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Strong earthquake in Taiwan: Will it cause a crisis in the semiconductor industry?


In a recent development, Taiwan Semiconductor Manufacturing Company (TSMC) has unveiled plans to manufacture cutting-edge 2nm chips at its new fab in Arizona’s semiconductor valley, USA. This groundbreaking move marks a significant leap forward for the semiconductor industry, holding immense potential for technological innovation and boosting economic security for the United States.

A Brief History of TSMC: The itan of the Semiconductor Industry

In 1987, Taiwan Semiconductor Manufacturing Company (TSMC) was founded by Morris Chang, a former executive at Texas Instruments. A decade later, the company listed on the Taiwan Stock Exchange, pioneering the concept of a pure-play foundry and establishing itself as the world’s first dedicated contract chipmaker.

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TSMC reigns supreme as the world’s largest contract chip manufacturer, holding over 50% of the market share (as of Q3 2023). It boasts the world’s most advanced chip fabrication plants, capable of producing the smallest chips in existence (with 2nm chips on the horizon). This remarkable achievement is the result of TSMC’s bold investments during the semiconductor industry downturn following the 2008 global financial crisis.

This industry giant plays an indispensable role in the global supply chain for electronic devices. Its chips are found in a vast array of smartphones, computers, tablets, cars, networking equipment, and other electronics. A disruption in TSMC’s chip supply can have severe consequences for global electronics manufacturing.

TSMC’s Dominance in the Semiconductor Market

Holding a commanding half of the global semiconductor market share, Taiwan Semiconductor Manufacturing Company (TSMC) stands as the premier chip supplier to tech giants like Apple, Qualcomm, Nvidia, AMD, and many more. The company plays a pivotal role in the global supply chain for electronic devices.

With over three decades of experience in the chipmaking industry, Taiwan Semiconductor Manufacturing Company boasts a world-class team of engineers and scientists, operating an extensive global network of manufacturing facilities across Taiwan, China, the United States, and Japan. This global scale enables the company to produce hundreds of millions of chips each month. TSMC is also recognized as a strategic company for Taiwan’s economy, receiving strong government support.

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– US provides massive $11.6 billion in support for TSMC’s Fab Construction

The US government has unveiled an $11.6 billion grant and loan package for TSMC, the world’s largest contract chipmaker from Taiwan. The aid aims to incentivize the company to invest in three advanced chip manufacturing plants in Arizona. This funding falls under the Chips and Science Act passed by the US Congress in 2022 to boost domestic semiconductor production.

The $11.6 billion support includes $6.6 billion in direct grants and $5 billion in loans, providing the opportunity for Taiwan Semiconductor Manufacturing Company to invest in three state-of-the-art fabs in Phoenix, Arizona. With this support, the global semiconductor giant will increase its total investment in Arizona from $40 billion to $65 billion. The project is expected to create 6,000 direct chipmaking jobs and 20,000 construction jobs.

TSMC is committed to completing and operationalizing the Arizona fabs. The first fab is expected to be operational by 2025, producing 4nm chips. The second fab is slated to manufacture 3nm and 2nm chips by 2028.

– Continued Expansion of Asian Manufacturing Plants

Taiwan Semiconductor Manufacturing Company remains committed to expanding its product lineup across its Asian manufacturing plants. The company plans to begin production of finished chips at its new fab in Japan by the end of 2024 and at a fab in Germany by the end of 2027. With subsidies from the Japanese and German governments, TSMC will establish joint ventures with customers to secure market stability.

TSMC’s ongoing efforts to expand market share and invest in product development underscore its unwavering position as the world’s leading semiconductor giant for the foreseeable future.