[News] Mature Node Orders Reportedly to Drop 30% in 2H25—UMC, VIS, PSMC Under Pressure

According to Economic Daily News, industry sources note that Taiwan’s leading IC design firms are sharply cutting wafer foundry orders for mature nodes in the second half of the year. In Q3 alone, orders have dropped 20–30% from Q2 levels. As a result, utilization rates at mature-node foundries could fall from around 70% in the first half to 60% or lower in the second half.

The report notes that this move is driven by three key negative factors: the end of the tariff-driven pull-in effect, a weaker-than-expected recovery in end-market demand for smartphones, networking, and automotive applications, and continued pressure from the strengthening New Taiwan dollar.

As the report indicates, with the U.S. set to implement reciprocal tariffs globally starting August 1, the early order pull-in momentum for wafer foundries is expected to end. In addition, the report notes that persistent weakness in global consumer markets has further weakened demand for mature nodes.

The automotive market remains particularly weak. Notably, Reuters reports that Texas Instruments, in its recent earnings call, said the sector’s recovery is lagging. Reuters also notes that STMicroelectronics posted its first quarterly loss in over a decade, missing market expectations after taking a $190 million charge for restructuring and impairment.

Industry sources note that AI, led by NVIDIA, is now the main driver of semiconductor demand. Foundries focused on mature process nodes that haven’t secured major AI orders are bearing the brunt of weak consumer and automotive demand, according to the report.

UMC, VIS, and PSMC Face Declining Profitability

As highlighted by the report, sources indicate that due to the poor outlook for mature nodes, Taiwan’s second-largest foundry UMC, TSMC affiliate VIS, and PSMC are all under margin pressure in the second half of the year

Institutional investors cited by the report note that UMC and VIS may see gross margins fall to around 25%. UMC’s gross margin dropped to 26.7% in Q1—its lowest in four years—and while a rebound is expected in Q2, order cuts from IC design clients and a stronger New Taiwan dollar are likely to further weigh on margins and profitability, as the report indicates. As for VIS, the report states that its Q1 gross margin was 30.1%, and the company previously signaled it could dip below 30% in Q2.

PSMC has posted losses for seven consecutive quarters, with gross margins still in negative territory. According to the report, the company acknowledged in its earnings call last week that tariff uncertainty and China’s subsidy-driven boost to consumption were key factors that led customers to pull in orders earlier in the year, but demand has recently cooled.

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(Photo credit: UMC)