Why Does TSMC Rule the World?

Semiconductor manufacturing is an extremely competitive business in which leading industry players determine a significant part of technological progress for the whole world.

Some companies own their own foundries, and they produce chips under their own name – for example, Intel. 

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Meanwhile, others create chips for their customers. This group includes one of the largest and most successful companies that you probably haven’t even heard of: Taiwan Semiconductor Manufacturing (TSMC).

In the article, we will tell you more about TSMC.

Why Taiwan?

In the last decade, Taiwan has taken a leading position in the world in the production of microelectronics, especially products such as semiconductors, microchips, and processors.

TSMC company

Now Taiwan is the undisputed leader in the global market for these products. The United States, China, and other countries that are considered advanced in microelectronics (Europe, Japan, South Korea, etc.) lag behind it. Electronic chips are now called the “blood of the economy.” 

Microchips are an integral part of weapons and other military equipment, spacecraft, medical and scientific equipment, household appliances, cars, airplanes, etc., and this island – which ranks only 21st in the world in terms of GDP and 53rd in terms of population – supplies the world’s economy with this “blood.” Experts estimate that Taiwan accounts for more than 50% of the global microchip market.

The peculiarity of Taiwan is that it not only deals with the microchips of today, but at the same time prepares to produce the microchips of tomorrow. Thus, the most advanced products of the industry today include microchips with indicators of 10 or less nanometers (one nanometer is 0.001 microns).

Taiwan has said that in the second half of this year it will start producing a chip with a 3-nanometer index. So, if we consider the market for only the most “advanced” chips, then Taiwan’s share in it will exceed 90%. Some of the “advanced” microchips are made in the USA. 

However, American companies now prefer only to develop the new generations of microchips, and not to manufacture them at scale. So, they outsource such production to Taiwan. Taiwan has turned into a global workshop of microchips, which it produces on orders from companies from various countries (this is called “contract manufacturing”).

Specifically, such a global workshop is the Taiwanese semiconductor company TSMC. Major clients of the company are HiSilicon, MediaTek, Huawei, Realtek, AMD, NVIDIA, Qualcomm, ARM Holdings, Altera, Xilinx, Apple, Broadcom, Conexant, and Intel. Among the company’s Russian clients are Baikal Electronics (a subsidiary of T–Platforms), STC Modul, MCST.

Founded in 1987, TSMC has made an almost vertical takeoff in its 35 years of existence. According to the latest data (as of November 7, 2021), the company’s capitalization amounted to $611 billion. The number of employees at the end of 2020 is about 57,000 people.

The main secret of the company’s success is the most advanced production equipment and highly qualified specialists. TSMC has offices in the USA, China, India, Japan, South Korea, and the Netherlands. The main task of the company’s foreign representative offices is to recruit specialists to work at TSMC, as well as to provide maintenance and support of production facilities at the main enterprise in Taiwan.

Taiwan TSMC company

The Taiwanese company has a special relationship with the Dutch ASML, which is almost a monopolist in the production of the main types of equipment – photo-lithographs and steppers.

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Why is TSMC a complicated giant?

Today, TSMC consists of 17 operating chip manufacturing factories. And that’s still not enough. In the early 2000s, the company invested about a billion dollars a year in development; in the next three years it is going to invest $100 billion. The fact is that the factories where chips are made are extremely expensive. They are filled with extremely precise tools and advanced technologies, and therefore they cost a lot of money – one will easily cost $15 billion.

In particular, clean rooms are very expensive. In order to make small transistors on silicon wafers, it is impossible to allow a single speck of dust to get on these wafers, since a huge amount of work will simply go to waste.

And dust is everywhere: particles of human skin and tissues, dirt from the street and shoes. That is why in such production facilities, employees are always dressed in protective suits and masks. Not because something threatens them, but because they themselves are a danger to technological processes and can unknowingly cause a defect in production. Special suits and a gateway system for cleaning employees from all kinds of dust that they brought on themselves from the street copes with this.

But this, of course, is not enough. To reduce the number of dust particles in the air to the lowest possible level, complex ventilation and air filtration system are built. All rooms are isolated, and the floor in the most expensive and important ones can be a perforated air receiver. 

Naturally, the climatic norms in such rooms are strictly standardized: humidity and temperature are maintained within the set values, and vibration and even electromagnetic fields are under strict control.

All these rooms, materials, equipment, and consumables are made of special materials that do not generate dust on a scale dangerous for production. That is why an astronomical sum is needed to create one such factory, not to mention equipment for the direct production of chips.

The latest TSMC factory is clean rooms with an area of two dozen football fields, with a purity level of no more than 10 particles per cubic meter of air, with special robots under the ceiling transporting materials, and unique photolithography machines, which we have already told about.

TSMC giant

TSMC is the favorite in the race to reduce the scale of the technical process. The company is able to produce chips with an incredible density of transistors. Only Samsung still somehow competes in this area, but the Taiwanese are already ready to bypass them by one generation. The factory mentioned above will produce chips using a 3-nanometer process technology. Transistors will be even smaller, chip performance will be higher, and their power consumption will decrease again. With this technology process, TSMC will leave a giant like Intel two generations behind.

Why has TSMC become successful lately?

Many people associate the recent successes of the Taiwanese with one important client – Apple. Samsung used to make chips for smartphones of this company. But due to the growing competition, Apple decided to change the contractor – TSMC will never compete with its customer in the field of smartphone production.

Now, this is the largest cooperation: Apple reserves the advanced capacities of TSMC, and TSMC is switching to more and more advanced technological processes, as the customer needs even more advanced processors for smartphones and laptops every year.

Because of this race, the most advanced technologies in the processing industry have focused on this island. The pandemic and the shortage of chips have demonstrated that the entire technological world is very dependent on them. Therefore, TSMC’s competitors appear mainly from the states. It is no longer possible for one company to create an equally large-scale and perfect technology business.

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