TSMC: Global chip champion in a hot spot

0
128

Russian gas can be replaced, but not the semiconductors from Taiwan's chip manufacturer TSMC. Because TSMC dominates the global semiconductor market like no other company.

Logo of the chip manufacturer TSMC

It is anything but a coincidence that Nancy Pelosi also meets Mark Liu during her visit to Taiwan. He is the boss of the most valuable company in the democratic island republic, the Taiwan Semiconductor Manufacturing Company (TSMC). And with that, Liu pulls the strings for supplying the world economy with semiconductors: from high-quality chips for the aerospace industry to mass-produced goods for the electronic control of cars or refrigerators.

If chip production falters in Taiwan's semiconductor metropolis Hsichnu on the north-west coast of the island republic, then at some point in Germany – on the other side of the world – car manufacturers will have to stop their assembly lines and send employees on short-time work.

Beusch in Taipei: Nancy Peolosi and Taiwan's President Tsai Ing-wen

To the top in 30 years

In the duty-free zone around the city of Hsinchu, which has fewer than 500,000 inhabitants, the semiconductor industry has been the focus since the 1980s. Here, less than 150 kilometers from mainland China, are two of the island's most important universities, which train professionals for the companies in the Hsinchu Science Park. The optical industry is represented here, as are a number of Taiwan's solar companies. However, the heart is formed by the 20 semiconductor manufacturers who produce chips for the digital megatrends of the global economy. From here, the world's two largest contract manufacturers for semiconductors, TSMC and UMC, supply the world with their high-tech products.

With around 65,000 employees, TSMC is the undisputed top dog – not only in Taiwan, but worldwide. TSMC manufactures more than 10,000 different products, they set the pace in the digital world.

Unknown and yet systemically relevant

The company logo is not visible on any of the products. Because TSMC is a so-called foundry, which means 'foundry' in German. They are contract manufacturers who produce high-quality semiconductors for Apple and other high-tech corporations. Because many of the best-known high-tech companies in the world are “fabless”, i.e. 'without (their own) factory' and devote their energy entirely to the development and design of the semiconductors. The chips are then produced in a foundry such as TSMC.

Confident announcement

Mark Liu leads this extremely important company that most people have never heard of. And just before Pelosi's visit to Taiwan, the TSMC chief told CNN that a Chinese invasion would halt chip production at TSMC's factories.

TSMC boss Mark Liu, here at a performance in 2020

In one of his rare interviews, which aired Monday, the TSMC chief confidently stated, “No one can control TSMC by force.” If military force were used or there was an invasion, “a TSMC factory would become inoperable,” Liu said, without further exploring what exactly is behind it. Just this much: “These are very highly developed production facilities that depend on real-time connections with the outside world, with Europe, Japan, with the USA.”

Dominating the market like no other company

TSMC controls more than half of the global semiconductor market. Customers are actually everyone who has rank and name in the global semiconductor industry: In addition to Apple and the chip specialist for mobile communications, Qualcomm, the German semiconductor champion Infineon also has its products manufactured in Taiwan.

The US heavyweights Intel and Broadcom have the semiconductors they develop produced by TSMC, as does the US specialist for graphics processors Nvidia.  All technological heavyweights involved in current mega trends such as digitization, artificial intelligence or autonomous driving are dependent on the semiconductor specialists from the city of Hsinchu in Taiwan.

“They have developed a system-relevant position ” Peter Fintl, semiconductor expert at the consulting firm Capgemini, is quoted as saying in the Handelsblatt. TSMC is also a world leader in manufacturing processes for high-end chips – for example for the aerospace and defense industries.

In the USA, semiconductors from the TSMC chip forge are installed in F-35 fighter jets or in the Javelin anti-tank weapon system, with which the Ukraine was able to disable Russian tanks. In addition, TSMC components power supercomputers at US National Laboratories that conduct cutting-edge research of national interest to the US.

Not just cutting-edge technology

Because the specialists from Taiwan also produce less sophisticated chips for the automotive industry, the global industry is particularly dependent on undisturbed production at TSCM. No wonder alarm bells ring in the rest of the world when Beijing threatens to invade and incorporate Taiwan into the People's Republic.

A lot has happened since US President Donald Trump increased the pressure on Asian high-tech companies to set up production facilities in the USA. A new TSMC chip factory will be built in Arizona by 2024. Cost point: 12 billion US dollars. From the first quarter of 2024, the contract manufacturers from Taiwan want to produce semiconductors for US customers such as Apple, Nvidia or Qualcomm near Phoenix.

It is not TSMC's first location in the USA. The company already produces wafers, wafer-thin discs, on which the integrated circuits, the microchips, are manufactured in plants on the west coast. TSCM has research centers in Texas for processor design.

More production in USA and Europe

According to information from the Washington Post, the conversation with Pelosi is also about the Chips and Science Act that has just been passed by the US Congress. The USA wants to support new chip factories on American soil with a total of 52 billion dollars. However, the lavish subsidies are only available to manufacturers who ensure that particularly sensitive chip technology is not produced in the People's Republic. Because no other country has been striving so hard in years to acquire the know-how for the production of high-end chips in order to be able to keep up with the West in armaments or aerospace and then to overtake it technologically.

In an interview with the Welt television channel, the China expert and DW columnist Alexander Görlach from the University of Oxford put it in a nutshell: “China is interested in Taiwan's semiconductor production industry, because China has the rare earths and Taiwan has the technology and the know-how.” According to Görlach, that is one of the main reasons why Germany and the USA cannot simply stand by and watch while Taiwan is taken over by the People's Republic. “Because then no car will roll off the assembly line if the chips don't come from Taiwan.”

< p>Computer animation of Intel's new chip factory in Magdeburg

Europe's semiconductor program

The EU is also working to do more for its independence from chip producers and plans to do more for its own semiconductor industry. With its European Chips Act, the EU Commission wants to support the chip industry with public funds amounting to 43 billion euros. The goal: Europe's share of global chip production is to be doubled from almost ten to 20 percent by 2030. The planned settlement of a huge chip factory by the US company Intel in Magdeburg (Saxony-Anhalt state) is a step on this path.

Until then, nobody can avoid Taiwan: because here will be According to the US Semiconductor Industry Association, more than 90 percent of the high-end chips produced worldwide are manufactured – and TSMC has by far the largest share of this.

Mark Liu is known for his understatement. When asked why China couldn't produce chips of the same high quality as Taiwan, despite government subsidies worth billions, the TSMC boss on CNN replied with a smile: “Oh, they can, just a few years later than us.”< /p>