Taiwan’s legacy chip industry faces growing competition from Chinese foundries like Nexchip, Hua Hong, and SMIC, which are expanding capacity and lowering prices in the US$56.3 billion mature-node chip market.

Nexchip, originally formed through a partnership between Taiwan’s Powerchip Technology and Hefei city, is now a competitor, reflecting China’s push for supply chain localization.

This has forced Powerchip to limit its operations in certain areas of the Chinese market.

In response, Taiwan’s major players are shifting focus. Powerchip is prioritizing technologies like 3D stacking, while UMC collaborates with Intel on advanced chip projects.

However, with China’s mature-node chip capacity rising to 34% in 2024, closing in on Taiwan’s 43%, China could surpass Taiwan’s market share by 2027.

US-China trade tensions could create opportunities for Taiwanese manufacturers, however executives acknowledge the need to adapt, as global customers seek alternatives outside China.