Sunday, September 25

The chip industry is facing an even bigger crisis: a war in Taiwan and the fall of TSMC


We are coming out of a crisis that has gripped the semiconductor industry for nearly two and a half years, and to a large extent continues to do so. And, surprisingly, this stage will seem like a joke, one in bad taste, if finally the conflict between China and Taiwan it flares up and they come to blows.

As we told you two days ago, Mark Liu, the general director of TSMC, assured during an interview with the American chain CNN that the company he directs would be forced to paralyze their factories (at least the ones it has on Taiwanese soil) due to the more than likely difficulty it would have in accessing the raw materials, chemicals, hardware components, and engineering tools it needs to sustain production.

However, this is not all. During his conversation with the CNN journalist, Liu assured that the stoppage of TSMC’s semiconductor production plants would represent a setback for the semiconductor industry. it would take a lot for him to recover.

It may seem exaggerated and predictable coming from someone with executive responsibility in this company, but in reality, it is not. and it’s not due to the privileged role that this company occupies in the global chip industry.

If TSMC falls, the semiconductor industry will falter

We can be sure of one thing: the messages that China, Taiwan and the United States have been sending since this conflict has intensified, coinciding with the visit to the Republic of China by Nancy Pelosi, the president of the United States House of Representatives, They have strong political interests.. And Mark Liu’s speech follows a strategy that seeks to exert international pressure to activate the mechanisms that stop China’s invasion of Taiwan.

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In any case, what is certain is that TSMC is currently the motor of the integrated circuit industry. The three factors that explain its relevance are the market share it currently has, its client portfolio, and, lastly, its technological capacity. As far as its presence in the semiconductor market is concerned, it has an overwhelming dominance over all its competitors.

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And it is that, according to Visual Capitalist monopolizes nothing less than 54% of the market. Far behind TSMC is Samsung, with 17%, and Intel hot on the heels of this South Korean company. And further behind are the Taiwanese UMC and the US GlobalFoundries, both with a 7% market share, and the Chinese SMIC, with 5%.

TSMC monopolizes no less than 54% of the semiconductor market. And no other company intimidates her, at least for now.

With regard to the portfolio of clients that TSMC currently has, we are interested in not forgetting that it manufactures integrated circuits for some of the largest technology companies on the planet, such as Apple, NVIDIA or Qualcomm. It even produces chips for other semiconductor manufacturers, including Intel. In any case, this is only a very small sample of a extensive client portfolio that any of its competitors would want for themselves.

The third factor is possibly the most important of the three: TSMC’s technological capacity. And the fact is that without it, this company would certainly not have the client portfolio that it has, nor would it hold the market share that it has held for many years. In the middle of last June, this company announced that in 2025 its 2nm photolithographic node will begin the production of large-scale integrated circuits.

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This integration process promises us chips 30% more efficient than those produced in the N3E node, which have not yet reached the market. Sounds really good. And we can be sure that TSMC’s ability to innovate will not peak there.

If we look back for a moment, we will see that the pace of technological development of this company is frenetic, and nothing invites us to foresee that it will stop. Just a hypothetical war between China and Taiwan I would screw up with all this effort. Let’s cross our fingers that it doesn’t happen now or ever.

Cover image: TSMC

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