What counts as a “legacy” or “mature-node” chip?

Generally, chips manufactured on process nodes of 28 nanometers or larger, sometimes extended to include nodes up to 40nm or 90nm depending on the classification used by regulators and industry bodies.

Why can't leading-edge fabs simply make these chips instead?

Leading-edge fabs are optimized for transistor density and performance, which comes at a much higher cost per wafer. Legacy chips prioritize reliability, wide operating tolerances, and low cost per unit at high volume requirements a cutting-edge fab is not economically suited to serve.

Why is China's growth in this segment considered a risk?

Regulators including the U.S. Bureau of Industry and Security have flagged concentration risk: if a large share of global mature-node capacity sits in one country, supply chains for automotive, defense, and industrial products become exposed to a single point of geopolitical or trade disruption.

Are Western companies competitive on price with Chinese foundries?

Not directly. McKinsey's analysis shows Western mature-node fabs carry meaningfully higher construction and operating costs, which is why government subsidies such as CHIPS Act funding play a central role in supporting domestic legacy chip production.

Could another chip shortage like 2021 happen again?

Analysts including S&P Global Mobility have flagged this risk specifically for nodes of 40nm and above, citing underinvestment relative to advanced-node capacity and rising demand from electric vehicles and industrial automation.

Legacy Chips Still Matter Why Mature Nodes Aren't Going Away

The semiconductor headlines belong almost entirely to 2-nanometer processors and AI accelerators, but the chips actually running the world's cars, appliances, and factory equipment are rarely built anywhere near the leading edge. Mature-node chips generally defined as 28 nanometers and larger remain the workhorses of global electronics, and despite years of predictions that the industry would race exclusively toward smaller transistors, demand for these older process technologies keeps proving structurally durable. The reason is not nostalgia; it is economics, reliability requirements, and a geopolitical contest that is reshaping where these chips get made.

What “Legacy” Actually Means in Chip Manufacturing

Despite the name, legacy chips are not stale technology; the term describes chips made on 28 nanometer processes and larger, which power the sensors, power management circuits, and microcontrollers found in everything from a car's braking system to an industrial robot arm. These chips do not need cutting-edge transistor density they need to be cheap, extremely reliable across a wide temperature range, and available in enormous volumes. That combination is precisely why leading-edge fabs, optimized for density and performance, are structurally the wrong tool for the job.

The Scale of the Market

Legacy and mature-node chips represent a market Reuters has sized at roughly $56.3 billion, a segment large enough that entire national industrial strategies now revolve around controlling it. A U.S. Bureau of Industry and Security survey of 97 major end users, representing nearly $3 trillion in combined annual revenue, found their products contained an estimated $111 billion in chip content more than one-sixth of global chip sales value much of it running through mature-node components that companies could not always trace back to their country of origin.

Why the Supply Picture Is Shifting

China's Capacity Build-Out

The most consequential change in the legacy chip market is geographic. According to Semiconductor Industry Association analysis of SEMI fab-tracking data, China's mature-node manufacturing capacity grew from 1.2 million wafer starts per month in 2015 to 3.0 million by 2023, lifting its share of global mature-node capacity from 19% to 33% over that period. The U.S. Commerce Department separately found that the median price of mature-node wafers from China-based foundries ran about 10% below foundries in the rest of the world a gap industry executives in Taiwan describe as an existential pricing threat.

Figure 1: China nearly tripled its mature-node wafer capacity between 2015 and 2023, gaining 14 percentage points of global market share. Source: Semiconductor Industry Association / SEMI World Fab Forecast.

Taiwanese Foundries Feel the Squeeze

That price pressure is already reshaping competitive dynamics outside China. Reuters reporting on Taiwan's legacy chip sector describes Chinese foundries such as SMIC and Hua Hong Semiconductor winning share from long-established players like Powerchip, UMC, and Vanguard International through aggressive capacity expansion and price cuts, forcing Taiwanese firms to either retreat from commodity legacy chips or push into more specialized, differentiated processes to survive.

Why Western Companies Keep Investing Anyway

Despite the pricing pressure from China, Western chipmakers are expanding legacy and current-generation capacity rather than abandoning it, largely for supply-security reasons rather than cost competitiveness alone. Texas Instruments, in its 2025 annual report filed with the SEC, disclosed plans to source more than 95% of its wafers internally, with over 80% on 300mm production, by 2030, backed by a stated investment of more than $60 billion to manufacture foundational semiconductors in the United States. GlobalFoundries, in a company statement following its U.S. Department of Commerce award, confirmed plans to invest approximately $13 billion over the next decade in its New York and Vermont sites, which produce automotive, aerospace and defense, and communications chips.

Figure 2: Announced U.S. investment commitments in legacy and current-generation chip manufacturing. Sources: U.S. Department of Commerce/NIST; Texas Instruments company disclosures.

Government Money Is Underwriting the Gap

The U.S. Department of Commerce, through the CHIPS and Science Act, awarded GlobalFoundries up to $1.5 billion in direct funding specifically to strengthen domestic legacy chip supply for the automotive and defense industries, noting that GlobalFoundries is the only U.S.-headquartered company among just four firms worldwide providing mature foundry capabilities at that scale outside China. That distinction supply security over cost is precisely why governments are willing to subsidize a segment that a private market alone might otherwise cede entirely to lower-cost Chinese producers.

The Cost Reality Behind the Policy Push

Subsidies exist because the underlying economics are difficult. McKinsey's analysis of mature-node fab economics found that, even accounting for available subsidies, a standard mature logic fab built in the United States costs roughly 10% more to construct and carries up to 35% higher operating costs than an equivalent facility built in Taiwan a gap that explains why onshoring legacy capacity has required direct government incentives rather than market forces alone. At the same time, automotive and industrial demand keeps mature-node supply structurally tight: S&P Global Mobility has warned that underinvestment in nodes of 40 nanometers and above risks a renewed shortage as electric-vehicle production ramps and inventory buffers built during the 2021–2022 shortage era continue to run down.

Conclusion

Mature nodes are not a shrinking corner of the chip industry waiting to be phased out they are a battleground for supply security, pricing power, and industrial policy, all at once. With China controlling a third of global mature-node capacity and undercutting rivals on price, and Western governments and companies collectively committing tens of billions of dollars to keep legacy production onshore, the fight over who makes the world's least glamorous chips has become one of the most consequential stories in global manufacturing.