As Chinese around the world usher in the Year of the Dragon, we are reminded of the symbolism of the dragon: strength, fortune and prosperity. This is particularly resonant with the legacy of the Asian Four Dragons—Hong Kong, Singapore, South Korea and Taiwan—which experienced an extraordinary economic transformation during the latter half of the 20th century and were propelled from developing to advanced economies. In particular, Taiwan’s role on the global stage has grown due to its leadership in semiconductors and technology. In fact, many of the chips and Artificial Intelligence (AI) servers that the “Magnificent 7” rely on for their businesses are made by Taiwanese firms.
Taiwan accounts for more than 60% of the world’s semiconductor production and more than 90% of the most sophisticated chips. The island has honed its technological skills since the 1990s when it emerged as a center for producing computer hardware, and as local foundries such as Taiwan Semiconductor Manufacturing Company (TSMC) and United Microelectronics Corporation (UMC) started to flourish. With the rise of smartphones, Taiwan quickly became essential in making chips for major companies like Qualcomm and Apple. Now, it boasts a complete manufacturing network that spans from upstream materials and equipment to downstream design, manufacturing, packaging and testing. This makes Taiwan the epicenter for producing the latest chips used in high-performance computing and AI, working with the likes of Nvidia, AMD and Broadcom. It is also at the forefront of assembling AI server hardware, a market poised for strong growth (~30% CAGR from 2022 to 2026), with companies such as Wistron, Quanta Computer and Foxconn taking the lead.
The Asian powerhouse is expanding globally. TSMC has made a significant move into North America by setting up a chip manufacturing facility in Arizona. In Japan, its subsidiary Japan Advanced Semiconductor Manufacturing (JASM) is expanding its chip making capabilities in the Kumamoto prefecture. In Europe, TSMC is collaborating with Infineon, NXP Semiconductors (NXPI) and Bosch in Dresden through a joint venture, which marks a notable advance into the European market. Similarly, electronic component & hardware manufacturers Wistron and Quanta Computer are growing their operations by leveraging the low-cost manufacturing ecosystem in Mexico, Vietnam, Thailand and Malaysia as demand for AI components increases globally, not to mention Taiwan-based chip design companies Alchip and Global Unichip, which have become trusted partners to internet giants Amazon and Microsoft for their latest AI chipset projects.
Taiwan’s economy relies heavily on exports, which make up nearly 70% of its GDP. The technology sector alone accounts for 60% of its exports. Thanks to strong technology expertise and AI products, Taiwan’s growth is rising steadily. With the semiconductor industry poised for a significant upturn and expected to become a US$1trillon market in 2030, Taiwan’s role in the global supply chain is more important than ever.
TSMC
TSMC is a cornerstone of the global semiconductor industry. It pioneered the foundry business model in the 1990s, which is now a standard practice. Commanding 60% share of the semiconductor foundry market, TSMC is crucial to Taiwan's economy, contributing a significant 15% to GDP.
More than just a chip manufacturer, TSMC is at the forefront of technological advancement, driving the transition from personal computing to today's AI and high-performance computing. TSMC has consistently produced smaller and more powerful chips, staying ahead in the race to advanced technology. The company leads the market not only in front-end manufacturing, but also in back-end processes, with groundbreaking work in advanced packaging and silicon stacking technologies like SoIC, InFO, and CoWoS. These innovations are essential for AI and high-performance computing efficiency.
Adapting to the changing needs of its international customers, TSMC is setting up operations in strategic global markets. Governments often support these collaborations, recognizing the benefits they bring. Notable projects include an advanced 5nm facility in Arizona, a partnership in Japan with Sony and Denso, and a joint venture in Germany with Bosch, Infineon and NXP as part of the European Chips Act. These ventures bolster local economies and underscore TSMC's dedication to remaining a leader in semiconductor manufacturing.
TSMC's commitment to technological excellence, strong global partnerships and strategic expansion overseas demonstrates its pivotal role in the semiconductor industry. Positioned for ongoing growth and innovation, TSMC is well prepared to navigate the future’s evolving tech landscape.
