Taiwan Semiconductor Manufacturing Company (TSMC) briefly joined the exclusive trillion-dollar valuation club, highlighting its dominance in the semiconductor industry. Here’s a closer look at five essential aspects of TSMC:
‘Godfather’ of the Chip Industry
TSMC was founded in 1987 by Morris Chang, an MIT and Stanford graduate with a prolific career in the U.S. tech industry. Taiwan’s government aimed to establish a competitive semiconductor industry, rivaling leaders like Japan. Over nearly four decades, TSMC has grown into a global powerhouse, producing chips vital for devices ranging from smartphones to advanced robotics. Chang, born in mainland China in 1931, retired in 2018, leaving a legacy that earned him the title of the “godfather” of Taiwan’s chip industry and one of its highest medals of honor.
AI Boom Driving Demand
The rise of artificial intelligence, exemplified by ChatGPT’s success, has significantly boosted TSMC’s fortunes. TSMC’s advanced semiconductors are crucial for AI applications, leading to close collaborations with AI leader Nvidia, which reached a $3.3 trillion market cap in June. TSMC also supplies other tech giants like Qualcomm and AMD, with production booked years in advance. Apple, one of TSMC’s most notable clients, relies on its chips for the latest iPhones and MacBooks. “We have established a research pipeline for technology to enable leading-edge AI devices, circuits, and systems for decades to come,” TSMC states on its website.
Geopolitical Concerns with China
Taiwan plays a critical role in the global semiconductor supply chain, with TSMC as its crown jewel. However, China’s claims over Taiwan and potential military actions have raised global concerns. US Commerce Secretary Gina Raimondo emphasized the catastrophic impact of a potential Chinese invasion of Taiwan on the global chip industry, noting that the U.S. currently imports 92 percent of its leading-edge chips from TSMC in Taiwan.
Expanding Beyond Taiwan
TSMC is diversifying its manufacturing footprint amid geopolitical tensions. The company is building two manufacturing plants in the United States, with a third announced, totaling $65 billion in investment in Arizona. Despite facing challenges like a shortage of specialized labor, TSMC continues its expansion. This year, it launched an $8.6 billion plant in Japan and announced plans for a second factory. TSMC is also planning its first European factory in Germany, bolstering its global presence.
Natural Disasters and Quake Preparedness
TSMC’s operations are also threatened by natural disasters, as Taiwan is situated on the seismically active “Ring of Fire.” A 7.4-magnitude earthquake in April caused TSMC to halt production temporarily. The company assured customers that the impact was minimal and has invested in seismic resistance features and an earthquake early warning system to mitigate damage and ensure safety.
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