Inside TSMC
Behind the scenes at the world's near-monopolist leading edge foundry
“When I joined TSMC in 2018, that’s when Morris Chang, the founder, was about to retire. The new chairman, Mark Liu, came in and he set a very aggressive goal back then, ‘TSMC will grow from a $35 billion company in terms of revenue to $100 billion by 2030’. In the room, we had about 100 executives in our quarterly meeting, everybody looked at each other, ‘we don’t believe that, there's no way’. But it looks like TSMC is going to reach $100 billion in revenue by next year. That’s five years ahead of schedule.”
— Former Director at both TSMC and Intel
Introduction, TSMC takes the lead
For decades, Intel was building the leading fabs in the industry. Even only recently, it was conventional wisdom that Intel was two to three years ahead of all competition such as TSMC and Samsung. Intel has been a true pioneer when it comes to transistor architectures, such as with the high-k metal gate in 2003 and FinFETs in 2011. However, things took a turn for the worst as from the 2016 period, with the company’s new 10nm node seeing strong delays. Intel had set over ambitious density targets and struggled to reach these by multiple patterning techniques with ASML’s immersion tools. Problems kept compounding from there on, with the semiconductor giant subsequently also struggling to introduce ASML’s new EUV tools at 7nm.
TSMC on the other hand, moved swiftly to 10nm and 7nm afterwards, successfully inserting EUV for high volume production on the enhanced version of 7nm in 2019 i.e. 7+. And in the following years, TSMC kept steaming ahead with the successful introductions of 5 and 3nm in a two year rhythm. Whereas also Samsung successfully introduced these nodes, the company’s process technologies struggled with low yields, especially at 3nm where their yields are known to be ‘terrible’, resulting in all large foundry customers such as Qualcomm, Tesla and Google to make the move to TSMC. The Taiwanese company has become a near monopolist at the leading edge of semiconductors in the foundry market.
A former director at both TSMC and Intel explains what this means for the business:
“TSMC is the arms dealer of the technology world. They provide the arsenal for customers, allowing them to compete. But no matter who wins, they’re going to come to TSMC to have their chips manufactured. If Apple is not doing so well, Qualcomm is doing well, and all that silicon comes from TSMC. Moore’s Law is a winner takes all business. If you’re a leader, you’ll take everything, but if you’re a follower, it’s very difficult. By the time you finish developing the technology, the leading node has moved on to the next generation. Intel was benefiting that for many, many years until one day, they dropped the ball. It took TSMC twenty years to catch up, but now, TSMC gets all the customers, charges the premium and gets those profit margins.”
In this article, we’ll go behind the scenes at TSMC and talk to a series of former vice presidents, directors and engineers at the company, as well as from their suppliers such as Applied Materials and competitors such as Intel. We’ll delve into topics such as TSMC’s competitive advantage, manufacturing and R&D know-how and practices, the company’s culture, dealings with suppliers and customers, pricing and capacity agreements, fab strategy, and much more.