs due to operational reasons.

Just recently, Japan's SUMCO, the world's second-largest silicon wafer manufacturer, announced on February 10th that it would restructure production of 200mm and smaller silicon wafers at its Miyazaki plant. Specifically, 200mm wafer production will cease by the end of 2026 and be transferred to plants in Nagasaki and Imari. 150mm wafer production will be transferred to a plant in Indonesia. 125mm and other wafer production will be withdrawn due to insufficient profitability. Monocrystalline silicon production will continue, but wafer processing will be relocated to other locations. Employees affected by the restructuring will be reassigned to 300mm wafer production operations. This restructuring resulted in a total non-recurring loss of 5.8 billion yen in fiscal 2024, including a 4.6 billion yen loss from inventory impairment and 1.2 billion yen in other losses..

SiC giant Wolfspeed, the world's largest supplier of SiC substrate wafers, closed two 6-inch SiC fabs two years ago and laid off 20% of its workforce. Leading global integrated device manufacturers (IDMs), including Wolfspeed, STMicroelectronics (ST), and Rohm, have all begun mass production of 8-inch SiC wafers to enhance their competitive advantage.

Although a number of manufacturers have closed 6-inch fabs in recent years, including Texas Instruments, Renesas, and ON Semiconductor, silicon wafer manufacturers, as third-party suppliers, are more directly responding to market demand and technological trends than IDMs. Whether it's Japan's SUMCO, Siltronic AG, or Wolfspeed, their shift to smaller-diameter wafer production shares several common factors:

One is the need for technological change and weakening market demand for smaller wafer sizes. More and more semiconductor manufacturers are transitioning to more advanced process technologies, such as 7nm, 5nm, and even smaller nodes. These advanced processes typically require larger-diameter silicon wafers (such as 300mm) to improve production efficiency and reduce costs. From a technical perspective, the widespread adoption of 300mm wafers has made the production of smaller-diameter wafers uneconomical.

From a market demand perspective, while AI-driven data center demand remains strong, demand recovery in other markets remains slow, and this divergence is likely to continue.

Another major competitive factor is the rise of domestic wafer fabs. In recent years, China's 6-inch wafer fabs for power semiconductors have become relatively mature, leading to increased competition. For example, China Resources Microelectronics and Silan Microelectronics are leading domestic 6-inch wafer manufacturers. China Resources Microelectronics currently has a 6-inch wafer manufacturing capacity of approximately 230,000 wafers per month, while Silan Microelectronics ranks second globally in chip manufacturing capacity smaller than or equal to 6 inches. There are also a number of other 6-inch wafer manufacturers, including Founder Microelectronics, Shanghai Advanced Semiconductor, Yandong Microelectronics, Beiyi Semiconductor, and Jiejie Semiconductor. Meanwhile, mainland Chinese manufacturers have been gradually expanding into 8-inch and 12-inch wafers in recent years, which will gradually erode market share for larger wafer sizes.

Large manufacturers such as Siltronic AG and SUMCO are striving to maintain their competitive advantage by adjusting production capacity and optimizing production lines. This phenomenon not only reflects the concentration of market size, but may also mean that competitive pressure in the industry is increasing, and manufacturers have to pay more attention to efficiency and technological innovation.

Source: Content from Semiconductor Industry Observation

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