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TechExec Week 23 - Friday Edition
(Total read time: 3 minutes)
Hey there,
Welcome to Week 23 of TechExec - the newsletter that turbocharges your growth to become a Tech Executive!
As always, we are sharing a new set of BLTs this week
💼 B - a Business concept / theory / story
💝 L - a lifestyle advice
🤖 T - a Tech explainer
Here is the schedule:
Monday —>💼 B - a Business concept / theory / story
Wednesday —> 💝 L - a lifestyle advice
Friday —> 🤖 T - a Tech explainer
This week we covered Search Funds on Monday and Eat The Frog on Wednesday.
Today’s Tech Explainer is on TSMC!
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Today’s post is sponsored by the Money Machine Newsletter
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💼 T - TSMC
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Taiwan Semiconductor Manufacturing Company, or TSMC, is a name that might not ring a bell for the average person, but it's a giant in the technology world. Founded in 1987 by Dr. Morris Chang, TSMC was created with the unique idea of being a dedicated silicon foundry. This was a revolutionary concept at the time. Instead of designing and selling its own chips like most semiconductor companies, TSMC would manufacture chips designed by its customers. This business model freed up tech companies to focus on designing innovative chips while TSMC took care of the complex process of manufacturing them. The company's growth trajectory accelerated as it continued to provide sophisticated and scalable facilities for the production of advanced, complex integrated circuits.
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Over the decades, TSMC has evolved into the world's largest semiconductor foundry, controlling over 50% of the market share. TSMC's massive success can be attributed to three main factors: its business model, technological prowess, and strategic partnerships. The company’s pure-play foundry model allowed it to focus on manufacturing processes, increasing efficiency and lowering production costs, which proved attractive to fabless semiconductor companies. TSMC has also consistently stayed ahead of its competitors with its relentless pursuit of cutting-edge technology, investing heavily in research and development to refine its processes and increase chip performance. Moreover, TSMC has built strong relationships with major tech giants around the world, including Apple, Qualcomm, and NVIDIA, by producing high-quality chips tailor-made to their needs.
TSMC's rise to prominence wasn't without challenges. It had to constantly innovate and invest heavily in research and development to stay ahead in the ever-evolving semiconductor industry. Today, TSMC is at the forefront of developing newer, smaller, and more energy-efficient chips. Their latest innovation, a 5-nanometer chip technology, is considered the world's most advanced chip-making process.
However, the shifting geopolitical landscape poses new challenges for TSMC. The intensifying US-China trade war has put TSMC in a precarious position. As a Taiwanese company, it is caught in the middle of these two superpowers. The United States is not only one of TSMC's biggest customers but also a critical supplier of chip-making equipment. On the other hand, mainland China is an indispensable part of TSMC's supply chain and also represents a huge potential market.
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The Trump administration's ban on selling chips to Huawei, a Chinese tech giant and a major customer of TSMC, was a significant blow. It has forced TSMC to navigate the treacherous waters of geopolitical tensions while trying to maintain its dominant position in the semiconductor industry.
Another issue is China's claim over Taiwan. If China were to exert greater control over Taiwan, it could affect TSMC's ability to serve its global customer base due to potential changes in governance policies or international relationships. Moreover, should the U.S. feel compelled to ensure its access to TSMC's technology, it could lead to further escalation in tensions.
As the US and China continue their technological rivalry, the future for TSMC is uncertain. However, its deep technological expertise, coupled with its strategic importance to both the US and China, may provide some protection. Despite the challenges, TSMC's history and success demonstrate its ability to adapt and thrive in a constantly changing environment. It will be interesting to see how TSMC maneuvers through this geopolitical chess game, shaping not just its own future but potentially the future of the global semiconductor industry as well.
Takeaway: TSMC, a global technology powerhouse, stands as a testament to innovation and adaptability. Founded with a groundbreaking concept of being a dedicated silicon foundry, TSMC revolutionized the semiconductor industry. Its customer-focused approach freed tech companies to focus on innovation while TSMC mastered chip manufacturing. The keys to its massive success are its efficient business model, technological leadership, and strategic partnerships with tech giants. Despite geopolitical challenges, like the US-China trade war and Taiwan's political status, TSMC's cutting-edge technology and global significance may safeguard its future. TSMC's journey underscores the ability to thrive amidst change, shaping the semiconductor industry's trajectory.
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