Vanguard Forecasts Mature-Node Chip Shortages Through 2027 Amid AI Boom

Vanguard International Semiconductor (VIS) has identified the global deployment of AI infrastructure as a structural and irreversible driver of demand for mature-node chips. The company expects the market for these legacy processes to remain in short supply through 2027, signaling a fundamental shift in the semiconductor landscape.

To address this deficit, VIS is investing between NT$60 billion and NT$70 billion (US$1.85 billion to US$2.16 billion) in capital expenditure this year. The primary focus of this spending is a new 12-inch fabrication plant in Singapore. This facility, operated as a joint venture with NXP Semiconductors NV under the name VisionPower Semiconductor Manufacturing Co, is scheduled to begin volume production in the first quarter of 2027. To support the plant's output, VIS is licensing 30nm and 40nm technologies from TSMC specifically to produce interposers.

The Shift to Structural Growth

While industry attention typically focuses on cutting-edge 3nm and 5nm nodes, AI servers require a massive volume of mature-node chips for essential functions such as power management and interposers. For VIS, which specializes in these processes and 8-inch wafers, this has transformed the market from a cyclical pattern into a long-term growth trend. Vanguard Chairman Fang Leuh stated that this shift is an "irreversible trend" and represents "structural growth, not [just] a short-term upcycle."

Market Implications and Pricing

This surge in demand is creating a trickle-down effect, tightening the supply of the foundational chips that support high-end GPUs and accelerators. According to Fang Leuh, AI demand significantly exceeds the combined capacity that companies can supply, with shortages expected to be evident next year.

This supply-demand imbalance is already impacting costs. Average selling prices (ASPs) were projected to climb 2% to 4% sequentially in the current quarter. These increases suggest that the AI boom is raising the overall bill of materials for AI hardware, as the cost of less-advanced, supporting silicon rises alongside premium components.

Future Outlook

As VIS moves toward the 2027 production target for its Singapore fab, the industry will watch whether capacity expansions can keep pace with the scaling of AI data centers. While the company has committed billions in capital, the persistent shortage forecast through 2027 indicates a prolonged capacity crunch in the foundry ecosystem. The success of the TSMC technology transfer for 30nm and 40nm interposers will be a critical metric in determining how quickly VIS can alleviate these bottlenecks.