Taiwan Semiconductor Manufacturing Company (TSMC) and Global Chip Dominance

Importance of TSMC

• TSMC is crucial to global technology, supplying chips for:
  • iPhones
  • Air conditioning units
  • Smart doorbells
  • Computers
  • Cars
  • F-35 fighter jets
  • NASA's Perseverance rover
• TSMC is responsible for 92% of the world's most advanced chips.
• Only two companies mass-produce chips under 10 nanometers: TSMC and Samsung.

Semiconductor Chips: The New Oil

• Dependence on semiconductor chips mirrors the past dependence on oil.
• Shortages of these chips impact industries (e.g., automakers struggling due to chip shortages).

Strategic Importance

• TSMC's dominance makes it strategically crucial in the tech rivalry between the U.S. and China.
• Nancy Pelosi's visit to Taiwan emphasized TSMC's global importance.
• China relies heavily on Taiwanese semiconductors despite tensions.

Historical Context

• Fundamental semiconductor technology originated in the U.S.
• U.S. firms outsourced chip production in the 1980s to cut costs.
• Morris Chang founded TSMC in 1987, capitalizing on outsourcing trends.

TSMC's Business Strategy and Impact

• Initially sold at a loss to gain market share; strategy proved successful.
• Supplies chips to major companies like Apple, Intel, Qualcomm, AMD, Nvidia, Huawei, and Tesla.

Manufacturing Process

• Chips contain up to 50 billion transistors.
• Made by layering silicon wafers with light-sensitive chemicals.
• Process is complex and delicate; cleanliness is crucial.

Geopolitical Implications

• TSMC is caught between U.S. and China tensions.
• U.S. CHIPS Act incentivizes chip manufacturing domestically.
• China's semiconductor technology and industry are rapidly advancing.

Future Prospects

• TSMC plans to produce 2-nanometer chips by 2025.
• Potential benefits: e.g., improved battery life for devices like iPhones.

Conclusion

• TSMC's significance in global technology offers Taiwan a protective leverage amidst geopolitical conflicts.