Monday 8 March 2021
Taiwan Semiconductor Manufacturing Company (TSMC) has been a revolutionary company in a critical industry. Yet, what it has achieved is largely under appreciated (despite the fact that if you’re reading this, you’ve likely benefited from their work). Founded in 1987, TSMC pioneered the ‘foundry’ model of semiconductor production, where TSMC create chips for other customers. This is the model that has allowed companies like AMD and NVIDIA to challenge the semiconductor giants like Samsung and IBM.
This article tells the story of TSMC’s founding and gives an overview of their growth in the 1990’s and 2000’s as they challenged a number of industry norms and grew into the company it is today.
What is clear through this story is just how critical the semiconductor industry is to so many of the companies we’re familiar with. In the late 2000’s and early 2010’s, Apple was facing an existential crisis as Samsung was cutting into its market share for smart phones yet at the same time Apple was reliant on Samsung for many critical components of their phones. Samsung had patents for many of these components, creating a reliance that threatened Apple’s supply chain. A secret deal between Apple and TSMC, years in the making, eventually broke this stranglehold.
The semiconductor industry is once again in focus amidst the rising US-China trade tensions. Critical in so many supply chains (both military and non-military), securing a steady supply of semiconductors is a national security priority. US military planners have identified a risk in having so much of this supply chain in China’s backyard (Taiwan and South Korea). For TSMC this creates a balancing act – trying to be neutral in the midst of escalating tensions of two superpowers.