One company in Taiwan is essential to the entire global economy and it’s one of the main reasons why the world is so concerned about China invading Taiwan: and that one company is Taiwan Semiconductor Manufacturing, also known as TSMC.

Taiwan Semiconductor Manufacturing is the largest independent semiconductor foundry in the world and manufactures the most cutting edge semiconductor microchips in existence. And semiconductor chips are used everywhere in the modern economy – these microchips are what power everyone’s computers, phones, and the data centers that companies rely on. Semiconductor sales are estimated to grow to $1 trillion dollar in revenues a year by 2030.

So the fact that Taiwan Semiconductor Manufacturing is the largest semiconductor foundry in the world, makes this one company absolutely essential to the global economy. And when I say that TSMC is the largest, what I really mean is that it completely dominates the semiconductor foundry market. TSMC has a market share of approximately 54% and Taiwan as a country has an estimated 63% of the market.

Even more critically though, it’s estimated that Taiwan accounts for 90% of the manufacturing capacity of the world’s most advanced semiconductor chips. The way semiconductor chips work is that the more transistors that are able to be crammed into the chip, the more powerful the chip will be. These manufacturing improvements are described in terms of nanometers by the semiconductor industry. TSMC is one of only two companies in the world that currently has a 3nm process. This puts TSMC at the cutting edge of semiconductor manufacturing.

The extreme intricacy involved in manufacturing and the technological requirements is the reason Taiwan Semiconductor Manufacturing has such a foothold on the foundry market. A lot of the big name semiconductor companies that you may have heard of like Nvidia, AMD, Qualcomm, and Broadcom are what’s called fabless companies – fabless companies don’t actually manufacture the semiconductor chips they design. Instead, they outsource the fabrication of their semiconductor designs to foundries like TSMC. Even Apple outsources the manufacturing of its own semiconductor designs used in its products to TSMC. So all of the semiconductors from these major companies are primarily being manufactured by TSMC in Taiwan.

Because Taiwan Semiconductor Manufacturing is the most critical semiconductor company and semiconductors are the foundation of the digital economy, other countries are rightfully panicking about the thought of China invading Taiwan. Chinese control of TSMC could cut major western companies out of the semiconductor supply chain if China wanted to. This also presents a national security risk because semiconductors are used in national security systems. So China taking Taiwan would both instantly cripple other nation’s economies and jeopardize their national security.

This is why the US is trying to fund domestic semiconductor production and to bring more semiconductor manufacturing over to the US by building new foundries. The US passed the chips act in 2022 which will provide roughly $280 billion to boost domestic production of semiconductors.

Not everyone is thrilled about the sudden blitz the US is making to bring lots of semiconductor manufacturing online in the US. Taiwan has long viewed its semiconductor industry as a deterrent to a Chinese invasion and the Taiwanese president has called it the country's “Silicon shield”. The reasons for this are twofold: 1st, since China itself relies heavily on Taiwan for semiconductors, they have to be very cautious for several reasons. All of the semiconductor factories are on the west side of Taiwan where China is most likely to invade from. If these factories are damaged in any way due to invasion, China instantly loses access to tons of semiconductor production which is a massive risk China would be taking with an invasion. A failed invasion effort by China could instantly lead to Taiwan cutting China off from its chips as well.

The second prong of the silicon shield is that the US, EU, and Japan all rely on Taiwan for its semiconductor chips, the international community has an especially vested interest in preserving Taiwan’s independence from China in order to protect their own supply chains.

Timestamps:
0:00 How TSMC Powers the Entire Economy
1:25 TSMC's Dominance in the Semiconductor Industry
1:56 How TSMC Makes Semiconductors
4:53 TSMC's Technological Advantage and Clients
6:00 Why China and the US Care About Taiwan's Semiconductors
6:36 The US Chips Act
7:22 Taiwan's Silicon Shield Against China

Disclaimer: Opinions expressed in this video are my personal opinion and are for information and entertainment purposes only. It is not intended to be investment advice and you are responsible for doing research and making your own investment decisions. Seek a licensed professional for investment advice.

#taiwan #chinataiwan #tsmc

свернуть