Taiwanese semiconductor titan TSMC briefly joined the exclusive club of companies valued at over $1 trillion on Monday. Here are five key things to know about Taiwan Semiconductor Manufacturing Company:
Foundation and Growth
– TSMC was founded in 1987 by Morris Chang, an MIT and Stanford graduate who had a distinguished career in the U.S. tech industry.
– Taiwan’s government aimed to establish a competitive semiconductor industry to rival leading nations like Japan.
– Over nearly four decades, TSMC has become a crucial player in producing chips for devices ranging from smartphones to advanced robots.
– Chang, born in mainland China in 1931, retired from TSMC in 2018 and is revered in Taiwan as the “godfather” of its chip industry. He received one of Taiwan’s highest honors in April.
AI Boom:
– The surge in artificial intelligence, driven by the success of ChatGPT, has fueled massive demand for TSMC’s advanced semiconductors needed for AI applications.
– TSMC collaborates closely with AI leader Nvidia, which became the world’s most valuable traded company in June with a market cap of around $3.3 trillion.
– TSMC also supplies chips to Nvidia’s competitors Qualcomm and AMD. Such is the demand that its production is reportedly booked years in advance.
– Apple is one of TSMC’s best-known clients, relying on its chips for iPhones and MacBooks. TSMC is committed to advancing technology for AI devices, circuits, and systems.
Geopolitical Concerns:
– Taiwan is a critical link in the global semiconductor supply chain, with TSMC as its crown jewel.
– China’s claims over Taiwan and increased military drills have raised global concerns about the chip industry.
– U.S. Commerce Secretary Gina Raimondo highlighted the devastating impact a Chinese invasion of Taiwan would have, noting that the U.S. currently sources 92% of its leading-edge chips from TSMC in Taiwan.
Expansion Efforts:
– TSMC is diversifying its manufacturing footprint to mitigate geopolitical risks, building two fabs in the U.S. and planning a third, with total investments in Arizona reaching $65 billion. However, these projects have faced challenges due to a shortage of skilled workers.
– In Japan, TSMC launched an $8.6 billion plant and announced plans for a second factory, supported strongly by the Japanese government.
Natural Disasters:
– Taiwan’s location on the “Ring of Fire” makes it prone to earthquakes, posing another risk to TSMC’s operations.
– In April, a 7.4-magnitude earthquake hit Taiwan, halting production at TSMC, although the company reported minimal impact.
– TSMC has invested in seismic resistance features and an earthquake early warning system to protect its facilities and reduce potential damage.
