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A Brief History of TSMC

A Brief History of TSMC
by Daniel Nenni on 08-02-2012 at 7:30 pm

 In 1985 Morris Chang was recruited by the Taiwanese government to help develop the emerging semiconductor industry. In 1986 Morris joined the Hsinchu based non profit research institute ITRI as Chairman and President and launched what would be TSMC’s first semiconductor wafer fabrication plant on the ITRI campus. Taiwan Semiconductor Manufacturing Company Ltd. was officially formed in 1987 as a joint venture between the Taiwan government (21%), Dutch multinational electronics giant Philips (28%), and other private investors.

Without a doubt, TSMC created what is today’s semiconductor foundry business model. While at TI, Morris Chang pioneered the then controversial idea of pricing semiconductors ahead on the cost curve, sacrificing early profits to gain market share to achieve manufacturing yields that would result in greater long-term profits. This pricing model is still the foundation of the fabless semiconductor business model.

Even starting 2 process nodes behind competing semiconductor manufacturers (IDMs), TSMC was able to attract customers. 4-5 years later TSMC was only behind 1 process node and the orders started pouring in. In 10 years TSMC caught up with IDMs and the fabless semiconductor industry blossomed enabling a whole new era of semiconductor design and manufacturing. Today TSMC is the undisputed leader with a reported 49% share of the $30B foundry market segment. UMC is second with just over a 12% share, GlobalFoundries is a close third with 12%, and SMIC is fourth with 4.4%.

As the story goes, Morris Chang made the first TSMC sales calls in 1987 with a single brochure:

TSMC Core Values: Integrity, commitment, innovation, and customer trust.

It is interesting to compare the consistency of this statement with the 1997 TSMC mission statement:

We are building the world’s Virtual Fab! We provide the best quality technology, the greatest capacity and the highest standard of service. We are the most reliable choice as a partner in semiconductor manufacturing.

And again with the vision/mission statement on the TSMC website today:

Our vision is to be the most advanced and largest technology and foundry services provider to fabless companies and IDMs, and in partnership with them, to forge a powerful competitive force in the semiconductor industry. Our mission is to be the trusted technology and capacity provider of the global logic IC industry for years to come.

Also according to the current website TSMC has:

  • Served more than 600 customers
  • Manufacturing more than 11,000 products
  • A total managed capacity of 16.4 million eight-inch equivalent wafers in 2013
  • Compiled the largest portfolio of process-proven libraries, IPs, design tools and reference flows
  • Fab 2, 3, 5, 8 and 12 located in the Hsinchu Science Park
  • Fab 6 and 14 located in the Tainan Science Park
  • Fab 15 located in Central Taiwan Science Park
  • A wholly-owned subsidiary, WaferTech in the United States; TSMC China; and its joint venture fab SSMC in Singapore.
  • A US $70,481 million market capitalization as of 7/31/2012
  • 2011 total sales revenue reached a new high at US $14.5 billion
  • Expected 2012 capital expenditure total of US $8.5 billion
  • Listings on the Taiwan and New York Stock Exchanges (TSM)

While the original intention of TSMC was to aid the Taiwanese semiconductor design houses, Dr. Morris Chang clearly had much larger aspirations which transformed the global semiconductor industry into what is today a $300B+ business that is mission critical to modern life.

A Brief History of Semiconductors
A Brief History of ASICs
A Brief History of Programmable Devices
A Brief History of the Fabless Semiconductor Industry
A Brief History of TSMC
A Brief History of EDA
A Brief History of Semiconductor IP
A Brief History of SoCs

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