Digitimes claims that TSMC has most of its eight inch fab capacity occupied by LCD driver IC orders and is demanding its LCD driver IC customers move to 12-inch wafers so orders placed with its 8-inch fabs could be better diversified.

Orders for LCD driver ICs are huge and take up most of the foundries' eight-inch fab capacity. When the demand falls orders would fall substantially resulting in excess production capacity at 8-inch fabs.

Some foundries have offered price discounts or incentives to encourage LCD driver IC firms to switch to 12-inch wafers. At the 12-inch fabs, 90nm and more mature process capacities are in sufficient supply prompting foundries to get enough orders for their 12-inch fabs.

It would appear that some of the bigger foundries are putting on stronger pressure for a change, we guess because they needed to be using the eight inch fabs for something more productive.