Taiwanese semiconductor giant TSMC on Monday joined the rare club of companies valued at more than $1 trillion.
Here are five things to know about Taiwan Semiconductor Manufacturing Company:
‘The Godfather’
M.I.T. and Stanford graduate Morris Chang founded TSMC in 1987 after an extensive career in the tech industry in the United States.
The Taiwanese government was attempting to establish a semiconductor industry that could compete with countries that were leading the field at the time, such as Japan.
Over the past nearly four decades, TSMC has become one of the world’s most important companies — a leader in producing chips that help run everything from smartphones to advanced robots.
Chang, who was born in mainland China in 1931, retired from TSMC in 2018. By then he had become revered in Taiwan and was often described as the “godfather” of the island’s chip industry.
In April, Taiwan awarded him one of its highest medals of honor.
The AI ​​Boom
With the revolution in artificial intelligence spurred by the success of ChatGPT, TSMC is capitalizing on a massive surge in demand for advanced semiconductors needed to train and run AI apps.
It works closely with AI leader Nvidia, which in June became the world’s most valuable company with a market capitalization of about $3.3 trillion.
TSMC also supplies Nvidia’s competitors Qualcomm and AMD, and demand for its chips is so high that production is reportedly booked out several years in advance.
Perhaps its most famous customer is Apple, which relies on TSMC chips for the latest iPhones and MacBooks.
“We have established a research pipeline for technologies to enable leading-edge AI devices, circuits, and systems for the decades to come,” TSMC says on its website.
Fears about China
Taiwan is the most critical link in the semiconductor supply chain, the lifeblood of the modern global economy, and TSMC is its crown jewel.
However, China considers this self-governing island as its territory and has not ruled out the use of force to bring it under its control.
Beijing has increased pressure on Taipei in recent years, including large-scale military exercises, raising concerns about its chip industry in capitals and boardrooms around the world.
US Commerce Secretary Gina Raimondo told a congressional hearing in May that a Chinese invasion of Taiwan and takeover of TSMC would be “absolutely devastating.”
“Right now, the United States buys 92 percent of its cutting-edge chips from Taiwan-based TSMC,” he said.
Expansion of America, Japan
TSMC has been under pressure to move away from Taiwan, where most of its factories are located, to avoid further escalating the confrontation between Washington and Beijing.
It is building two “fabs” – manufacturing plants – in the United States and in April announced plans for a third, bringing its total investment in the state of Arizona to $65 billion.
But its U.S. projects faced hurdles last year, which the company attributed to a shortage of human resources as making chips requires highly specialized skills.
TSMC also broke ground on a plant in Japan this year at a cost of $8.6 billion – a major milestone for the country as it competes with the US and Europe to lure top chip companies with heavy subsidies.
With “strong” support from the Japanese government, TSMC has announced a second factory to make more advanced chips. The company is also planning a new factory in Germany – which will be its first in Europe.
Earthquake risk
Geopolitics isn’t the only concern for TSMC and Taiwan’s chip industry.
The island is also prone to natural disasters.
It lies on the “Ring of Fire”, a zone of intense seismic activity along the Pacific Ocean, and – like neighbouring Japan – has a long history of devastating earthquakes.
TSMC was one of the companies that halted production following the 7.4 magnitude earthquake in April this year, the worst to hit Taiwan in several decades.
It told customers that the earthquake’s impact was minimal.
According to TSMC’s website, it has invested in a number of earthquake-resistant features at its plants to reduce damage and casualties, including an earthquake early warning system.
(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)
