J.P. Morgan Asian Foundries: TSMC Shutting Down Mature 12-Inch Process Node Capacity?
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J.P. Morgan addresses market speculation regarding TSMC's potential closure of mature 12-inch capacity. TSMC plans to convert 40-90nm capacity at its Fab 14 and Fab 12 facilities into advanced packaging space for CoWoS. This initial phase involves 20-30k wafer starts per month, representing less than 10% of total capacity at this node, with implementation expected by late 2027.
A larger closure plan, potentially impacting up to 20% of 40-90nm capacity, remains under discussion with clients. A final decision is anticipated around April or May 2026. TSMC cites three strategic reasons: structural oversupply from Chinese capacity build-out, eventual demand migration to 28/22nm nodes, and sub-70% utilization rates over the past three years.
J.P. Morgan believes the impact on alternative foundries like UMC and GlobalFoundries will be primarily sentimental rather than a substantial driver of order shifts or pricing power. Industry-wide utilization remains low outside of 28nm.
Chinese foundries such as SMIC and Hua Hong have recently raised prices by 5-10% driven by localization demand, though sustainability remains questionable amid weak smartphone momentum. Meanwhile, UMC's Xiamen facility faces potential stranded asset risk due to shifting geopolitical supply chain dynamics.