[News] Israel Unrest Disrupts Tower; Orders Reportedly Shift to Vanguard, PSMC, Lifting Mature-Node Pricing

As Israel enters a state of emergency, shipments from Israel-based foundries have reportedly been disrupted, prompting global companies to shift orders. According to Economic Daily News, Israel’s largest foundry and a top-ten global player, Tower Semiconductor, has faced shipment constraints, leading international chipmakers to transfer or expand orders to Taiwan.

Vanguard International Semiconductor, an affiliate of TSMC, has emerged as the preferred alternative and is seeing a surge in urgent orders, while Powerchip Semiconductor Manufacturing Corp (PSMC) also confirmed a noticeable pickup in bookings, the report adds.

As customers shift orders, mature-node capacity in Taiwan is tightening. Economic Daily News notes that the U.S.–Iran conflict has accelerated transfers, prompting buyers to pay premiums to secure supply and driving mature-node pricing higher. With urgent demand rising, institutional investors expect Vanguard and PSMC to benefit from higher ASPs and stronger gross margins.

Tower specializes in specialty and high-voltage mature processes, serving customers including onsemi, Vishay Intertechnology, Broadcom, Skyworks Solutions, Intel and Samsung Electronics. Its global foundry share is comparable to Taiwan peers, and Israel serves as its primary production base, with key nodes ranging from 0.18µm to 0.13µm—areas that also align with PSMC’s strengths, the report adds.

Meanwhile, industry sources say Tower Semiconductor has historically enjoyed stronger pricing power in mature and specialty nodes, largely due to its distinct product mix. Its chips are primarily used in automotive and industrial applications, which feature long certification cycles, low substitutability and stringent supply stability requirements, enabling Tower to sustain relatively higher average selling prices and margins over time, as the report indicates.

Mature-Node Order Shifts Favor Taiwan Foundries

Industry sources suggest that international chipmakers had initially sought support from TSMC. However, as TSMC scales back its mature-node exposure and directs customers to Vanguard, transfer momentum has accelerated. Given Vanguard’s close technology overlap with Tower and its long-standing customer relationships, orders have naturally flowed in its direction. PSMC also has significant process overlap with Tower, the report notes.

Among customers likely to be affected by Tower Semiconductor’s supply constraints, onsemi has long outsourced part of its 8-inch mature-node production, with Vanguard serving as a key partner in power management ICs, mid- to low-voltage MOSFETs and BCD processes, while PSMC maintains close ties with onsemi in power discrete and mixed-signal products. Vishay Intertechnology has likewise been a long-time Vanguard customer, placing substantial orders for trench MOSFET and TVS products, and has shifted part of its production from China to Taiwan and Singapore in recent years due to geopolitical considerations, the report highlights.

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(Photo credit: Tower Semiconductor)