Taiwan Enterprise: TSMC

30-Second Overview

TSMC (Taiwan Semiconductor Manufacturing Company) manufactures more than half of the world's advanced chips, with 2025 revenues of US$122 billion and a market capitalization that briefly surpassed US$2 trillion. But when it was founded in 1987, no one believed a semiconductor company that only did contract manufacturing — without designing its own products — could survive. Founder Morris Chang was 56 when he left Texas Instruments in the US to return to Taiwan, with the government as a "reluctant investor." Thirty-eight years later, this company that started in Hsinchu has become the core of geopolitical competition — the US threw US$165 billion at it to build factories in America, and whether the "silicon shield" can actually protect Taiwan remains something no one dares guarantee.

"I Just Wanted to Survive"

In 1987, 56-year-old Morris Chang made a decision that at the time seemed far from wise: leaving global semiconductor giant Texas Instruments, flying back to Taiwan, and founding a company that "only does manufacturing, without designing chips."

This business model did not exist at the time. Semiconductor companies either designed and manufactured themselves — like Intel and Samsung — or simply outsourced to Japan. The term "pure-play foundry" had not yet been invented.

"When I founded TSMC in 1987, the first few years were really hard. How could I have had a vision for ten years later? I just wanted to survive, just wanted the company to survive!" Chang recalled later (source: Business Today).

The government invested 48.3%, and Dutch Philips put in 27.5%. But Chang has said the government was "a reluctant investor" — if not for former Economics Minister K.T. Li (李國鼎) throwing his support behind it, the money never would have been allocated (source: Commercial Times).

The first wafer fab was set up in Hsinchu Science Park, with only a 0.8-micron process — four hundred times larger than today's 2-nanometer.

The biggest problem in the early days was not technology but trust. Chang visited global semiconductor companies one by one, trying to convince them to hand over their most critical manufacturing to a small Taiwanese factory. Most found this inconceivable — hand over the lifeblood to a third party? But Chang insisted on one principle: no proprietary brands, never compete with customers. This commitment later proved to be TSMC's most powerful moat.

📝 Editorial Note: What Chang invented was not a technology but a division of labor. Before him, anyone making chips had to build their own factory. After him, the world's smartest chip designers could focus on design — leaving the manufacturing to Taiwan. This division of labor gave birth to what NVIDIA, Qualcomm, and AMD look like today.

From Contract Manufacturer to the World's Heart

The turning point came in the late 1990s. Personal computers and mobile phones simultaneously exploded, chip demand surged, and "fabless" companies — NVIDIA, Qualcomm, Broadcom — that separated design from manufacturing began to rise. TSMC's business model went from "nobody understands it" to "indispensable."

In 2000, with the dot-com bubble, most companies pulled back. TSMC went against the tide and expanded, building multiple 12-inch wafer fabs in Hsinchu. This "be greedy when others are fearful" decision laid the foundation for leadership a decade later.

In 2005, Chang retired for the first time, with Rick Tsai taking over as CEO. After the 2009 financial crisis, 78-year-old Chang returned, leading the company into the smartphone era. In 2016, TSMC won the exclusive contract to manufacture Apple's iPhone processors — from then on, the chip inside every iPhone in the world was made in Taiwan.

By 2018, when Chang officially retired and C.C. Wei took over as CEO, TSMC was no longer just a foundry. It was the bottleneck of all digital civilization.

Then AI arrived.

The Beast in the Numbers

TSMC's scale is hard to convey in words; numbers are more direct:

At a January 2026 investor call, Wei said: "AI looks like an endless demand." (source: Economic Daily News)

NVIDIA's AI training chips, Apple's phone processors, AMD's server chips — all exclusively manufactured by TSMC. What does this mean? It means if TSMC's factories stopped for a week, the global tech industry would grind to a halt with it.

Water Trucks, Farmland, and the Cost of the "Sacred Mountain"

In the spring of 2021, Taiwan experienced its worst drought in 56 years. The reservoir serving Hsinchu Science Park dropped to historic lows, and TSMC activated water truck deliveries — a 12-ton water truck, at NT$15,000 per trip (source: Business Next).

At the same time, the government ordered rice farmers in the Taoyuan-Hsinchu-Miaoli region to stop irrigation. Farmers' water was given to the wafer fabs. The New York Times headline was blunt: "Taiwan's Drought Pits Chip Makers Against Farmers" (source: NYT, 2021).

This is the other side of the "sacred mountain of national defense." One of TSMC's advanced process wafer fabs uses over 150,000 tons of water per day, and its electricity consumption accounts for more than 7% of Taiwan's total. Between 2015 and 2019, TSMC's own water usage grew 70% (source: Foreign Policy). In the environmental impact assessment for the Baoshan Phase 2 expansion, TSMC pledged that its processes would use 100% recycled water — but just running a recycled water pipeline to the science park would cost over NT$10 billion, and the government would have to foot the bill.

Former Hsinchu Science Park Administration Director Lee Chieh-mu told Mirror Media in 2021: "Shipping water by truck is like carrying water to put out a fire — a drop in the bucket, only good for emergencies... If it doesn't rain, TSMC will face production cuts." (source: Mirror Media)

TSMC has pledged to reach net-zero emissions by 2050 and is investing heavily in renewable energy. But the paradox is: the stronger AI demand gets, the more electricity and water advanced processes consume. The taller the sacred mountain grows, the longer its shadow.

📝 Editorial Note: "Sacred mountain of national defense" has become almost a matter of faith in Taiwan — but the other side of faith is the inability to question. When a company grows so large that the entire nation's water and electricity allocation must yield to it, the line between "protection" and "dependence" has already blurred.

Silicon Shield: Umbrella or Trap?

"Because TSMC is now Taiwan's most recognizable company, it has become embedded in the concept of Taiwan's sovereignty." Rupert Hammond-Chambers, president of the US-Taiwan Business Council, said this (source: MIT Technology Review).

This is the "silicon shield" theory: Taiwan manufactures the world's most critical chips, so no one dares touch Taiwan. In 2024, Chang himself said: TSMC has gone from being a "strategically important place" for geopolitical strategists to being a "truly contested place" (source: Epoch Times).

But the silicon shield has a structural paradox.

In March 2025, C.C. Wei stood at the White House alongside Trump to announce: TSMC would invest US$100 billion in Arizona, adding to the previous US$65 billion, bringing the total planned US investment to US$165 billion, with six wafer fabs planned. Trump said: "Semiconductors are the economic backbone of the 21st century." The implication: the US wants to ensure it can get chips "no matter what happens in Taiwan."

MIT Technology Review in 2025 ran a sharply titled report: "Taiwan's 'Silicon Shield' Could Be Weakening." The logic: when the US has its own advanced processes, Taiwan's irreplaceability decreases — the silicon shield's defensive power actually weakens as TSMC expands globally.

A 2026 Substack analysis put it more directly: "From the US perspective, the core question is not 'how to protect Taiwan because of chips' but 'how to ensure chips are available no matter what happens.' That is a completely different risk calculation." (source: TSPA Semiconductor)

At the same time, TSMC is also surviving in the gap between the US-China tech war. Complying with US export controls means losing part of the China market. Not complying could anger its most important ally. Chang has said globalization is dead, free world trade is dead — in such an environment, TSMC's challenge is to "continue seeking development."

One Hundred Thousand Youth, One Hundred Thousand Livers

Search "TSMC" on PTT and what most often comes up is not stock analysis but a phrase: "One hundred thousand youth, one hundred thousand livers — shift workers GG save Taiwan." (source: PTT WomenTalk board / CommonWealth Magazine)

GG is TSMC's nickname (from the English "Good Game," also implying the game is over). TSMC's salaries are among the highest in Taiwan's tech sector, but the price is high pressure, shift work, and being on call at all times. In a 2024 CommonWealth Magazine report, an engineer described the intensity: "Imagine driving at 160 km/h on the freeway for 10 hours nonstop." (source: CommonWealth Magazine)

Online comments collected by Cheers Magazine were even more direct: "People outside are rushing to get in, people inside want to escape." "Equipment engineers are really the bottom tier at TSMC..."

On his 94th birthday, Chang talked about leadership philosophy and said: "You can be strict with your colleagues, but you must be fair and have no personal bias." He recalled that when he founded TSMC, Chinese-American colleagues from TI wanted to come with him: "You need a team — you can't do anything without a team!" But he didn't bring a single one. (source: Economic Daily News)

This culture of "no mercy but fairness" has passed down from Chang through today's TSMC. It explains why the company can maintain such strict quality standards — and why employees describe their livers using "GG."

The Weight of an Island

In March 2026, TSMC's market cap was approximately 2.3 times Taiwan's GDP. One company worth more than an entire nation's annual output — there is no second example anywhere in the world.

Chang once told the Wall Street Journal that he had "finished," describing himself like an old soldier — "not dead but fading away" (source: BusinessWeekly). But what he created far exceeds a single company. Around TSMC, Taiwan has built the world's most complete semiconductor industry cluster — from equipment to materials to packaging and testing, the entire supply chain within a hundred-kilometer radius. This density lets TSMC respond to a customer's engineering change within 24 hours — something Samsung and Intel cannot do.

2nm is expected to enter mass production in the second half of 2026. 1.4nm is already on the way. Each generation of process requires more investment than the last — a single 2nm fab costs over US$20 billion. The closer processes approach physical limits, the higher the cost of each step forward, and the fewer competitors can keep up.

Chang used money from a "reluctant investor" to build, on an island battered by typhoons and short on water and power, the heart of all of humanity's digital civilization. Thirty-eight years later, the whole world wants to replicate this miracle — but so far, no one has succeeded.

References

• Business Today: What was Morris Chang thinking when he founded TSMC at 56? (primary interview)
• Commercial Times: Chang reveals the bitterness — the government was a reluctant investor (primary)
• Manufacturing Dive: TSMC 2025 full-year earnings (primary, English)
• Economic Daily News: C.C. Wei — AI looks like an endless demand (primary investor call)
• Business Next: TSMC deploys water trucks against the worst drought in 56 years
• New York Times: Taiwan's Drought Pits Chip Makers Against Farmers (English)
• Foreign Policy: Climate Planning Could Doom TSMC Arizona Expansion (English)
• MIT Technology Review: Taiwan's "silicon shield" could be weakening (English)
• Mirror Media: Water shortage, production cut crisis — will TSMC face production cuts?
• CommonWealth Magazine: Veterans vs. Gen Z — on pressure and pride at TSMC
• BusinessWeekly: Morris Chang — I have achieved what I consider success
• CompaniesMarketCap: TSMC market cap
• TSPA Semiconductor: When Chips Meet Geopolitics (English)
• Economic Daily News: Morris Chang at 94 — 4 things every leader must understand (primary)
• Cheers Magazine: One Day at TSMC — One Hundred Thousand Youth, One Hundred Thousand Livers