A Single Company in Taiwan Makes 92% of the World’s Most Sophisticated Chips

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A Single Company in Taiwan Makes 92% of the World’s Most Sophisticated Chips

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A Single Company in Taiwan Makes 92% of the World’s Most Sophisticated Chips
Taiwan Semiconductor's dominance is a single point of failures for phones, cars, and nearly all sophisticated chips in the global economy.
MISHJUN 20, 2021

Apple, Qualcomm, and Intel design chips, but when it comes to making them, the World Relies on One Chip Maker in Taiwan, Leaving Everyone Vulnerable.

Taiwan Semiconductor Manufacturing Co. TSM’s chips are everywhere, though most consumers don’t know it.

The company makes almost all of the world’s most sophisticated chips, and many of the simpler ones, too. They’re in billions of products with built-in electronics, including iPhones, personal computers and cars—all without any obvious sign they came from TSMC, which does the manufacturing for better-known companies that design them, like Apple Inc. and Qualcomm Inc.

Its technology is so advanced, Capital Economics said, that it now makes around 92% of the world’s most sophisticated chips, which have transistors that are less than one-thousandth the width of a human hair. Samsung Electronics Co. makes the rest. Most of the roughly 1.4 billion smartphone processors world-wide are made by TSMC.

While the U.S. still leads the world in chip design and intellectual property with homegrown giants like Intel Corp. , Nvidia Corp. and Qualcomm, it now accounts for only 12% of the world’s chip manufacturing, down from 37% in 1990, according to Boston Consulting Group.

Other countries would need to spend at least $30 billion a year for a minimum of five years “to have any reasonable chance of success” in catching up with TSMC and Samsung, wrote IC Insights, a research firm, in a recent report.

Dimitris Dotis, the Audi brand specialist at Audi Tysons Corner dealership in Virginia, summed up the situation to customers. “Almost all microchips that go into all new vehicles including Audi come from TSMC in Taiwan,” he wrote. “They expect bottlenecks in the supply chain to last through 2022.”

TSMC Eyes Expansion in Arizona

Trump promised TSMC $3 billion in incentives to build a factory in Arizona, but no funding was allocated.

The newest chip designs will still be made in Taiwan.

Reuters reports Chipmaker TSMC Eyeing Expansion of Planned Arizona Plant.

Taiwan Semiconductor Manufacturing Co Ltd is planning to build several more chipmaking factories in the U.S. state of Arizona beyond the one currently planned, three people familiar with the matter told Reuters.

TSMC, the world's largest contract chipmaker, announced in May 2020 it would build a $12 billion factory in Arizona, an apparent win by the Trump administration in its push to wrestle global tech supply chains back from China.

TSMC manufactures the bulk of its chips in Taiwan and has older chip facilities in China and the U.S. state of Washington.

The initial fab is relatively modest by industry standards, with a planned output of 20,000 wafers - each of which contains thousands of chips - every month using the company's most sophisticated 5 nanometre semiconductor manufacturing technology.

The Biden administration is preparing to spend tens of billions of dollars to support domestic chip manufacturing. Under existing legislation, foreign firms are eligible for those funds, but whether they will ultimately receive it is an open question.
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