SEMICONDUCTORS The power of Taiwan's chip industry
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Semiconductors are crucial to the technology that powers the modern world. For decades, Taiwan has stood as the world’s leading manufacturer of semiconductor chips. We take a closer look at the Taiwanese semiconductor manufacturing industry and examine just how and why Taiwan became such as powerhouse.

Semiconductors, or microchips as they are commonly called, are found in almost every device you can think of. From microwaves to mobile phones to laptop computers, children’s toys, automobiles, medical devices, and military equipment. The vast majority of machines that power our modern world contain semiconductor chips. Without them, the innovations and revolutionary technological breakthroughs of our current digitized age simply would not have been possible.
When it comes to the semiconductor manufacturing industry, one country has stood above all others: Taiwan, the world’s biggest producer of semiconductor chips. How did Taiwan achieve such a stranglehold over the global semiconductor manufacturing industry? The emergence of Taiwan as a semiconductor behemoth is mostly due to the success of just one company.
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TSMC - The giant of Taiwanese semiconductor manufacturing
Since the mid-80s, Taiwan has held an almost total monopoly on the contract manufacturing of semiconductors. In total, Taiwanese semiconductor manufacturing firms accumulated US$175 billion in revenue in 2022. Of the firms that make up the Taiwanese semiconductor industry, Taiwan Semiconductor Manufacturing Limited (TSMC) is by far the largest and the most important. The world’s biggest manufacturer of semiconductors, TSMC is also one of the ten largest companies in the world. Recent figures have placed the market cap value of TSMC between US$452.74 billion and US$468 billion.
Check this interactive graphic to get five ineresting facts about the semiconductor manufacturer TSMC at a glance:
The history of TSMC
TSMC was founded by Morris Chang a Taiwanese American in 1987. Often referred to as the ‘father of semiconductors’, Chang was born in China and moved to the USA to study first at Harvard and then MIT. After getting experience in the semiconductor industry by working at Texas Instruments, Chang relocated to Taiwan to capitalize on the vast number of Western companies that were outsourcing their manufacturing needs to Asia.
In 1990 TSMC opened its first fully owned semiconductor fabrication foundry and opened Taiwan’s first eight-inch semiconductor fabrication foundry in 1993. The company opened a US fab foundry in 1997 and was able to reach a one million wafer capacity. That same year, TSMC became the first Taiwanese firm to be listed on the New York Stock Exchange.
The company pioneered seven-nanometer and five-nanometer production processes for semiconductor manufacturing and was the first firm to use extreme ultraviolet lithography in semiconductor fabrication processes. Now headquartered in Hsinchu Science Park in Hsinchu, Taiwan, TSMC has the estimated global capacity to produce thirteen million 300 mm-equivalent wafers per year.
TSMC now has subsidiaries in China, the United States, and Singapore and offices in China, Europe, India, Japan, South Korea, and the United States. It has over 65,000 employees and accounts for 54 % of the global semiconductor market share. TSMC is the biggest supplier of semiconductors that are below 10 nanometers.
Accomplished tech investor and management consultant for TSMC Bill Tai was recently quoted as saying that “TSMC is the biggest chip foundry on the planet with silicon in most of the devices in your house and your life.”
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The top chip manufacturers in Taiwan
Rank | Company | Approx. Market Value |
1. | TSMC | US$468 |
2. | ASE Technology | US$12.5 |
3. | AU Optronics | US$10.5 |
4. | MediaTek | US$8.5 |
5. | LITE-ON Technology | US$7.5 |
6. | United Microelectronics | US$5.0 |
7. | Nanya Technology | US$3.0 |
8. | SPIL | US$2.8 |
9. | EDOM Technology | US$2.7 |
10. | Sino-American Silicon Products | US$2.4 |
Can any other countries rival the Taiwanese microchip industry?
In terms of worldwide market share, the only other company that comes close to TSMC is South Korea’s Samsung. At first glance, it may seem that the lead TSMC has on Samsung is unassailable, since TSMC accounts for roughly 54 % of the market share while Samsung only has 17 %, however, it is worth noting that Samsung has only been producing semiconductors since 2017. The rapid rise of Samsung in the global market for advanced semiconductors that are less than 10 nanometers wide is impressive.
The United States has invested significant capital into becoming a player in the semiconductor market in an attempt to free itself from its reliance on Asian-manufactured chips. According to recent figures, US company Global Foundries reached the fourth position among the top global semiconductor manufacturers. Global Foundries has 14 facilities worldwide with approximately 15,000 employees. The US continues to invest in its semiconductor industry with President Biden signing the CHIPS and Science Act in 2022 which will inject US$52.7 billion into semiconductor research and development to secure its supply of microchips for the future.
China is a major consumer of semiconductors and produces significant amounts of chips itself with the Semiconductor Manufacturing International Corporation (SMIC) and the Hua Hong Semiconductor Manufacturing Corporation (HHGrace) accounting for 5% and 1% of worldwide microchip production respectively. China has invested a significant amount of money into its semiconductor industry and managed to keep production levels high during the Covid19 coronavirus lockdown which caused a global chip shortage in 2020 and 2921. However, the blacklisting of Chinese firms by the US and other western states as well as concerns about the quality of output and the viability of Chinese semiconductor firms in general have continued to hamper the growth of the industry.
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The main consumer markets for Taiwanese semiconductor chips
By far the largest client for TSMC’s semiconductors is Apple, followed by other US-based tech giants such as AMD, Intel, NVIDIA, Qualcomm, and Broadcom. This positions the United States as the overall biggest consumer of Taiwanese microchips. An estimated 65 % of TSMC’s annual revenue is generated by North American clients.
On a global scale, however, China is by far the biggest importer of semiconductors. Even though the number of semiconductors imported by China fell by 15 % during 2022, it still ranks as the world’s biggest importer of chips with an estimated 538.4 billion units purchased during 2022.
The state of the Taiwanese chip industry labor market
At the time of writing, the demand for Taiwanese-manufactured semiconductors is booming. However, it is not all good news for Taiwanese semiconductor manufacturers. The industry is currently experiencing a severe shortage of talent and desperately needs power electronics engineering experts. Reports show that the Taiwanese semiconductor industry had a shortfall of 35,000 people during the first quarter of 2022. This is an almost 40 % increase from the previous year. The shortage of experienced engineers is due to the aggressive expansion of TSMC and other Taiwanese microchip manufacturers.
Part of the problem is that Taiwanese firms are still reluctant to employ women, so while 25 % of Taiwanese graduates have diplomas in engineering only 25 % manage to find work. The situation is slowly improving with women now accounting for 44 % of new hires in the industry. This change, unfortunately, is not enough to fill the immense number of positions that are now open (read also our article about achievements of women in electrical and electronics engineering).
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Another factor causing the talent shortage is that countries like the US, China, Japan, and India are all investing heavily in expanding their semiconductor industries. Large companies such as Google and Alibaba are luring talented engineers away from careers in Taiwan’s chip industry. With the average monthly salary of a Taiwanese semiconductor worker sitting at just US$1688, it’s not difficult to see where the difficulties are.
Taiwan also has stringent labor laws that make it hard for foreigners to find employment in Taiwan's chip industry. The Taiwanese government is currently looking at ways to increase wages and loosen visa requirements to attract both domestic and international talent.
Why is Taiwan the world’s leading chip manufacturer?
The global dominance of TSMC seems to be unassailable. But why is this the case? How did Taiwan become such a microchip monster? Part of the reason goes back to the very early years of TSMC. The Taiwanese government wisely injected massive amounts of capital into growing the company. Smart decisions by TSMC’s leaders also helped to secure its position just as the semiconductor industry started to boom. Many US companies outsourced their microchip fabrication needs to TSMC, giving the company a huge advantage over its competitors.
There is also the work culture of Taiwan. Simon Wang the vice president of chip manufacturer Macronix was quoted as saying that “We get 15 %better output than anywhere else because of our culture of having MScs and BScs working 24 hours a day even on the graveyard shift. The workforce is always pushing for output. Our equipment utilization is much better than anywhere else.” The Lean management style implemented by TSMC has also resulted in the company being able to be more agile and innovative in its production methods than its competitors.
As the talent shortage grows alongside increased demand for advanced semiconductors along with major consumers such as the United States and China seeking to become self-sufficient, can Taiwan maintain its position as the number one semiconductor manufacturer in the world? For now, it would seem so, but the coming years could prove to be challenging for TSMC and Taiwan’s other semiconductor giants.
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