TSMC's decision to exit the gallium nitride (GaN) foundry market has set off a major restructuring of the global power device supply chain toward China-independent models and sharpened the race for leadership amongst Taiwan and US GaN foundries.
The restructuring is driven primarily by supply chain security concerns amid ongoing geopolitical tensions.
Yet with GaN demand for AI data centers, robotics, and emerging industrial applications expected to surge beyond supply chain forecasts in the second half of 2025, the long-term security strategy now clashes with immediate market needs.
Sources say that while the China-independent supply chain centers on the race to succeed TSMC in GaN, key contenders, including Vanguard International Semiconductor (VIS), GlobalFoundries (GF), and PSMC, still face near-term constraints in production speed, scale, and cost competitiveness, limiting their ability to absorb the sudden rise in AI data center demand.
Data center requirements mirror automotive-grade standards, imposing stringent safety and reliability demands and lengthening qualification cycles.
Rising AI computing demand for high-efficiency power design is driving a shift toward mixed architectures using silicon, GaN, and silicon carbide (SiC). Only a few IDMs, such as Infineon, maintain strong internal capability in both GaN and SiC, while most focus on one or the other.
With IC design houses also increasing demand, GaN foundry outsourcing is accelerating, and TSMC's withdrawal is intensifying the search for substitute capacity.
US players say several companies across Europe, the US, and Asia are adopting a dual-track approach to manage the transition.
In the short term, these companies must rely on China-produced GaN to serve AI data center and robotics demand, while simultaneously developing long-term strategies to expand China-independent supply chains for future localization.
This pragmatic approach reflects the unavoidable tension between geopolitical constraints and market requirements.
Sources note that Innoscience, China's leading GaN supplier, is the immediate beneficiary in the short-term gap-filling cycle due to its ample capacity, mature technology, and certifications from major international customers.
Market analysts believe Innoscience is one factor behind TSMC's exit. Its scale and low-cost bidding strategy have pressured TSMC's profitability, prompting the foundry to abandon GaN and redirect resources to advanced packaging.
Innoscience's lead over domestic rivals has already drawn patent challenges from Infineon and EPC, and market speculation suggests that Nvidia's supply chain is among the areas of concern.
Nvidia, which may be preparing its position in China, is expected to name Innoscience as its sole China supplier for 800 VDC products in 2025, reshaping China's GaN landscape and bolstering Innoscience's standing in the global market.
STMicroelectronics maintains the closest partnership with Innoscience. STM uses Innoscience GaN wafers for next-generation compact and high-efficiency USB PD chargers and, as a major SiC supplier, has also formed a SiC joint venture with Sanan Optoelectronics in Chongqing, underscoring its deep localization in China.
Onsemi recently signed a memorandum of understanding with Innoscience to explore mature 8-inch GaN-on-silicon processes to expand GaN power device production capacity.
Article translated by Levi Li and edited by Jerry Chen
