TSMC

History

In 1986, Li Kwoh-ting, representing the Executive Yuan, invited Morris Chang to serve as the president of the Industrial Technology Research Institute (ITRI) and offered him a blank cheque to build Taiwan's chip industry. At that time, the Taiwanese government wanted to develop its semiconductor industry, but its high investment and high risk nature made it difficult to find investors. Texas Instruments and Intel turned down Chang. Only Philips was willing to sign a joint venture contract with Taiwan to put up $58 million, transfer its production technology, and license intellectual property in exchange for a 27.6 percent stake in TSMC. Alongside generous tax benefits, the Taiwanese government, through the National Development Fund, Executive Yuan, provided another 48.3 percent of the startup capital for TSMC. 20% of the capital was raised from eight private companies (ranging from Formosa Plastics Group’s 5%, CAPCO’s 5% to Taiyuan Textile’s 1%) which were owned by some of the island's wealthiest families, who owned firms that specialised in plastics, textiles, and chemicals. These wealthy Taiwanese were directly "asked" by the government to invest. The rest of the 4.1% capital came from Taiwan's then ruling party’s investment arm: Kuomintang Central Investment Co.

From the company's onset, TSMC operated primarily as a project of the Taiwanese state, as opposed to a completely private company. Its first CEO was James E. Dykes, who left after a year and Morris Chang became the CEO. Although Philips initially held a 27.5% stake in TSMC, its influence extended beyond financial investment. In addition to capital, Philips played a crucial role by transferring semiconductor manufacturing technology, intellectual property, and patents to TSMC, enabling the company to scale more rapidly. Philips also provided TSMC's first CEO, James E. Dykes, who had previously worked at Philips North America. This partnership represented an early example of the "fab-light" strategy, as Philips gradually reduced its in-house semiconductor manufacturing and relied more on external foundries like TSMC. Over the following decades, Philips steadily divested its stake in TSMC and shifted its primary focus to healthcare technology.

Since then, the company has continued to grow, albeit subject to the cycles of demand. In 2011, the company planned to increase research and development expenditures by almost 39 percent to NT$50 billion to fend off growing competition. The company also planned to expand capacity by 30 percent in 2011 to meet strong market demand. In May 2014, TSMC's board of directors approved capital appropriations of US$568 million to increase and improve manufacturing capabilities after the company forecast higher than expected demand. In August 2014, TSMC's board of directors approved additional capital appropriations of US$3.05 billion.

Patent dispute with GlobalFoundries

On 26 August 2019, GlobalFoundries filed several patent infringement lawsuits against TSMC in the US and Germany claiming that TSMC's 7 nm, 10 nm, 12 nm, 16 nm, and 28 nm nodes infringed 16 of its patents. GlobalFoundries named twenty defendants. TSMC said that it was confident that the allegations were baseless. On 1 October 2019, TSMC filed patent infringement lawsuits against GlobalFoundries in the US, Germany and Singapore, claiming that GlobalFoundries' 12 nm, 14 nm, 22 nm, 28 nm and 40 nm nodes infringed 25 of its patents. On 29 October 2019, TSMC and GlobalFoundries announced a resolution to the dispute, agreeing to a life-of-patents cross-licence for all of their existing semiconductor patents and new patents for the next 10 years. GlobalFoundries CEO Thomas Caulfield said the agreement "enables both of our companies to focus on innovation and to better serve our clients around the world".

Corporate affairs

Senior leadership

Chief Executive: C. C. Wei (since June 2018)

Chairman: C. C. Wei (since June 2024)

Morris Chang (1987–2018)

Mark Liu (2018–2024)

Morris Chang (1987–2005)

Rick Tsai (2005–2009)

Morris Chang (2009–2013); second term

C. C. Wei and Mark Liu (2013–2018); co-CEO's

Business trends

The key trends for TSMC are (as of the financial year ending 31 December):

TSMC and the rest of the foundry industry are exposed to the cyclical industrial dynamics of the semiconductor industry. TSMC must ensure its production capacity to meet strong customer demand during upturns; however, during downturns, it must contend with excess capacity because of weak demand and the high fixed costs associated with its manufacturing facilities. As a result, the company's financial results tend to fluctuate with a cycle time of a few years. This is more apparent in earnings than revenues because of the general trend of revenue and capacity growth. TSMC's business has generally also been seasonal, with a peak in Q3 and a low in Q1.

In 2014, TSMC was at the forefront of the foundry industry for high-performance, low-power applications, leading major smartphone chip companies, such as Qualcomm, Mediatek, and Apple, to place an increasing amount of orders. While the competitors in the foundry industry (primarily GlobalFoundries and United Microelectronics Corporation) have encountered difficulties ramping leading-edge 28 nm capacity, the leading integrated device manufacturers such as Samsung and Intel that seek to offer foundry capacity to third parties were also unable to match the requirements for advanced mobile applications.

For most of 2014, TSMC saw a continuing increase in revenues due to increased demand, primarily due to chips for smartphone applications. TSMC raised its financial guidance in March 2014 and posted 'unseasonably strong' first-quarter results. For Q2 2014, revenues came in at NT$183 billion, with 28 nm technology business growing more than 30 percent from the previous quarter. Lead times for chip orders at TSMC increased due to a tight capacity situation, putting fabless chip companies at risk of not meeting their sales expectations or shipment schedules, and in August 2014 it was reported that TSMC's production capacity for the fourth quarter of 2014 was already almost fully booked, a scenario that had not occurred for many years, which was described as being due to a ripple-effect due to TSMC landing CPU orders from Apple.

However, monthly sales for 2014 peaked in October, decreasing by 10 percent in November due to cautious inventory adjustment actions taken by some of its customers. TSMC's revenue for 2014 saw growth of 28 percent over the previous year, while TSMC forecasted that revenue for 2015 would grow by 15 to 20 percent from 2014, thanks to strong demand for its 20 nm process, new 16 nm FinFET process technology as well as continuing demand for 28 nm, and demand for less advanced chip fabrication in its 200mm fabs.

Ownership

Around 56 percent of TSMC shares are held by the general public and around 38 percent are held by institutions. The largest shareholders in early 2024 were:

National Development Fund, Executive Yuan (6.38%)

BlackRock (5.09%)

Capital Research and Management Company (3.61%)

Government of Singapore Investment Corporation (3.32%)

Norges Bank (1.59%)

Fidelity Investments (1.37%)

New Labor Pension Scheme (1.28%)

The Vanguard Group (1.26%)

Yuanta Securities Investment (1.02%)

JPMorgan Chase (0.83%)

Fidelity International (0.8%)

Baillie Gifford (0.76%)

Fubon Life Insurance (0.75%)

Invesco (0.63%)

Technologies

TSMC's N7+ is the first commercially available extreme-ultraviolet lithographic process in the semiconductor industry. It uses ultraviolet patterning and enables more acute circuits to be implemented on the silicon. N7+ offers a 15–20 percent higher transistor density and 10 percent reduction in power consumption than previous technology. The N7 achieved the fastest ever volume time to market, faster than 10 nm and 16 nm. The N5 iteration doubles transistor density and improves performance by an additional 15 percent.

In late 2022, TSMC began volume production of its 3 nm process (N3), which provides up to a 70% increase in logic density and a 15% speed improvement over the 5 nm generation. By late 2025, the company transitioned to its 2 nm technology (N2), marking a major architectural shift from FinFET to Gate-All-Around (GAA) nanosheet transistors. The N2 node offers a 10 to 15% performance boost or a 25 to 30% reduction in power consumption compared to the enhanced 3 nm (N3E) process, while increasing chip density by more than 15%.

Production capabilities

On 300 mm wafers, TSMC has silicon lithography on node sizes:

0.13 μm (130 nm, options: general-purpose (G), low-power (LP), high-performance low-voltage (LV))

90 nm (based upon 80GC from Q4/2006)

65 nm (options: general-purpose (GP), low-power (LP), ultra-low power (ULP, LPG))

55 nm (options: general-purpose (GP), low-power (LP))

40 nm (options: general-purpose (GP), low-power (LP), ultra-low power (ULP))

28 nm (options: high-performance (HP), high-performance mobile (HPM), high-performance computing (HPC), high-performance low-power (HPL), low-power (LP), high-performance computing Plus (HPC+), ultra-low power (ULP) with HKMG)

22 nm (options: ultra-low power (ULP), ultra-low leakage (ULL))

20 nm

16 nm (options: FinFET (FF), FinFET Plus (FF+), FinFET Compact (FFC))

12 nm (options: FinFET Compact (FFC), FinFET Nvidia (FFN)), enhanced version of 16 nm process

10 nm (options: FinFET (FF))

7 nm (options: FinFET (FF), FinFET Plus (FF+), FinFET Pro (FFP), high-performance computing (HPC))

6 nm (options: FinFET (FF), risk production started in Q1 2020, enhanced version of 7 nm process)

Facilities

Central Taiwan Science Park

The investment of US$9.4 billion to build its third 300mm wafer fabrication facility in Central Taiwan Science Park (Fab 15) was originally announced in 2010. The facility was expected to manufacture over 100,000 wafers a month and generate US$5 billion per year of revenue. TSMC has continued to expand advanced 28 nm manufacturing capacity at Fab 15. On 12 January 2011, TSMC announced the acquisition of land from Powerchip Semiconductor for NT$2.9 billion (US$96 million) to build two additional 300mm fabs (Fab 12B) to cope with increasing global demand.

Germany

In August 2023, being Maria Marced EMEA President, TSMC committed €3.5 billion to a €10+ billion factory in Dresden, Germany. The plant is subsidised with €5 billion from the German government. Three European companies (Robert Bosch GmbH, Infineon Technologies, and NXP Semiconductors) invested in the plant in return for a 10 percent share each. The resulting joint venture with TSMC is named European Semiconductor Manufacturing Company (ESMC). The factory is planned to be fully operational in 2029 with a monthly capacity of 40,000 12-inch wafers. One wing of the building will be dedicated to 28 nm process, while the other to 12 and 16 nm FinFET - notably, the facility will not be able to use EUV process as ASML's EUV scanners are too tall for the building.

Facility broke ground in August 2024. Construction of the office buildings was finished in January 2026, at that time the main fab's foundation slab and basements were also completed, with the ongoing work on the fab itself and the auxiliary buildings. According to the ESMC President Christian Koitzsch, by June 2026 construction was on-schedule, with the plans to make the fab water-tight and install the first machine by the end of 2026, while the first office workers will move in by mid-2027.

Japan

In November 2021, TSMC and Sony announced that TSMC would be establishing a new subsidiary named Japan Advanced Semiconductor Manufacturing (JASM) in Kumamoto, Japan. Denso and Toyota have also invested in the company and are minor shareholders.

The first factory (Fab 23) in Kikuyo, began commercial operations in December 2024 and produces 12-, 22-, and 28-nanometre processes. Fab 23 cost US$8.6 billion to build, with 476 billion yen subsidised by the Ministry of Economy, Trade and Industry (METI).

The second factory, currently under construction adjacent to Fab 23 as of January 2025, will produce 6-nanometre and 12-nanometre processes. This factory is estimated to cost US$13.9 billion, with 732 billion yen funded by the METI.

United States

In 2020, TSMC announced a planned fab in Phoenix, Arizona with a $12 billion investment which intended to begin production by 2024. At launch it was the most advanced fab in the United States. TSMC claimed the plant will create 1,900 full-time jobs.

In December 2022, TSMC announced its plans to triple its investment in the Arizona plants in response to the growing tensions between the US and China and the supply chain disruption that has led to chip shortages. In that same month, TSMC stated that it was running into major cost issues, because the cost of construction of buildings and facilities in the US is four to five times what an identical plant would cost in Taiwan, as well as difficulty finding qualified personnel. These additional production costs will increase the cost of TSMC's chips made in the US to at least 50 percent more than the cost of chips made in Taiwan. In July 2023 TSMC warned that US talent was insufficient, so Taiwanese workers will need to be brought in for a limited time, and that the chip factory will not be operational until 2025. In September 2023, an analyst said the chips will still need to be sent back to Taiwan for packaging. In January 2024, TSMC chairman Liu again warned that Arizona lacked workers with the specialised skills to hire and that TSMC's second Arizona plant likely will not start volume production of advanced chips until 2027 or 2028.

In April 2024, the Biden administration announced a preliminary agreement to award TSMC Arizona up to $6.6 billion in direct funding under the CHIPS and Science Act, alongside up to $5 billion in proposed loans, to support TSMC's planned investment of more than $65 billion across three fabrication plants in Phoenix, which would represent the largest foreign direct investment in a greenfield project in US history. In November 2024, the Commerce Department finalised the binding $6.6 billion CHIPS Act award — the first major award completed under the $52.7 billion programme. TSMC also agreed to use its most advanced "A16" manufacturing technology in Arizona and committed to forgo stock buybacks for five years under an "upside sharing agreement" with the US government.

In July 2025, Wei indicated that TSMC would speed up its production timelines toward the completion of a "gigafab" cluster totalling six facilities after an additional $100 billion investment in Arizona.

In July 2026, TSMC announced an additional US$100 billion investment in its United States manufacturing operations, increasing its total planned investment in the country to US$265 billion. The company's current and planned Arizona operations were expected to comprise twelve semiconductor fabrication and advanced-packaging facilities, together with a research-and-development centre. Its first Arizona fabrication plant was operational, while the second was preparing to begin equipment installation.

Sustainability

TSMC's operations consume a large amount of power and water and thus have significant environmental impact. TSMC pledged to have net-zero emissions by 2050 and to power all global operations with 100% renewable energy within that same timeframe. The company has also invested in water conservation technologies, including high-efficiency wastewater recycling systems capable of reclaiming over 85% of water used in fabrication processes. In 2024, TSMC reportedly consumed over 150,000 tons of water per day in Hsinchu City, approximately 10% of the city's water supply.

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 world's largest corporate green energy order ever made.