AI-Driven Demand and Fab Exits Tighten 8-Inch Wafer Supply, Boosting Foundry Pricing

A structural supply crunch is emerging for mature-node chips as the AI boom creates secondary demand for power management and analog semiconductors, which are predominantly made on 8-inch wafers. Simultaneously, leading foundries TSMC (2330-TW) and Samsung are closing older 8-inch fabs, tightening supply and driving up utilization and prices for remaining capacity. TSMC plans to shut its 8-inch Fab 5 and 6-inch Fab 2 around 2027, while Samsung will close its Giheung S7 8-inch line in H2 2026, reducing its 8-inch capacity by ~20%. TrendForce estimates global 8-inch supply will shrink ~2.4% in 2026, pushing average utilization to 85-90% from 75-80% and enabling foundries to raise prices 5-20%. This benefits regional foundries like DB HiTek and Chinese players like Hua Hong (688347-CN) and SMIC (688981-CN), which can capture spillover orders. The industry shift is firmly toward 12-inch wafers for mature nodes, as seen with Texas Instruments' (TXN-US) new Sherman fab, though second-tier foundries like Powerchip (6770-TW) face pressure, selling its underutilized 12-inch plant to Micron (MU-US) for $1.8B.