Aug-08-2026– The global semiconductor foundry market is showing increasingly clear signs of recovery, although second-quarter results indicate that growth remains uneven across companies and technology segments.
Recent results from TSMC, GlobalFoundries, Tower Semiconductor, Vanguard International Semiconductor, UMC and other foundry manufacturers point to strengthening demand across AI infrastructure, advanced logic, silicon photonics, power management and selected mature-node applications.
At the same time, foundries are announcing significant new capacity investments, suggesting that manufacturers increasingly expect today’s demand recovery to extend into the coming years.
TSMC continues to set the pace for the global foundry industry, supported by exceptionally strong demand for advanced process technologies and AI-related semiconductor products.
The world’s largest pure-play semiconductor foundry reported Q2 2026 revenue of US$40.2 billion, increasing 33.7% year-over-year and 12.0% sequentially.
Profitability also remained exceptionally strong, with a 67.7% gross margin and 60.3% operating margin.
TSMC expects growth to continue into the third quarter, forecasting revenue between US$44.6 billion and US$45.8 billion. At the midpoint of the guidance, this would represent approximately another 12% sequential increase.
TSMC’s performance illustrates the exceptional strength at the leading edge of semiconductor manufacturing, where AI accelerators and high-performance computing are driving demand for advanced process technologies.
However, the latest results across the wider foundry market show that the AI infrastructure boom is increasingly extending beyond advanced logic.
GlobalFoundries reported Q2 2026 revenue of US$1.79 billion, representing growth of 9% sequentially and 6% year-over-year.
The company highlighted particularly strong demand from its strategic growth markets, including optical networking for AI data centers.
GlobalFoundries’ differentiated silicon photonics and silicon germanium technologies are becoming increasingly important as AI data centers require higher-speed connectivity between processors, memory and networking infrastructure.
The company expects the momentum to continue, forecasting Q3 revenue around a midpoint of US$1.89 billion.
Tower Semiconductor delivered one of the strongest performances among specialty foundries.
The company reported record Q2 revenue of US$460 million, up approximately 24% year-over-year, while net income reached a record US$91 million.
Tower expects Q3 revenue of approximately US$520 million, representing another significant sequential increase.
A major driver is silicon photonics.
Tower said its silicon photonics business reached an approximately US$680 million annualized revenue run rate during Q2, compared with around US$180 million a year earlier. The company expects to exceed a US$1 billion
annualized run rate during Q4 2026.
To support this expansion, Tower is increasing its 300mm manufacturing capacity in Japan.
The company plans to repurpose its Arai Fab 6 facility for silicon photonics and advanced packaging, maximize production at its Uozu Fab 7 and construct additional manufacturing capacity adjacent to Fab 7.
The investments will support silicon photonics, silicon germanium and advanced optical packaging.
Taiwan’s Vanguard International Semiconductor also reported strong Q2 growth.
VIS recorded Q2 sales of approximately US$445 million, an increase of 13.7% sequentially and 21.8% year-over-year.
Wafer shipments increased approximately 11% sequentially, while blended average selling prices increased around 3%.
Importantly for the mature-node foundry market, VIS said demand for power management semiconductor products continues to increase.
For Q3, the company expects wafer shipments to rise another 1% to 3% sequentially and blended ASP to increase 2% to 4%.
The results suggest that the recovery is no longer limited to leading-edge AI processors.
Power management ICs and other specialty semiconductor products manufactured on mature processes are also beginning to benefit.
United Microelectronics Corporation reported July revenue of approximately US$740 million, increasing around 3% sequentially and 19% year-over-year.
The latest monthly figures provide another indication that demand for mature-node semiconductor manufacturing continues to improve.
Vanguard’s July revenue showed a different pattern, declining sequentially following a strong previous month while remaining substantially higher year-over-year.
The contrasting results highlight that the recovery remains uneven even within the mature-node foundry sector.
Specialty foundry X-Fab is positioning itself for longer-term growth in emerging semiconductor technologies.
The company has secured approximately €127.4 million in public funding under the EU Chips Act to expand microsystems and photonics manufacturing at its Erfurt facility in Germany.
The project, known as Fab4Micro, will expand X-Fab’s production capabilities for MEMS, microsystems and photonic devices, with initial production planned for the end of 2028.
X-Fab also continues to develop its wide-bandgap semiconductor business.
Its SiC activities are benefiting from increasing prototyping demand, while the expected transition toward 800V power distribution in AI data centers could create additional opportunities for both silicon carbide and gallium nitride technologies.
This represents an important development for specialty foundries: AI demand is increasingly spreading beyond processors themselves into power delivery, connectivity, sensing and supporting semiconductor technologies.
Samsung is also investing heavily in its foundry business as competition intensifies at advanced process nodes.
Samsung said foundry earnings improved during Q2, helped by demand for HBM base dies and stronger orders from U.S. customers.
The company also reported increasing customer engagement around its 2nm process technology, particularly for high-performance computing applications.
Samsung plans to expand its U.S. manufacturing footprint further through additional 300mm capacity in Taylor, Texas.
The investment illustrates the scale of capacity being planned as semiconductor companies prepare for continued growth in AI and high-performance computing.
One of the clearest trends emerging from the latest earnings cycle is the rapid growth of photonics.
Tower’s accelerating silicon photonics business is perhaps the strongest example, while GlobalFoundries is also benefiting from increased demand for silicon photonics and silicon germanium technologies in AI data-center optical networking.
Investment is increasing elsewhere as well.
Switzerland-based CCRAFT, a new photonics foundry, recently raised approximately US$7.8 million to develop a pure-play thin-film lithium niobate photonic integrated circuit foundry.
The company is targeting TFLN photonic integrated circuits for data communications, quantum technologies, lidar, sensing and space applications.
While still at an early stage, the emergence of dedicated photonics foundries demonstrates how rapidly optical technologies are becoming integrated into the semiconductor manufacturing ecosystem.
The latest results highlight an important shift in the semiconductor market.
The first stage of the AI investment boom was primarily associated with advanced GPUs, CPUs and HBM.
Demand is now spreading much further through the semiconductor supply chain
.
AI data centers increasingly require:
This is allowing specialty and mature-node foundries to increasingly participate in AI-related growth.
TSMC remains the clearest beneficiary of the enormous demand for advanced computing silicon, but the results from Tower, GlobalFoundries, VIS and others demonstrate that the supporting infrastructure around AI processors is becoming a meaningful growth market of its own.
Taken together, the latest results suggest that the global foundry market entered the second half of 2026 with improving momentum.
TSMC is leading the market with revenue growth of nearly 34%, driven by advanced-node AI and HPC demand.
GlobalFoundries is benefiting from optical networking and AI infrastructure.
Tower Semiconductor is experiencing exceptionally rapid growth in silicon photonics.
VIS is seeing stronger power management demand.
UMC continues to report strong year-over-year revenue growth.
X-Fab is investing heavily in MEMS, photonics and wide-bandgap technologies.
Samsung continues to commit substantial capital to leading-edge foundry capacity.
The recovery, however, should not be viewed as uniform.
Demand conditions still vary considerably between end markets, process technologies and individual customers.
The larger story may therefore be less about a traditional semiconductor cycle and more about where the industry’s next manufacturing bottlenecks are emerging.
TSMC is capturing the enormous growth in advanced AI compute, while specialty foundries are increasingly benefiting from the photonics, power management, connectivity and other semiconductor technologies required to build complete AI infrastructure.
For foundries able to provide these technologies, the AI build-out is creating an opportunity that extends far beyond simply manufacturing AI processors.
