The move follows Navitas’ decision to shift orders to PSMC, signaling a strategic pivot as TSMC refocuses on core and advanced technologies.
Taiwan Semiconductor Manufacturing Co. (TSMC), the world’s leading contract chipmaker, has announced plans to gradually exit the gallium nitride (GaN) semiconductor market over the next two years. The decision, revealed Thursday, follows a strategic review of market dynamics and aligns with the company’s long-term development goals.
Industry analysts attribute the move to intensifying competition from Chinese manufacturers, which has significantly compressed profit margins in the GaN space. China’s heavy investment and resulting price pressure have made the segment less attractive for high-end global players like TSMC.
The announcement came shortly after U.S.-based Navitas Semiconductor disclosed a new strategic partnership with Taiwan’s Powerchip Semiconductor Manufacturing Corp. (PSMC). Under the agreement, Navitas will transition its GaN orders from TSMC to PSMC within the next 12 to 24 months. PSMC plans to begin production of Navitas’ 100V GaN chips at its Zhunan facility by the first half of 2026, with expansion to higher voltage families up to 650V.
GaN is considered a third-generation semiconductor material and is widely used in 5G infrastructure, fast chargers, and electric vehicles due to its high efficiency and fast-switching capabilities. The company initially invested in GaN production using its six-inch and later eight-inch fabs. However, the cost competition has rendered the segment commercially unviable.
The company assured that the phase-out will be carefully managed in coordination with existing clients and is not expected to impact its financial guidance. The company still projects a strong 24–26% revenue growth for 2025, despite ongoing geopolitical and currency headwinds. The decision was finalized by the Chairman C.C. Wei last week, reportedly on the recommendation of Senior VP Kevin Zhang. The company has already begun notifying customers to ensure a smooth transition.
This strategic withdrawal marks a notable shift in TSMC’s product roadmap as it focuses more on core and emerging technologies, while competitors like PSMC step in to capture opportunities in the maturing GaN market.
