The production line that helped build the modern chip industry is running at three-quarters speed. TSMC has reduced output on its 28-nanometer lines by roughly 25 percent compared with the start of the year, according to 36Kr’s reporting on industry sources, a cut that reflects a slowdown in demand for the mature-node chips that power cars, industrial equipment and consumer electronics. The world’s largest contract chipmaker is adjusting to a market in which the AI boom has not lifted every part of its business.
The 28nm node has an outsized place in TSMC’s history. It was the process that made the company the dominant force in foundry manufacturing, the technology that allowed a generation of chip designers to build powerful, power-efficient devices without owning a factory. More than a decade after its introduction, it remains one of the highest-volume nodes in the industry, produced across multiple TSMC fabs including major sites in Taiwan and China. The cut is a sign that even the most durable manufacturing lines eventually face the arithmetic of supply and demand.
The slowdown has been building for a year. The mature-node segment, which includes 28nm and older geometries, went through a wave of capacity expansion during the pandemic-era chip shortage, when automakers and industrial customers tripled orders and governments subsidized new fabs. That capacity is now coming online just as demand is cooling, and the industry that raced to build mature-node plants is discovering that it built too many of them. TSMC’s cut is an acknowledgment that the surplus must be worked off before prices stabilize.
The same week brought a counterweight to the reduction. TSMC executives said the company is actively evaluating India’s role in the global semiconductor market, which they estimate will be worth $1.5 trillion over the coming years, according to 36Kr. The statements stopped short of committing to a specific investment, but they signal that India has moved from the periphery to the center of TSMC’s thinking about where the industry’s next growth will come from. The country has been courting chipmakers with subsidies and promises of a large engineering workforce, and it has made clear it wants a share of the semiconductor supply chain it has historically missed.
The two stories are connected by a single strategic question: where will TSMC put its next factories? The company’s leading-edge production is concentrated in Taiwan, with expansion in Arizona and Japan, and its mature-node capacity is spread across Taiwan, China and other sites. India would offer access to a domestic market that is building electronics at unprecedented scale, along with a government eager to subsidize fabrication. The challenge is that foundry economics are brutal: a modern fab costs tens of billions of dollars, takes years to build and requires a supply chain of chemicals, equipment and trained engineers that India is still assembling.
TSMC’s calculus is being shaped by geopolitics as much as by economics. The company has spent the past several years diversifying its manufacturing footprint at the urging of the United States and other governments, and India is part of that diversification logic. At the same time, TSMC has been careful not to spread itself too thin, and executives have repeatedly said that Taiwan will remain the heart of its most advanced production. The India evaluation is consistent with a company that wants to be present in every major market without committing to more than it can execute.
The mature-node cut and the India exploration also illustrate the two-speed nature of the semiconductor industry in 2026. The leading edge is booming, with AI accelerators and high-bandwidth memory sold out and prices rising. The mature node is soft, with capacity gluts in 28nm and older geometries depressing utilization and margins. TSMC is unusual in operating at both extremes, and its strategy for the next few years is essentially a bet that the leading edge will stay strong while the mature node works through its surplus.
Analysts said the 28nm reduction is likely to be followed by similar adjustments across the industry as other foundries respond to the same oversupply. The mature-node market has become crowded, with Chinese foundries adding capacity aggressively and established players defending their share, and the consolidation phase that follows overcapacity is rarely kind to the weakest players. TSMC’s size and technology lead give it more room to maneuver than most, but the cut shows that even the industry’s strongest company cannot ignore the cycle.
For India, the timing of TSMC’s interest is auspicious. The country has been building the infrastructure of a semiconductor industry for years, and its electronics manufacturing sector has grown rapidly as global companies have shifted assembly away from China. A TSMC investment, even a modest one, would validate India’s ambitions and draw other suppliers in its wake. The question is whether the country can offer what a foundry needs: reliable power, water, logistics, and a workforce trained in the exacting discipline of chip manufacturing.
TSMC has made no commitments, and people familiar with the company’s thinking said the India evaluation is at an early stage. The 28nm cut, by contrast, is already being felt across the supply chain, in the equipment makers that supply the lines and the customers waiting for prices to fall. The company is simultaneously contracting one part of its business and scouting new ground for another, a combination that has become the defining pattern of the semiconductor industry’s response to the AI era: retreat where demand has softened, and position where the next wave of growth is expected to arrive.
