TSMC is one of its shadow giants. The company based on the island of Taiwan builds computer chips for Silicon Valley giants. It is the small hands, unknown to the general public, who are behind the success of the iPhone and so many others.
The specificity that has made TSMC successful is its role as a manufacturer. The firm does not develop its own technology for its chips, it only builds other people’s chips. A tedious and costly step, which was very quickly outsourced during the explosion of IT in the 90s.
Since then, the company, 48% owned by the Taiwanese government, has worked for others. It nevertheless has unique skills in the world, with ever finer chips.
A world leader in semiconductor manufacturing for around ten years, TSMC is one of the jewels in the Taiwanese crown. It is also a weighty argument in geopolitical negotiations between (mainland) China and the United States.
The giants of Silicon Valley need TSMC to sustain their business, on the other hand, China does not hide its military intentions on Taiwan. With Xi Jinping in Beijing, and the return of Donald Trump to the White House, relations between the two giants could become strained again.
TSMC used as a weapon by Taiwan
At the same time, China is increasing military maneuvers and intimidation around Taiwan. To protect itself and not “arm the enemy”, Taiwan has therefore decided to end trade in semiconductors.
In a decision made by the TSMC board of directors, the company decided to end exports of the latest generation chips for Chinese companies. The objective of the maneuver is barely veiled, to prevent potential adversaries from seizing key technology.
It is the newspaper “The Financial Times” which reveals the information. He ensures that chips less than 7 nanometers (technology acquired by TSMC in 2018) will no longer be sold to the brand’s Chinese partners.
TSMC an unknown giant
Although the name TSMC is not known to the general public, the company is nevertheless one of the big names in the IT world. 11th largest stock market valuation on the planet according to the Wall Street Journal, TSMC shares are trading around $190 today, it was around $90 just 18 months ago.
In 2021, the company generated 65% of revenues linked to the sale of computer chips, at the same time it declared a turnover of 61 billion dollars for the year 2023. In addition to these sums which make the company is a real goose that lays golden eggs for Taiwan, it is above all its technology and its know-how that is of interest.
Especially since the competition is quite far away. Intel, the Taiwanese’s main adversary, lost 50% of its market valuation in 2023. If the promises of Pat Gelsinger, Intel’s CEO, have succeeded in restoring confidence among investors, TSMC remains one step ahead.
The Arizona Question
Taiwan has a special relationship with the United States. Both countries need each other, but for very different reasons. In order to strengthen this link, TSMC had planned to open a factory on American soil, in Arizona. If this project was viewed very favorably by Donald Trump in particular, TSMC seems to have gone back on its word in its last days.
The brand ensures that its latest generation chips will only be produced on Taiwanese soil, thus limiting the risks of information leaks, but also ensuring the stability of the island’s “Silicon Shield”. With unique factories in the world, like those of TSMC, Taiwan strategically protects itself from a massive bombardment of the island.
