The semiconductor industry, including Integrated Circuit (IC) manufacturing, design, and packaging, forms a major part of Taiwan's IT industry. [1] Due to its strong capabilities in OEM wafer manufacturing and a complete industry supply chain, Taiwan has been able to distinguish itself as a leading microchip manufacturer and dominate the global marketplace. [1] [2] Taiwan’s semiconductor sector accounted for US$115 billion, around 20 percent of the global semiconductor industry. In sectors such as foundry operations, Taiwanese companies account for 50 percent of the world market, with Taiwan Semiconductor Manufacturing Company (TSMC) the biggest player in the foundry market. [3]
TSMC and United Microelectronics Corporation (UMC) are the two largest contract chipmakers in the world, [4] while MediaTek is the fourth-largest fabless semiconductor company globally. [5] ASE Group is also the world's largest Outsourced Semiconductor Assembly and Test (OSAT) provider. [6]
The Taiwanese semiconductor industry got its start in 1974. In 1976 the government convinced RCA to transfer semiconductor technology to Taiwan. [4] Under the direction of Chiang Ching-Kuo the government appointed the Industrial Technology Research Institute (ITRI) to lead the development of the industry with an emphasis on developing commercial products rather than pure scientific advances. ITRI sent four teams of engineers to train at RCA before building a demonstration factory in Taiwan. The demonstration factory was able to achieve higher yields than RCA's fabs in the US. The demonstration factory was spun off by ITRI in 1980 as UMC. UMC received initial investment from both private and public sources. [7]
In 1987, TSMC pioneered the fabless foundry model, reshaping the global semiconductor industry. [8] [9] From ITRI's first 3-inch wafer fabrication plant built in 1977 [8] and the founding of UMC in 1980, [10] the industry had developed into a world leader with 40 fabs in operation by 2002. [1] In 2007, the semiconductor industry overtook that of the United States, second only to Japan. [11]
The sector output reached US$39 billion in 2009, ranking first in global market share in IC manufacturing, packaging, and testing, and second in IC design. [8] Although the global financial crisis from 2007 to 2010 affected sales and exports, [12] the industry has rebounded with companies posting record profits for 2010. [13] [14] In 2010 Taiwan had the largest share of 300 nm, 90 nm, and 60 nm manufacturing capacities worldwide, and was expected to pass Japan in total IC fab capacity by mid-2011. [15] [16] By 2020, Taiwan was the unmatched leader of the global semiconductor industry with Taiwan Semiconductor Manufacturing Company (TSMC) alone accounting for more than 50% of the global market. [17]
In the 2020s artificial intelligence processing emerged as a significant demand driver for the Taiwanese semiconductor industry. [18]
The semiconductor industry uses a large portion of the power produced in Taiwan. By 2022 TSMC alone is estimated to consume 7.2% of Taiwan's total power output. [19] Due to pressure from customers and government regulations the semiconductor industry has been switching to green power. In July 2020 TSMC signed a 20-year deal with Ørsted to buy the entire production of two offshore wind farms under development off Taiwan's west coast. At the time of its signing it was the largest corporate green energy order ever made. [20] Much of the switch to renewable energy has been mandated by Apple Inc. whose primary components suppliers are located on Taiwan. [21] [22]
The Taiwanese semiconductor industry is one of the top targets of Chinese intelligence activity abroad. [23]
Taiwanese TSMC and South Korean rival Samsung have near total control of the leading edge of the semiconductor industry with TSMC significantly ahead of Samsung. This situation in which global production capabilities have been concentrated in just a few selected countries leads to significant geopolitical challenges and contributes heavily to changes in global techno-politics. [24]
Due to its significant position in both the American and Chinese tech industry supply chains, Taiwan has been enmeshed in the technological front of the China–United States trade war and the larger geopolitical conflict between the two powers. [25] The US prohibited companies which use American equipment or IP from exporting products to prohibited companies in China. This forced Taiwanese semiconductor companies to stop doing business with major Chinese clients like Huawei. [26] [27]
In January 2021 the German government appealed to the Taiwanese government to help persuade Taiwanese semiconductor companies to ramp up production as a global semiconductor shortage was hampering the German economy's recovery from the COVID-19 pandemic. A lack of semiconductors had caused vehicle production lines to be idled, leading German Economy Minister Peter Altmaier to personally reach out to Taiwan's economics affairs minister Wang Mei-hua in an attempt to get Taiwanese semiconductor companies to increase their manufacturing capacity. [28] Similar requests had been made by the United States, the European Union, and Japan. The Taiwanese government and TSMC announced that as much as possible priority would be given to automakers from Taiwan's close geopolitical allies. [29]
In April 2021 the US Government blacklisted seven Chinese supercomputing companies due to alleged involvement in supplying equipment to the Peoples Liberation Army (PLA), Chinese military–industrial complex, and Weapon of Mass Destruction (WMD) programs. In response Taiwanese chipmakers Alchip and TSMC suspended new orders from Chinese supercomputing company Tianjin Phytium Information Technology. [30]
The geopolitical strength of the semiconductor industry is often referred to as Taiwan's "Silicon Shield." [31] According to the New York Times, "Taiwan has relied on its dominance of the microchip industry for its defense," and that, "because its semiconductor industry is so important to Chinese manufacturing and the United States consumer economy, actions that threaten its foundries would be too risky." [32] In 2022 Matthew Pottinger challenged the existence of a Silicon Shield arguing that China does not behave in ways which appear rational to audiences in democratic countries. [33]
International policy measures have been taken in attempts to ensure the longevity TSMC's manufacturing output by third parties such as the United States. Through policy efforts such as the CHIPS and Science Act, the United States and Taiwanese governments have taken steps to bolster TSMC's manufacturing capability on U.S. soil. [34] Such policy efforts were put in place after geopolitical tensions between the United States and China demonstrated a potential weak point in the nation's reliance on foreign manufacturing. [34] Notably, TSMC announced plans to build a $12 billion semiconductor manufacturing plant in Arizona, [34] [35] enhancing their semiconductor production capabilities on international land.
In April 2024, the United States Department of Commerce provided TSMC Arizona with a grant for a total of $6.6 billion in funding under the CHIPS and Science Act. [36] Additionally, the two countries are investing in joint research initiatives and workforce development programs to provide a steady pipeline of skilled workers for the semiconductor industry. [36] TSMC's expansion into the United States has also been met with significant challenges, particularly in its Arizona plant, facing a 1-year delay on its planned operating date. [37] Some TSMC managers have attributed the plant's troubled development to cultural clashes between TSMC's management and American workers. [37] [38]
Semiconductor device fabrication is the process used to manufacture semiconductor devices, typically integrated circuits (ICs) such as computer processors, microcontrollers, and memory chips. It is a multiple-step photolithographic and physico-chemical process during which electronic circuits are gradually created on a wafer, typically made of pure single-crystal semiconducting material. Silicon is almost always used, but various compound semiconductors are used for specialized applications.
The economy of Taiwan is a highly developed free-market economy. It is the 8th largest in Asia and 20th-largest in the world by purchasing power parity, allowing Taiwan to be included in the advanced economies group by the International Monetary Fund. Taiwan is notable for its rapid economic development from an agriculture-based society to an industrialised, high-income country. This economic growth has been described as the Taiwan Miracle. It is gauged in the high-income economies group by the World Bank. Taiwan is one of the most technologically advanced computer microchip and high-tech electronics industries makers in the world.
Taiwan Semiconductor Manufacturing Company Limited is a Taiwanese multinational semiconductor contract manufacturing and design company. It is the world's second-most valuable semiconductor company, the world's largest dedicated independent ("pure-play") semiconductor foundry, and its country's largest company, with headquarters and main operations located in the Hsinchu Science Park in Hsinchu, Taiwan. Although the central government of Taiwan is the largest individual shareholder, the majority of TSMC is owned by foreign investors. In 2023, the company was ranked 44th in the Forbes Global 2000.
The semiconductor industry is the aggregate of companies engaged in the design and fabrication of semiconductors and semiconductor devices, such as transistors and integrated circuits. It formed around 1960, once the fabrication of semiconductor devices became a viable business. The industry's annual semiconductor sales revenue has since grown to over $481 billion, as of 2018.
The foundry model is a microelectronics engineering and manufacturing business model consisting of a semiconductor fabrication plant, or foundry, and an integrated circuit design operation, each belonging to separate companies or subsidiaries.
Fabless manufacturing is the design and sale of hardware devices and semiconductor chips while outsourcing their fabrication to a specialized manufacturer called a semiconductor foundry. These foundries are typically, but not exclusively, located in the United States, China, and Taiwan. Fabless companies can benefit from lower capital costs while concentrating their research and development resources on the end market. Some fabless companies and pure play foundries may offer integrated-circuit design services to third parties.
The Hsinchu Science Park is an industrial park established by the government of Taiwan on 15 December 1980. It straddles Hsinchu City and Hsinchu County in Taiwan.
Chartered Semiconductor Manufacturing, Inc. (CSM), was a Singaporean semiconductor company.
Semiconductor Manufacturing International Corporation (SMIC) is a partially state-owned publicly listed Chinese pure-play semiconductor foundry company. It is the largest contract chip maker in mainland China.
United Microelectronics Corporation is a Taiwanese company based in Hsinchu, Taiwan. It was founded as Taiwan's first semiconductor company in 1980 as a spin-off of the government-sponsored Industrial Technology Research Institute (ITRI).
In the microelectronics industry, a semiconductor fabrication plant is a factory for semiconductor device fabrication.
The Industrial Technology Research Institute is a technology research and development institution in Taiwan. It was founded in 1973 and is headquartered in Hsinchu City, Taiwan, with branch offices in the U.S., Europe, and Japan.
Alchip is a fabless semiconductor company founded in 2003 and headquartered in Taipei, Taiwan. Alchip specializes in the design and manufacture of digital CMOS ASICs.
GlobalFoundries Inc. is a multinational semiconductor contract manufacturing and design company incorporated in the Cayman Islands and headquartered in Malta, New York. Created by the divestiture of the manufacturing arm of AMD, the company was privately owned by Mubadala Investment Company, a sovereign wealth fund of the United Arab Emirates, until an initial public offering (IPO) in October 2021.
Morris Chang is an American businessman and electrical engineer, originally from Ningbo, China. He built his business career first in the United States and then subsequently in Taiwan. He is the founder and former chairman and CEO of Taiwan Semiconductor Manufacturing Company (TSMC). He is regarded as the founder of Taiwan's semiconductor industry. As of April 2024, his net worth was estimated at US$3.4 billion.
Vanguard International Semiconductor Corporation (VIS) is a Taiwanese specialized IC foundry service provider, founded in December 1994 in Hsinchu Science Park by Morris Chang. In March 1998, VIS became a listed company on the Taiwan Over-The-Counter Stock Exchange (OTC) with the main shareholders TSMC, National Development Fund, Executive Yuan and other institutional investors.
Between 2020 and 2023, there was a worldwide chip shortage affecting more than 169 industries, which led to major price increases, long queues, and reselling among consumers and manufacturers for automobiles, graphics cards, video game consoles, computers, household appliances, and other consumer electronics that require integrated circuits.
The Chinese semiconductor industry, including integrated circuit design and manufacturing, forms a major part of mainland China's information technology industry.
The CHIPS and Science Act is a U.S. federal statute enacted by the 117th United States Congress and signed into law by President Joe Biden on August 9, 2022. The act authorizes roughly $280 billion in new funding to boost domestic research and manufacturing of semiconductors in the United States, for which it appropriates $52.7 billion. The act includes $39 billion in subsidies for chip manufacturing on U.S. soil along with 25% investment tax credits for costs of manufacturing equipment, and $13 billion for semiconductor research and workforce training, with the dual aim of strengthening American supply chain resilience and countering China. It also invests $174 billion in the overall ecosystem of public sector research in science and technology, advancing human spaceflight, quantum computing, materials science, biotechnology, experimental physics, research security, social and ethical considerations, workforce development and diversity, equity, and inclusion efforts at NASA, NSF, DOE, EDA, and NIST.
| History |  | |
|---|---|---|
| Currency | ||
| Banking and finance | ||
| Government agencies | ||
| Research | ||
| Sectors | ||
| Industrial parks | ||
| Associations | ||
| Other | ||
