TSMC Plans Phaseout of 6-Inch Wafers Consolidates 8-Inch Capacity

Taiwan Semiconductor Manufacturing Company (TSMC) announced plans to phase out its 6-inch wafer manufacturing within two years and streamline its 8-inch wafer production to optimize operations and maintain competitiveness in the global semiconductor market. Despite these changes, TSMC confirmed that its financial targets for the year remain unaffected, supported by strong demand for AI applications and an upgraded sales growth forecast of about 30% for 2025 in U.S. dollar terms. The company operates multiple fabs in Taiwan, including four 12-inch giga fabs and four 8-inch fabs, and is considering transforming the phased-out 6-inch wafer plant into an advanced IC assembly site to meet AI demand. TSMC's board approved capital expenditures of approximately US$20.66 billion for expanding advanced process capacity, packaging, and mature technology, alongside issuing unsecured corporate bonds and a capital injection to reduce foreign exchange hedging costs. However, TSMC anticipates a 2-3 percentage point reduction in gross margins due to its U.S. operations amid tariffs and subsidies from the U.S. government, though the stock maintains an overall 'Outperform' rating from analysts with a positive price target outlook. The company's robust financial performance and strategic investments position it strongly despite short-term margin pressures from its U.S. expansions.