Semiconductor shines brightly as the keyword of the decade. The island’s relations with China have been complex and sometimes tenuous, and also important at the moment is the semiconductor supply chain of which Taiwan plays a critical role. The importance of semiconductors becomes apparent given the very position held by Taiwan over the total market. In the fourth quarter of 2023, Taiwan Semiconductor Manufacturing Corporation alone commands 61% of the global market share in professional foundry services, and the entire Taiwanese foundry adds up to 68%. Let us decode why is there Taiwan’s dominance in semiconductors.
Chronology
America was at the beginning of its own semiconductor revolution back in the early 1970s. By the end of that decade, however, a team of bright young electrical engineers from Taiwan launched the Industrial Technology Research Institute in Hsinchu. Its first commercial effort was United Microelectronics Corporation (UMC). It successfully launched in 1980. Thus began the groundwork for what would become the world’s most notable chip hub in the tiny city of Hsinchu south of Taipei, soon to find itself in the global limelight.
In seven years, TSMC was given birth, and the former Texas Instruments master, Morris Chang, came on board at the helm for the organization. Chang is now popularly known as the father of Taiwan’s chip sector. He led TSMC with a new flavor.
Major Reason for Success
TSMC actually is the world’s first dedicated “contract manufacturer”-a company that does chip manufacturing but not design. With this innovation in the supply chain, semiconductor engineering companies weren’t limited in their own fabrication capacity anymore as they could rely on TSMC to manufacture whatever chip they designed. This turned out to be an extremely lucrative business model.
The success of Taiwan has led to the emergence of Japan and South Korea setting up similar firms. The three collectively account for about 80% of global fabrication capacity. Furthermore, Taiwan has now become a qualitative leader in the foundry market, as TSMC is one of only two companies in the world (the other being South Korea’s Samsung) with the capacity to currently manufacture the most advanced 5-nanometer semiconductors.
Other Companies
The semiconductor industry has grown quite large, which is due mainly to TSMC’s encouragement of fabless design houses. During this period, companies such as ASE Technology came into being, which offered professional testing and packaging OEM services. Moreover, growth has occurred among various other formations and flocking of supportive services under the semiconductor’s industry umbrella. In fact, the force of Taiwan’s semiconductor capability lies in a vast industrial cluster rather than one or two companies. It is a very good showing of how well this ecosystem is able to support and sustain itself in new technologies in the field.
The resource-focused engineering workforce in Taiwan does not disclose its specific influences or three decades of expertise. Their steadfastness enables fabrications to test operating variations through mileage until achieving optimal operations. Taiwan’s Dominance in Semiconductors is truly an inspiring story for every startup right there. You can be such a startup like TSMC and add India into the list. All the best!
