Building the Future: TSMC’s Role in Advancing Technology and Supply Chains
In today's rapidly progressing technological world, the race to advance semiconductors has never been more crucial. As a key to future generations, semiconductors serve as a basis for smartphones and computers to medical and military equipment. As a frontrunner in this revolution, Taiwan Semiconductor Manufacturing Company Limited (TSMC) remains to serve as the headway in the semiconductor industry. TSMC's growth, including their expansion into the United States, is pivotal in propelling global semiconductor advancements and expanding supply.
Since its founding in 1987 by Morris Chang as the first company dedicated to the semiconductor industry, TSMC has experienced rapid growth, acting as an example to various industries seeking new ways to innovate and increase profits. Focusing on contract manufacturing, TSMC provides companies with cutting-edge technology without undergoing heavy production costs. Originating as a Taiwanese centralized company, expansion into the US and other countries has shown its role as a consumer-driven corporation in a fast-growing industry. Currently, TSMC produces a wide range of chips, including those used in high-performance computing, mobile devices, and automotive applications. Serving as the “brain” to many of the devices we use in everyday life, semiconductors, including those manufactured by TSMC, have been a fundamental aspect to the sustainability of all modern-day technology.
With the expansion, TSMC's first headquarters within the United States will be located in Arizona. Marking its largest greenfield project to date, the state-of-the-art development just outside of Phoenix will represent a $12 billion commitment to the establishment of a leading manufacturing base (Nguyen 2024). The new facility will serve as a systematic starting point to meet US consumer demands. In recent years, TSMC has accounted for 54% of total foundry revenue and has about an $85.13 billion market share. In 2020, the company had over $10 billion in Q1 revenue totals, with an expected $3 billion growth in the revenue of 2021 Q1. This year, the Q1 totals have exceeded projections, representing a 30% total increase in sales (Reuters 2024). As of September, the stock price has risen close to 10%, its highest increase since first joining the New York Stock Exchange in 1997 (The Fool 2024). In addition, the plant will produce various opportunities for those living in the campus as well as internationally. It is projected that over 21,000 jobs will be created, with 6,000 of those in the high-tech workforce. Moreover, the majority of the other anticipated employment opportunities will be for the construction industry, as well as tens of thousands more in indirect manufacturing. In turn, this will contribute to Arizona's growing reputation as a tech hub, fueling local economies and boosting the workforce
At the heart of TSMC’s success is the fabrication of some of the most sophisticated chips currently on the market. The demand for these chips will only climb as progressions like artificial intelligence (AI) continue to develop. TSMC’s chips contribute to faster data processing for AI, enhanced machine learning, and improved efficiency among the systems. AI companies such as OpenAI and Amazon Web Services (AWS) currently utilize TSMC's advanced chip technology for their systems (Bloomberg 2024). Beyond AI, TSMC works with ubiquitous technology companies like Apple, who is a leader in the mainstream use of semiconductor chips. TSMC and Apple are approaching their tenth year working together, and Apple has signed to be the first customer of the Arizona plant with the continued production of the A16 chips (Hardwick 2024). These chips, first seen in the iPhone 14, are likely to be the basis of future models in the upcoming years. With applications extending beyond AI and other handheld technologies, TSMC's chips will be used for other industries. For instance, in the automotive industry, cars have become increasingly reliant on semiconductor technology for computing and safety features. During the COVID-19 pandemic, the automotive industry faced harsh realities as production halted and the semiconductor supply became scarce. The new domestic TSMC production site presents a solution to these supply scarcities, and likely indicates an augmented future reliance upon the technology as access to it increases.
The procedure of microchip manufacturing is incredibly complex, requiring the integration of circuits from silicon wafers. While the process is often binned by six core steps, it can take anywhere from two hundred to over a thousand steps to create a semiconductor. Depending on chip sophistication, this process can take weeks to months to complete. While this mainly refers to 10 and 7 nanometer (nm) nodes, TSMC is developing breakthrough 3 nm nodes, which would greatly improve computing efficiency and performance by making the chips smaller, faster, and more power-efficient, allowing devices to run more advanced applications like AI and machine learning without using as much energy (EconoTimes 2024). However, the development to manufacturing timeline is much longer and is somewhat unpredictable, taking anywhere from 5 to 10 years.
In the midst of this significant expansion, TSMC has also encountered various setbacks. Recent hurricanes and tropical storms such as Hurricane Helene and Hurricane Beryl have had a heavy impact on resource attainment. The only two mines which currently produce high quality raw quartz, an essential part of semiconductor manufacturing, are both located in South Carolina. Without these mines, the semiconductor industry would face collapse, leading to an economic crisis, as numerous aspects of daily life rely on these essential components (Bloomberg 2024). In addition to natural disasters, the southern storms present a threat to the development of the Arizona plant. Samsung and other TSMC competitors are building similar plants. The race for developing cutting edge products is high stakes, as research and development costs are very expensive. Likewise, finding a workforce that has proper knowledge of these components may take time, delaying production and profit opportunities.
With their advanced technology and investments in production, there is no doubt that TSMC holds a definitive lead in the semiconductor market. However, the pressure will only continue to build as competitors such as Samsung, Nvidia, and Intel amplify efforts to meet the fierce demand from consumers. TSMC’s success is dependent upon their ability to innovate, yield efficient cost management strategies, and continue to build long-lasting partnerships with industry leaders. As the field develops, TSMC not only faces barriers but a path to shape the future of technology.
References
TSMC. “TSMC Arizona.” Taiwan Semiconductor Manufacturing Company Limited. Accessed October 28, 2024. https://www.tsmc.com/static/abouttsmcaz/index.htm.
Bloomberg. “TSMC, Samsung, Other Chip Makers Monitor Quartz Supply after Hurricane Shut Mines.” South China Morning Post, October 3, 2024. https://www.scmp.com/tech/big-tech/article/3280937/tsmc-samsung-other-major-chip-makers-monitor-quartz-supply-after-hurricane-shut-mines.
Hardwick, Tim. “Apple’s A16 Chips Now Being Manufactured in Arizona TSMC Plant.” MacRumors, September 18, 2024. https://www.macrumors.com/2024/09/18/apple-a16-chips-manufactured-arizona-tsmc-plant/.
Reuters. “TSMC’s Third-Quarter Profit Handily Beats Forecasts on AI Boom.” South China Morning Post, October 17, 2024. https://www.scmp.com/tech/tech-trends/article/3282714/tsmcs-third-quarter-profit-handily-beats-forecasts-ai-boom.
The Fool. “Will TSMC Be Worth More Than Apple by 2030?” The Motley Fool, August 31, 2024.https://www.fool.com/investing/2024/08/31/will-tsmc-be-worth-more-than-apple-by-2030/.