As the tension between China and Taiwan builds, there’s hope WWIII can be avoided thanks to a little-known manufacturer that supplies the world’s computer chips. Little known might not be the appropriate description for the 11th most valuable company in the world.
But how many of your friends know about Taiwan Semiconductor Manufacturing Co. (TSMC)—manufacturer of the world’s most sophisticated chips? My guess is not many until the WSJ did a feature this weekend:
The company makes almost all of the world’s most sophisticated chips, and many of the simpler ones, too. They’re in billions of products with built-in electronics, including iPhones, personal computers and cars—all without any obvious sign they came from TSMC, which does the manufacturing for better-known companies that design them, like Apple Inc. and Qualcomm Inc. QCOM 0.72%
TSMC has emerged over the past several years as the world’s most important semiconductor company, with enormous influence over the global economy. With a market cap of around $550 billion, it ranks as the world’s 11th most valuable company.
Its dominance leaves the world in a vulnerable position, however. As more technologies require chips of mind-boggling complexity, more are coming from this one company, on an island that’s a focal point of tensions between the U.S. and China, which claims Taiwan as its own.
News Flash: There’re risks that come along with outsourcing America’s manufacturing. We know that when an iPhone is designed in California and manufactured in China, someone’s getting an education. There’s a price to pay for giving away our manufacturing base.
The good news for now? China needs Taiwan just as much as we do, and because of that, there’s a “Silicon Shield,” protecting the “Switzerland of chips.” Stay tuned.
The WSJ continues:
Taiwanese leaders refer to the local chip industry as Taiwan’s “silicon shield,” helping protect it from such conflict. Taiwan’s government has showered subsidies on the local chip industry over the years, analysts say.
TSMC’s Ms. Kao said the company’s success comes from being in the right place at the right time, with the right business model. While Taiwan’s government played a crucial role in its founding investment, she said, the company doesn’t receive subsidies to build facilities.
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Originally posted on Your Survival Guy.