Foundry Major Sees Capacity Utilization Nearing Full Target as Order Backlog, Contract Talks Advance
A major foundry is expected to return to full capacity utilization as order backlogs and contract negotiations advance. Utilization gains are driven by HBM4 adoption of a 4-nanometer process and stronger 2-nanometer demand from cloud and AI/high-performance computing customers. The company's utilization has remained below 50% since 2024, with high fixed costs causing losses; normalization would improve profitability. Qualcomm, AMD, and Google are in talks, while Taylor Fab 1 is slated for 2026 production and Fab 2 for 2030 mass production.
Order backlog and advancing contract negotiations have made reaching full capacity utilization nearly certain.
The recovery in utilization is mainly driven by sixth-generation high-bandwidth memory (HBM4) adopting a 4-nanometer process, as well as expanding demand from cloud service providers and AI/high-performance computing customers for 2-nanometer process technology. Project discussions with large customers such as Broadcom are progressing, the memory upcycle is feeding into foundry operations, and AI-related demand continues to grow. The company's utilization rate has remained persistently below 50% since 2024, and high fixed costs have led to losses; normalization of utilization will directly improve its earnings structure.
On the customer front, Qualcomm, AMD, and Google have entered negotiations, but the signing of volume production contracts has yet to advance. In the second half of the year, mobile products based on the second-generation 2-nanometer process will begin mass production, with capacity expansion proceeding in tandem.
On capacity expansion, Fab 1 in Taylor, Texas, is scheduled to begin production in 2026, and Fab 2 in Taylor is scheduled to break ground within the year, targeting mass production by 2030. As customer inquiries for the 1.4-nanometer process increase, plans for an additional wafer fab have been placed on the research agenda.
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