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Then there's electronic design automation companies such as Cadence and Synopsys that write the software used to design chips. Some, such as Arm and MIPS, focus on IP and architecture, providing the core building blocks to design chips. Now, each major step of chipmaking is often handled by a separate company. "If you were a smart designer, you didn't have to have billions of dollars and a fab behind you for the first time with the emergence of TSM," Rolland said. Intel, for example, still designs and makes its own chips, but it's fallen behind Samsung and TSMC in recent years and now relies on TSMC to make some of its chips. It's become nearly impossible for even the biggest chip companies - Intel, Nvidia, Broadcom, Qualcomm, AMD - to do it all and keep up with the most advanced tech. Analysts say building a fab today takes at least two years and $10 billion.
If you get it off the ground, it can't scale.'"īut as chips got more complex, manufacturing them became an enormous undertaking. "When Morris went out to get funding, he went to many named companies that you know, and they told them, 'Morris, your idea won't get off the ground. A legendary saying in the industry back then was "Real men have fabs." When he founded TSMC in 1987, giants such as Intel and Texas Instruments took pride in designing and making their own chips. "When you're just focused on one thing, you do one thing really well," said Cassidy, who joined TSMC 23 years ago after what he describes as a fascinating hourslong meeting with Chang.Ĭhang bet big on a need that didn't exist yet. His idea: Focus only on manufacturing - what's now known as a pure-play foundry.
There, the government asked him to create a Taiwanese semiconductor company that would become a world leader. Born in China and educated at Harvard, MIT and Stanford, Chang moved to Taiwan after 25 years at Texas Instruments. When Morris Chang first proposed the idea for TSMC in the 1980s, investors were skeptical. And Apple is likely to slash its 2021 production targets for the iPhone 13, with orders for some models delayed by more than a month. Carmakers including GM and Toyota have paused production at some plants. All types of chips have been impacted by the shortage. Cars often use less-advanced 28- to 40-nanometer chips. That becomes a matter of national importance for the United States, but not only the United States, but the Western world," said Christopher Rolland, Susquehanna's senior semiconductor analyst.Īlong with cutting edge 3- and 5-nanometer chips, TSMC also makes larger chips for products such as electric toothbrushes and coffeemakers.
"It's become almost a monopoly at the leading edge, and all of those manufacturing operations, for the most part, are out of Taiwan, Hsinchu. When it comes to the most advanced chips used in the latest iPhones, supercomputers and automotive AI, TSMC is responsible for 92% of production while Samsung is responsible for the other 8%, according to research group Capital Economics. TSMC alone was responsible for 24% of the world's semiconductor output in 2020, up from 21% in 2019, according to the company. Their success brings all the business that we could ever hope for," Cassidy said. We let our products speak for themselves. So Apple gets all the accolades when a new phone comes out," said Joanne Itow, managing director of manufacturing at Semico Research. "But they remain sort of in the background, in terms of end markets.
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TSMC is also Apple's exclusive provider of the most advanced chips inside every iPhone currently on the market and most Mac computers. Earlier this month, it announced plans for a new factory in Japan, where it will produce chips with older technologies, for things like household devices and certain car components. TSMC makes key components for everything from cellphones to F-35 fighter jets to NASA's Perseverance Rover mission to Mars. Cassidy is TSMC's chief strategy officer and the president and CEO of TSMC's project in Arizona. They'll be used in smartphones," Rick Cassidy told CNBC. "These are parts that are going to be used in lots of different places: CPUs, GPUs, IPUs, etc. The company says it will produce 20,000 wafers each month. CNBC got an exclusive tour of the $12 billion fabrication plant, or fab, in Phoenix, Arizona, where TSMC will start making 5-nanometer chips in 2024.