Taiwan Semiconductor Manufacturing Company Limited, commonly known as TSMC, is a Taiwanese multinational semiconductor contract manufacturing and design company headquartered in Hsinchu Science Park. It is the world's largest dedicated semiconductor foundry, holding approximately 70% of the global market share, and serves as the primary chip supplier for major fabless companies such as AMD, Apple, Broadcom, and Qualcomm. The company's advanced manufacturing capabilities have made it central to the artificial intelligence boom, as it produces the high-performance chips needed for AI workloads.
TSMC was founded in 1987 by Morris Chang as a joint venture between the Taiwanese government, the Industrial Technology Research Institute (ITRI), and private investors. It became the first dedicated semiconductor foundry, a business model that separates chip design from manufacturing. By 2025, TSMC was ranked 38th in the Forbes Global 2000 and accounted for about 30 percent of the Taiwan Stock Exchange's main index. The company has been listed on the Taiwan Stock Exchange since 1993 and on the New York Stock Exchange since 1997.
Founding and early history
The idea for TSMC originated in the mid-1980s when Li Kwoh-ting, representing the Executive Yuan, invited Morris Chang to lead the Industrial Technology Research Institute (ITRI) and build Taiwan's chip industry. The Taiwanese government wanted to develop semiconductors but faced difficulty because of high investment costs and risk. Both Texas Instruments and Intel declined to partner with Taiwan. Only Philips agreed to a joint venture, providing $58 million in capital, transferring production technology, and licensing intellectual property in exchange for a 27.6 percent stake.
The Taiwanese government, through the National Development Fund, contributed another 48.3 percent of startup capital. Eight private companies, including Formosa Plastics Group and CAPCO, supplied about 20 percent, while the Kuomintang Central Investment Co. held 4.1 percent. Philips also supplied the first CEO, James E. Dykes, before Morris Chang took over. Over time, Philips reduced its stake and shifted toward healthcare technology.
Chang retired in 2018 after leading TSMC for 31 years. Mark Liu became chairman and C. C. Wei became chief executive. Under successive leaders, the company expanded capacity and adopted new technology. Since 1994, TSMC has achieved a 17.4 percent compound annual growth rate in revenue and 16.1 percent in earnings.
Manufacturing and Technology
TSMC operates fabs that produce chips using process nodes from 2 microns to 3 nanometres. As of 2020, its global capacity was about 13 million 300 millimetre equivalent wafers per year. The company was the first foundry to commercialize 7-nanometre and 5-nanometre production, with the latter used in the 2020 Apple A14 and M1 system-on-chips, the MediaTek Dimensity 8100, and AMD Ryzen 7000 series processors.
The firm also became the first semiconductor company to use ASML's extreme ultraviolet lithography technology in high volume production. This leadership in advanced nodes has made TSMC the primary manufacturer for many of the most sophisticated AI accelerator chips. In 2011, TSMC increased research and development spending by almost 39 percent to NT$50 billion to fend off competition, and in 2014 its board approved an additional US$3.05 billion in capital appropriations.
Key Customers and Products
Most major fabless semiconductor companies rely on TSMC for their chips. These include AMD, ARM Holdings, Broadcom, Qualcomm, Apple, Nvidia, and MediaTek. Emerging companies such as Allwinner Technology, HiSilicon, and UNISOC also use TSMC's foundry services. Integrated device manufacturers like Intel, NXP, STMicroelectronics, and Texas Instruments outsource some production to TSMC even though they have their own factories.
For the current era, the demand is heavily driven by generative AI applications. TSMC fabs advanced processors for AI servers and personal computers, including those used in data centers for training large language models. In 2011, TSMC began trial production of Apple's A5 and A6 system-on-chips for iPad and iPhone devices. By 2014, it was making Apple's A8 and A8X SoCs, and later the Apple S series. The A9 chip was split between TSMC and Samsung to meet volume demand, but the A9X went exclusively to TSMC. Arm and TSMC announced in 2014 a multi-year agreement to develop 10-nanometre FinFET processors.
Global Expansion and Investments
Despite government reservations under President Tsai Ing-wen, TSMC invested US$3 billion in 2017 to build a manufacturing subsidiary in Nanjing, China. The company has also expanded overseas to a limited extent. TSMC offers a range of process technologies across its production to serve customers in different market segments, and has invested heavily in new fabs in Taiwan and Arizona.
TSMC's dominant market share is a significant bottleneck in the global semiconductor supply chain. Because it holds about 70 percent of the foundry market, a disruption at its factories could cause another worldwide chip shortage. The company has been identified as essential to the supply of chips for military and civilian AI systems.
Energy Usage and Renewable Commitment
In 2020, TSMC became the first semiconductor company to sign up for the RE100 initiative, pledging to use 100 percent renewable energy by 2050. The firm accounts for roughly 5 percent of Taiwan’s energy consumption, exceeding that of the capital city Taipei. This high consumption has driven the government and TSMC to accelerate renewable energy adoption. The initiative is helped by the company's scale, with a global capacity of about 13 million wafers per year.
Government and Ownership
Although the Taiwanese government through the National Development Fund holds a significant single stake, the majority of TSMC's shares are owned by foreign investors. The company's board and management have kept close ties with the state, and it has contributed to Taiwan's economy. In 2022, Taiwan's exports of integrated circuits amounted to $184 billion, nearly 25 percent of the country's GDP, with TSMC being a major contributor. The company has grown rapidly due to the AI boom, increasing its server and processor shipments in the 2020s.
Financial Performance and Industry Position
TSMC's market capitalisation places it among the largest non-US companies globally. Its revenue growth has outpaced many peers due to the machine learning demand for advanced semiconductors. In the early 2020s, the company expanded capacity to serve customers like OpenAI, Groq, and other AI infrastructure providers. The inherent importance of silicon manufacturing for AI has made TSMC a strategic company, not just as a supplier but as a key enabling layer for deep learning and neural network processing.
As of the mid-2020s, TSMC continues to lead the industry with 3-nanometre production and developing 2-nanometre nodes. Its specialized customers, such as Cerebras and Groq, also rely on TSMC fabs for their large-scale AI accelerators. The company's ability to keep a competitive edge relies on continuous R&D spending and the size of its manufacturing base, which has made it the central node of the global semiconductor ecosystem.