Taipei [Taiwan], July 4 (ANI): Taiwan Semiconductor Manufacturing Co. (TSMC) has decided to phase out its GaN (Gallium nitride) semiconductor business in two years, a move analysts said was due to competition from China, which has eroded the product's profit margin, Focus Taiwan reported.

In a statement Thursday, TSMC, the world's largest contract chipmaker, said the decision was made after a comprehensive evaluation that took into account its long-term development strategies and market conditions, the news report said.

TSMC's announcement came after US-based Navitas Semiconductor said earlier this week it has set up a strategic partnership with Powerchip Semiconductor Manufacturing Corp. (PSMC) and will shift its GaN orders from TSMC to PSMC over the next 12 to 24 months.

The GaN (gallium nitride) compound semiconductor, composed of gallium (Ga) and nitrogen (N), is part of a so-called third-generation of semiconductors used largely in 5G communications and electric vehicle production.

As per the Focus Taiwan report, TSMC said it is working closely with its clients to ensure the transition period will proceed smoothly and try its best to satisfy demand from its clients over the next two years.

The gradual withdrawal from the GaN market is unlikely to affect its sales guidance for this year, the company said, as per the news report.

TSMC has forecast its sales will grow 24-26 percent in 2025 in US dollar terms despite the impact of American tariff policies and a stronger Taiwan dollar.

According to local news media reports, TSMC first used its six-inch fab and then an eight-inch fab for its GaN product line, but China's massive injection of funds into the product line in recent years has caused a plunge in global product prices.

The reports said TSMC Chairman CC Wei finalised the decision last week at the suggestion of Kevin Zhang, the company's senior vice president for business development and global sales, and TSMC informed its clients of the decision.

Navitas said PSMC is expected to manufacture its GaN portfolio with voltage ratings from 100V to 650V in a facility located in Zhunan, starting with production of the 100V family first in the first half of 2026, according to the Focus Taiwan report. (ANI)