TSMC
Overview
TSMC (Taiwan Semiconductor Manufacturing Company) is the world's largest semiconductor foundry, established in 1987 in Taiwan. A foundry is a business model in which chips are contract-manufactured on orders from fabless companies specializing in semiconductor design, and TSMC is the pioneer and unrivaled market leader in this field. It produces a significant portion of the advanced semiconductors used in smartphones, computers, servers, automobiles, and more worldwide, and is regarded as a linchpin of the global IT supply chain.
Key Details
Founding and Growth
TSMC was founded in 1987 by Morris Chang (張忠謀) in the Hsinchu Science Park, Taiwan. At a time when IDMs (integrated device manufacturers) such as IBM handled both design and manufacturing, TSMC introduced a business model dedicated solely to manufacturing, driving the division of labor in the semiconductor industry. Initially lacking technological prowess, the company narrowed the technology gap through sustained R&D investment and grew rapidly in the 2000s with the advent of the smartphone era. Today, it has the largest market capitalization on the Taiwan Stock Exchange and is among the most prominent companies globally.
Key Technologies and Processes
TSMC's core competitiveness lies in semiconductor advanced process technology. The smaller the line width used to etch circuits onto silicon wafers, the more transistors can be integrated, improving performance and power efficiency. TSMC solidified its technological leadership by becoming the first in the world to mass-produce 7nm (2018), 5nm (2020), and 3nm (2022) processes. As of 2025, its 2nm process is on the verge of mass production, and next-generation processes below 1.4nm are under development. In addition, advanced packaging technologies (CoWoS, InFO, etc.) enhance chip performance, while solutions required for AI semiconductors—such as integration with high-bandwidth memory (HBM)—are also provided.
Customers and Industry Position
TSMC's major customers include Apple, NVIDIA, AMD, Qualcomm, and MediaTek. Apple entrusts the entire production of its A-series chips for iPhones to TSMC, and NVIDIA manufactures AI accelerator GPUs primarily using TSMC's advanced processes. As such, if the world's leading fabless companies want cutting-edge chips, they are virtually dependent on TSMC. As of 2023, TSMC's foundry market share stood at around 60% or more, leaving a wide gap with second-place Samsung Electronics (in the high-teens percentage range). Accordingly, TSMC, as a 'super-gap enterprise' that dictates the semiconductor supply chain, leads pricing power and technology standards.
Global Foundry Competition
Competitors include Samsung Electronics and Intel. Samsung Electronics is challenging TSMC technologically, having been the first to apply the 3nm GAA (Gate-All-Around) process to the market, but it has yet to catch up in terms of yield and customer trust. Intel is pursuing an 'IDM 2.0' strategy that combines its own manufacturing with foundry services, but has not yet produced notable results. Meanwhile, China's SMIC faces difficulties entering advanced processes due to U.S. export controls. TSMC retains market dominance based on its technology leadership, but the competitive landscape is rapidly shifting amid the semiconductor hegemony contest between the United States and China.
Geopolitical Risks
With its headquarters and major fabs in Taiwan, TSMC is directly affected by political tensions between China and Taiwan. China claims Taiwan as its own territory, and military threats heighten uncertainty in the semiconductor supply chain. In response, major countries such as the United States, Japan, and Europe have proposed that TSMC build foundries within their borders and have implemented policies including subsidies to attract domestic semiconductor production. TSMC is reducing geopolitical risk by diversifying its global production bases, while taking a cautious approach to prevent core technologies from leaking overseas.
Latest Developments
Between 2024 and 2025, TSMC's earnings improved significantly on the back of surging demand for AI semiconductors. In particular, demand for advanced CoWoS packaging used in NVIDIA's next-generation AI GPU, the B200 (Blackwell), skyrocketed, prompting TSMC to invest trillions of won in expanding packaging facilities in Taiwan. In 2025, the company began operating mass-production lines for its 2nm process and launched its first Japanese fab (JASM) in Kumamoto in collaboration with Foxconn and others. Its Arizona fab in the United States is also targeting large-scale mass production starting in 2025, and investment is accelerating following the confirmation of subsidies under the U.S. CHIPS Act. TSMC is also expanding its global production network, including breaking ground on its first European fab (ESMC) in Dresden, Germany. Meanwhile, as U.S.–China tensions intensify, TSMC faces constraints on operating advanced process fabs in China and is instead increasing investment in Taiwan even further. Along with the growth of the AI semiconductor market, its stock price has reached record highs, elevating it into the ranks of the world's most valuable companies.
Related Topics
- [[Semiconductor]]
- [[Foundry]]
- [[Apple]]
- [[NVIDIA]]
- [[Taiwan Semiconductor]]