This Taiwanese company supplies the world with chips – and is therefore sought after by the US and China


A TSMC factory in Nanjing, one of two locations in China. The country is highly dependent on the Taiwanese for the production of advanced chips.Picture AFP

Intel inside – in the past, everyone who bought a computer was told in advertisements that it had to contain an Intel processor. The American manufacturer made the heart of modern computers, and everyone was allowed to know it. How different it is now. Connoisseurs may remember that there is a Bionic A15 chip in their latest iPhone 13, but not who the manufacturer is. It’s not Apple. Apple designs its own chips, but they are assembled elsewhere. In Taiwan at Taiwan Semiconductor Manufacturing Company (TSMC).

Last week, Nancy Pelosi, Speaker of the US House of Representatives, made her much-discussed surprise visit to Taiwan. Part of the condensed program was also a lunch with Mark Liu, CEO of the largest chip maker in the world, TSMC. Logical, because TSMC plays a role on the international geopolitical chessboard.

The term ‘biggest’ is not an exaggeration. Depending on the definition, the percentages are different, but the result is impressive in all cases. According to one calculation, TSMC (annual revenue: 56 billion euros) controls more than half of the total global chip manufacturing market, while another puts percentages as high as 90 percent. The latter then applies when installing advanced chips. These are used, for example, in modern smartphones.

Indispensable

It’s simple: the world can no longer do without chips. No cars, refrigerators, computers, telephones, military aircraft or cash registers without chips. And TSMC is playing a leading role in this. There are quite a few chip manufacturers worldwide, but there has been an acute shortage since the corona pandemic. Besides, hardly anyone is able to make advanced chips. These are chips that use an extremely large number of transistors on a minimal surface.

TSMC can do that, as can the Korean Samsung, for example. Incidentally, not without Dutch help. Both manufacturers are customers of Veldhoven-based ASML, which supplies the very expensive high-tech machines for manufacturing chips. No TSMC without ASML, and no chips for your latest iPhone without TSMC.

Surprisingly, both TSMC and ASML have Philips roots. ASML was once a subsidiary of Philips, while the people of Eindhoven stood at the cradle of TSMC in 1987. At that time, the Taiwanese government had the visionary eye to build a modern chip factory that would produce on behalf of other parties, which was a revolutionary idea at the time. Philips invested and acquired 28 percent of the shares. It later grew to no less than 38 percent.

Philips sold its last block of 383 million shares in 2008, accompanied by the dry comment: “As a result of this sale, Philips no longer owns an interest in TSMC.” Of course, it is easy to laugh at decisions made in retrospect, but the calculations are no less painful. Philips is currently worth around 17 billion euros, while the value of the former troubled subsidiary ASML is 229 billion. TSMC is worth a lot more at around $445 billion. It can be.

World power

TSMC’s importance goes far beyond bare numbers. ‘Those who can make advanced chips have world power’, argued Bram Nauta (Professor of Electrical Engineering at the University of Twente) two years ago. de Volkskrant. The escalating conflict between the US and China – Trump blacklisted 100 Chinese technology companies – led to serious problems for Huawei as the manufacturer ran out of chips. It was then that it became crystal clear that China had forgotten an essential part of its technology strategy: the production of advanced chips. There are several Chinese chip factories, but they cannot do what TSMC or Samsung can do.

Not only is China sensitively dependent on the Taiwanese, the US is too. This is precisely the reason why the government there is now providing a large sum of money to ensure that production there also gets underway (again). Incidentally, both TSMC and Samsung already have factories in the USA.

China is also trying to build ultra-modern factories with investment, but establishing its own chip industry is a matter of very long breathing. There simply isn’t that time. “China does not have a plan B”, concluded Professor Nauta already two years ago. “Or, well, invade Taiwan.” This scenario has not become less likely in recent months. This makes TSMC not only an economic but also a geopolitical factor of importance.

Battle at the nanometer

The smaller the distance between the lines on the silicon wafer, the more powerful the chip. It is in terms of nanometers or one millionth of a millimeter. Moore’s Law states that the number of transistors per chip doubles every two years. Both TSMC and Samsung (far from number 2 in the world) started the production of so-called 5-nm chips two years ago. And recently, Samsung proudly announced that it will make 3nm chips. It is still unclear whether this will actually be in mass production: major customers have yet to report.

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