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From its listing in 1994 to 2022, TSMC's revenue has a compound annual growth rate of 18.5%, an average gross profit margin of 50%, and an average net profit margin of 36%. For every 6 yuan of products sold by TSMC, the gross profit is 3 yuan and the net profit is 2 yuan. Before TSMC, no matter which industry it was in, most profits came from design and sales, not manufacturing. It was based on this that Shi Zhengrong proposed the famous "smile curve". TSMC’s manufacturing success as a pure-play foundry is “almost anomalous historically.”
(Explanation: The dark gray part is net profit, the dark gray + medium gray part is gross profit, and the dark gray + medium gray + light gray part is revenue. Data source: TSMC’s financial reports over the years.)
Although there are many jokes circulating on the Internet about the high work pressure and long working hours of TSMC employees, it is undeniable that TSMC’s salary, benefits and development space are still far beyond the average level of Taiwanese companies. TSMC’s employees account for only four thousandths of Taiwan’s working population, but they contribute 1.5% of Taiwan’s newborns. This is considered by TSMC to be one of the positive results of its high-quality welfare system.
Behind TSMC's technological leadership is the continued growth in the number of patents owned by TSMC. The total number of patents owned by TSMC in the world has exceeded 71,000, including more than 8,800 global patents obtained in 2021. Among them, the number of patents applied for in the United States ranks fourth among U.S. patent applicants. This is the sixth consecutive year that TSMC Entered the ranking of the top ten patent filing companies in the United States. TSMC's total R&D budget in 2021 accounts for approximately 7.9% of total revenue. The proportion may not seem outstanding, but the scale of US$4.5 billion is quite staggering.
In 2021, TSMC can provide 291 different process technologies to produce 12,302 different products for 535 customers, with applications covering the entire electronics industry. TSMC provides more than 38,000 technical documents and 2,600 process design kits online from 0.5 micron to 3 nanometer processes, which are downloaded and used by customers more than 100,000 times per year. TSMC's component database and silicon intellectual property total have expanded to more than 35,000 in 2020, an increase of 35% year-on-year. Because TSMC has a wide variety of process technologies, customers who want to realize any system product can find a suitable process at TSMC to coordinate production.
Apple firmly occupies the position of TSMC’s largest customer. With Qualcomm and Nvidia, TSMC's two traditional major customers, switching orders to Samsung Electronics in large numbers, MediaTek has become TSMC's second largest customer in 2021. TSMC’s third largest customer is its latest loyal partner, Chaowei . The "stay-at-home" economy has experienced explosive growth under the COVID-19 epidemic. Sony and Microsoft's new game consoles are out of stock, bringing a large number of orders to AMD. AMD's Zen 3 architecture CPUs and RDNA 2 architecture GPUs are in short supply. As a result, Chaowei has significantly increased the production volume of TSMC's 7nm process. With the launch of AMD's Zen 4 architecture-based CPUs using the more expensive 5nm process and the successful acquisition of Xilinx, AMD is likely to surpass MediaTek and become TSMC's second largest customer.
While the overall chip market continues to fluctuate from time to time, the scale of the wafer foundry market is almost only increasing.
Chart: TSMC’s share of wafer foundry and overall chip market
[Explanation: The dark gray part is TSMC’s wafer foundry revenue, the middle gray part is the wafer foundry market size except TSMC (including IDM factories such as Intel), the dark gray + medium gray + light gray part is the global semiconductor market size . ]
As shown in the figure, since 2011, the share of the foundry business in the overall chip market has increased from 12% to 24% in 12 years, with an average annual increase of 1%. Although professional wafer foundries and fabless factories are developing rapidly, more than half of the semiconductor market is still occupied by IDM factories. For example, Intel in the field of logic chips, Samsung Electronics, SK Hynix, Micron and Kioxia that monopolize memory, Texas Instruments, Infineon, STMicroelectronics, NXP and Renesas Electronics in automotive chips and analog chips are all IDM factory. Among the top 15 semiconductor companies in the world (in the second quarter of 2021), IDM factories still occupy eight seats, fabless factories occupy six seats, and there is only one professional wafer foundry, TSMC. Although Europe and Japan have a weak presence in the wafer foundry market, with only one factory of GlobalFoundries and UMC respectively, their IDM factories are very strong. For example, in automotive chips, Japan holds 25% of the global market share, while Taiwan only holds 2% (data from Gartner 2020).
It is often said on the Internet that one out of every two chips on the planet is manufactured by TSMC. This statement is not true. To be precise, one out of every two custom chips (or contract chips, contract chips) on the planet is made by TSMC.
Even UMC was impressed by Zhang Zhongmou's achievements. Taiwan's wafer giants have been at odds for many years. UMC has challenged Chang from time to time, but Chang has never responded. Zhang Zhongmou believes that TSMC's goal is to become a world-class company, and TSMC should continue to learn from benchmark companies in the industry, rather than focusing on UMC as its own follower. UMC's senior executives publicly praised TSMC: "It's really amazing. The achievements are really great. Even we deeply admire TSMC's development to the scale it is today."
Of course, just as Pepsi-Cola has achieved Coca-Cola and KFC has achieved McDonald's, the industry generally believes that without the strong competition from UMC, TSMC would not have been able to achieve such rapid growth, and Taiwan's foundry industry may not have achieved such rapid growth. A strong position like today. For TSMC to be where it is today, Zhang Zhongmou must also thank UMC.
How much does it cost to build a TSMC? Calculating only the fixed asset investment part, as shown in the table, as of the end of 2020, TSMC's cumulative expenses reached NT$4.3 trillion (equivalent to NT$1 trillion), accounting for 37% of revenue. This 1 trillion yuan is only TSMC’s past investment. In the four years after 2020, TSMC will invest another 1 trillion yuan (approximately 190 billion yuan and 240 billion yuan have been invested in 2021 and 2022 respectively ).
No matter how much money it costs, the chip must be made. Mainland China has become the largest market for chip procurement in the world. In 2021, the number of chips imported into mainland China reached a new high, reaching 635.5 billion units, a year-on-year increase of 17%, and the value reached US$439.7 billion, a year-on-year increase of 15.4%. On June 9 of the same year, at the World Semiconductor Conference, Wu Hanming, an academician of the Chinese Academy of Engineering, pointed out: China still lacks eight SMICs if it wants to complete the local replacement of chips. The importance of the chip manufacturing industry has been fully exposed in the recent unprecedented global chip shortage.
For more stories about TSMC’s competition with Intel and Samsung Electronics, please see the book "Chip Tide".
"Chip Wave" is the latest masterpiece of Yu Sheng, the author of "Chip War" . It is the first book on the market that focuses on wafer foundry and tells the history of the development of the chip manufacturing industry. It is based on detailed data analysis and rigorous historical research. foundation, a panoramic depiction of the complete history of wafer foundries such as TSMC, UMC, Semiconductor Manufacturing International Corporation, and Global Foundries from their establishment to the present, as well as the relationship between vertically integrated foundries such as Samsung Electronics and Intel. Fierce competition for OEM business.
This book has very important reference significance for how mainland China can develop its own chip manufacturing industry and catch up with the world's leading semiconductor technology level .
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