Taiwan Semiconductor Manufacturing Company Ltd. (NYSE:TSM) is moving to structurally rebalance its mature-node manufacturing footprint as part of a broader effort to optimize capital allocation and manufacturing efficiency.
According to Counterpoint Foundry Service’s Monthly Intelligence Report, the company is expected to reduce Fab14’s 12-inch mature-node capacity by 15%–20% by 2028. The adjustment targets chronically weak utilization at legacy nodes while freeing resources to support the expansion of advanced packaging technologies.
Counterpoint’s Foundry Market Supply Tracker data shows that utilization rates at 40–90nm nodes have remained at around 80%, with limited signs of near-term recovery. In contrast, demand for advanced packaging continues to strengthen, prompting the company to prioritize the reallocation of cleanroom space, equipment, and capital toward higher-value segments.
Overseas Fabs Absorb Mature Demand
To maintain supply continuity for customers dependent on mature and mid-range nodes, Taiwan Semiconductor is increasingly relying on overseas fabs and affiliated platforms.
In Japan, the Kumamoto fab (Fab23) is expected to ramp 40/45nm and 12/16nm capacity by the end of 2026, supporting automotive and ISP demand.
In Europe, the Dresden fab (Fab24) is progressing toward equipment installation in 2027, with planned capacity at 22/28nm and 12/16nm later in the decade.
Select tools from Fab14 are expected to be redeployed to these sites, improving asset utilization while limiting overseas capital spending.
Role of VIS in Mature Nodes
Taiwan Semiconductor affiliate VIS is also absorbing part of the mature-node load. VIS plans to acquire 12-inch tools from Taiwan Semiconductor to expand 130nm–40nm production at its Singapore-based VSMC facility. This reinforces a clearer internal division of labor, with Taiwan Semiconductor focusing on advanced logic and packaging, while VIS addresses stable mature-node demand more efficiently.
Overall, Taiwan Semiconductor expects to phase out around 50,000 wafers per month of Fab14 capacity by 2028, enhancing profitability and flexibility while maintaining diversified customer supply.
This realignment is a cornerstone of the chipmaker’s $52 billion to $56 billion capital expenditure plan for 2026.
The $1.7 trillion contract chipmaker gained 45% in the last 12 months.
Reportedly, Nvidia Corp. (NASDAQ:NVDA) has overtaken Apple Inc. (NASDAQ:AAPL) as Taiwan Semiconductor’s largest customer.
TSM Price Action: Taiwan Semiconductor shares were up 0.42% at $328.75 during premarket trading on Friday, according to Benzinga Pro data.
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