In recent years, artificial intelligence (AI) has swept the globe. It enables everything from voice assistants to self-driving cars and language models like GPT-3. However, many people are unaware that one business is responsible for all this technological advancement. The Taiwan Semiconductor Manufacturing Company (TSMC) makes all of the cutting-edge artificial intelligence (AI) processors used today, including those by Google, AMD, Amazon, Microsoft, and NVIDIA. Modern AI depends on these specialized processors, which have driven every critical development in the last ten years.
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Despite being crucial to the electronics sector, the general public is still unfamiliar with TSMC. It was deemed “the most important company in the world that you’ve probably never heard of” by Time Magazine. Yet, its chip manufacturing facilities, or “fabs,” are located on Taiwan’s western coast, barely 110 miles from China’s mainland. Many analysts think war may break out within the next ten years as tensions between the two nations rise.
The Concentration of the Semiconductors Industry
The international and sophisticated semiconductor supply chain is unexpectedly localized in certain places. For instance, ASML in the Netherlands is the sole supplier of intense ultraviolet lithography equipment. This equipment is needed to manufacture advanced semiconductors.
The Future of AI Chips
The H100, a highly anticipated next-generation AI processor from NVIDIA, features 4-nanometer transistors and is ready to propel the AI industry forward. Almost all AI research teams across the globe intend to adopt this new chip as soon as feasible. TSMC has made significant investments over many years to develop strong relationships with dozens of businesses in the semiconductor supply chain, including chip designers like NVIDIA, equipment makers like ASML, and EDA software suppliers like Cadence.
Grand Alliance
What has come to be known as TSMC’s “Grand Alliance” is another aspect that contributes to its supremacy. For the interaction of the technologies and processes used by these businesses, TSMC has set precise guidelines. This network of companies has, in turn, created its goods in line with TSMC’s standards; they have no option because conformity with TSMC’s procedures is essential to their continued survival.
Why is TSMC Unassailable?
How did TSMC grow to be so assertive? Why is it so challenging for any other business to do what TSMC does? Chip production involves significant upfront capital investment, and sophisticated chip fabrication requires ongoing multibillion-dollar R&D spending. TSMC announced in 2021 that they would spread the massive $100 billion investment over three years. Recently, the business invested $20 billion in constructing a single fabrication facility (fab), the storied Fab 18, where they manufacture the most cutting-edge chips, such as NVIDIA’s H100s AI processor.
TSMC has made significant investments over many years to develop strong relationships with dozens of businesses in the semiconductor supply chain, including chip designers like NVIDIA, equipment makers like ASML, and EDA software suppliers like Cadence. Because of its unparalleled specialization, network effects, and economies of scale, TSMC has become completely unreplaceable, and the entire world is now utterly dependent on it.
Our Say
It’s critical to acknowledge the businesses that enable the advancement of AI, like GPT-3. Although TSMC may not be a household brand, it is the company that will determine the direction of artificial intelligence. It is imperative to maintain the safety and security of this vital institution as tensions between Taiwan and China rise. The dominance of TSMC’s Grand Alliance and the concentration of the semiconductor industry serve only to emphasize the importance of ongoing investment and innovation in this area.
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In addition, TSMC is one of the top 15 most valuable corporations globally, with a market valuation of almost $500 billion. Thus, TSMC is at the core of the digital world and the semiconductor business worldwide.
Finally, as we continue to rely on cutting-edge technology, it is essential to acknowledge the businesses that make it all possible. TSMC is unquestionably one of these businesses. It has established itself as the foundation of contemporary AI. It is powering everything from self-driving vehicles to language models like GPT-3 thanks to its unmatched experience, investments, and strategic alliances. The success of TSMC is dependent on its continuing operation. Thus, maintaining the facility’s safety and security is crucial despite geopolitical unrest.
