TAIPEI (Taiwan News) — Taiwan’s legacy chipmakers are feeling the squeeze as Chinese competitors fight for more market share, Reuters reported Monday.

Legacy, or mainstream, chips use larger transistors and are commonly found in automobiles, home appliances, and other consumer electronics. They differ from advanced chips, typically defined as 5 nm or below, which are used in AI and weapon systems. In general, the smaller the manufacturing process, the more powerful the chip.

Powerchip Semiconductor Manufacturing Corporation (PSMC) is one Taiwanese foundry facing growing challenges as Beijing pushes Chinese chipmakers to boost competitiveness.

PSMC Chair Frank Huang warned: “Mature-node foundries like us must transform. Otherwise, Chinese price cuts will mess us up even further.”

United Microelectronics Corporation (UMC), Taiwan’s first semiconductor company, also acknowledged the pressure from China. The company said global capacity expansion had created "severe challenges” for the industry. To stay competitive, UMC said it is working with Intel to develop more advanced chips and diversify beyond legacy chipmaking.

As the US continues restricting China’s access to advanced chips, Taiwanese executives said Chinese foundries have doubled down on legacy chips, undercutting Taiwanese rivals on price.

According to TrendForce, China’s share of global legacy chip manufacturing reached 34% in 2024, while Taiwan’s stood at 43%. By 2027, China’s share is projected to surpass Taiwan’s, while South Korea and the US, with single-digit shares, are expected to see declines, per Reuters.

Although Taiwanese foundries still lead in process stability and production yield rates, industry insiders say Chinese firms have become increasingly aggressive in pitching business since 2023.

International Data Corporation (IDC) Senior Research Manager Galen Zeng predicted Taiwanese chip designers and foundries would likely specialize their processes and diversify beyond legacy chips. However, he noted that profits would still take a hit due to price competition from Chinese rivals.

Still, Taiwanese chipmakers could benefit from US efforts to curb China’s semiconductor growth. Huang said PSMC is already receiving orders redirected to Taiwan that would have otherwise gone to China.

Another industry source said more international customers have been requesting chip production outside of China since 2023. “Some customers will tell us that no matter what, they don’t want us to tape out chips in China. They don’t want ‘Made in China,’” the source added.