Taiwan’s wafer foundry industry is poised for only a modest revenue uptick in the second half of 2025 compared with the first half. A high comparison base from earlier in the year and ongoing US semiconductor tariff policies are tempering momentum, even as new smartphone application processors provide some lift.
Industry watchers expect the electronics supply chain to remain cautious with order pull-ins through the back half of the year. Third-quarter revenue growth is projected to decelerate to about 7.1% quarter over quarter, and elevated customer inventories, combined with tariff-related uncertainty, are likely to cap wafer shipments and revenue in the fourth quarter, according to DIGITIMES.
Key factors shaping H2 2025
– Softer demand signals: After front-loaded orders in the first half, customers are prioritizing inventory digestion over aggressive restocking.
– Tariff headwinds: US policies on semiconductor-related imports are adding cost and planning complexity, which can delay or trim orders.
– Smartphone AP cycle: The rollout of new application processors should provide some support, but not enough to offset broader caution across the supply chain.
– High base effect: Robust first-half results create a tougher comparison for the second half, making growth appear milder even if shipments remain healthy.
A notable strategic shift is also underway. TSMC’s planned exit from the gallium nitride (GaN) foundry market is set to reshape competition within Taiwan’s specialty process landscape. As the company reallocates focus and capacity, opportunities could open for niche players specializing in power electronics and RF applications, potentially redistributing GaN-related demand across the local ecosystem.
What to watch next
– Inventory normalization pace: Faster burn-down of customer stock could improve late-year visibility and unlock upside to Q4 orders.
– Tariff developments: Any policy changes or exemptions could ease cost pressures and accelerate order commitments.
– Smartphone and premium device refreshes: Stronger-than-expected AP demand would favor advanced and mid-tier nodes, partially offsetting softness elsewhere.
– Competitive dynamics in specialty processes: With TSMC stepping back from GaN, smaller foundries may capture design wins, influencing pricing and capacity allocation.
Bottom line: Taiwan’s foundry revenue should edge higher in H2 2025, but growth will be slower than earlier in the year. Cautious procurement, tariff-related friction, and a high base will keep third-quarter gains moderate and likely constrain the fourth quarter. The exit from GaN by a leading player adds a competitive wrinkle that could benefit specialized foundries even as mainstream wafer demand remains measured.
