securities.io, Dec. 30, 2024 –
The Semiconductor Leader
As electronics and microchips made their way into virtually every product, from washing machines to cameras and phones, their manufacturers became increasingly large and important companies.
The first dominant actors of the nascent tech industry were established in the USA, with companies like Intel (INTC +0%) and IBM (IBM -0.19%). Quickly after, the industry shifted toward Asia, with Japan and then Taiwan benefiting from the combination of high-quality labor and lower costs.
This shift over costs turned into a long-term advantage. Experience and accumulated R&D effort transformed the Asian chip foundries into giants, which today produce most of the global chip supply.
Besides almost the entire industry, one company dominates the most advanced chip production process: the Taiwan Semiconductor Manufacturing Company, or TSMC.
A State-Led Initiative
TSMC was founded in 1987, at the initiative of the Taiwanese government to build the country's chip industry from scratch. It was a spin-off from the government research institute ITRI (Industrial Technology Research Institute).
This was after industry leaders like Texas Instruments and Intel declined the opportunity, with only Philips willing to sign a joint venture and invest $58M & IPs in exchange for 27.5% in TSMC.
Today, the Taiwanese government still owns 6% of TSMC, and Philips would sell all its TSMC shares in 2008.