HONG KONG, July 8 — The world’s most advanced chips, the ones inside the latest iPhones and the fastest AI servers, are made by one company on one island. Taiwan Semiconductor Manufacturing Company, founded in 1987 by Morris Chang, now produces 90 percent of the world’s most sophisticated semiconductors — those at 7 nanometers and below. Its customers include Apple, AMD, and Nvidia.
The company’s main fabrication facilities sit in the Hsinchu Science Park in Taiwan. That geographical concentration has become a source of profound concern for global supply chains.
China has increased military pressure on Taiwan since 2022, and Taiwan’s semiconductor industry is critical to the world’s electronics. TSMC’s revenue in 2022 reached $75.9 billion. It is the world’s largest dedicated semiconductor foundry, meaning it only makes chips for other companies; it does not design its own.
Its closest rival is Samsung Electronics, headquartered in Suwon, South Korea. Samsung’s foundry business was established in 2005, and in June 2022 it began mass production of 3-nanometer chips using a new transistor architecture called Gate-All-Around, or GAA.
The company invested $151 billion in its chip business from 2021 to 2023. Both companies now face a challenge from Intel, which relaunched its foundry services in 2021. The U.S. government has urged both TSMC and Samsung to build factories in the United States.
The aim is to reduce dependence on Taiwan for the most advanced chips. TSMC announced a plant in Arizona in May 2020, with production expected to begin in 2024. The Arizona facility is TSMC’s first major fabrication plant outside Taiwan.
It is not the only one. In November 2021, TSMC announced a new plant in Kumamoto, Japan, also with production expected in 2024.
The geopolitical risks are not abstract. A blockade or conflict in the Taiwan Strait would halt the flow of the world’s most advanced chips. There is no short-term replacement for TSMC’s capacity.
Building a new semiconductor fabrication plant takes years and costs billions of dollars. Samsung’s $151 billion investment from 2021 to 2023 shows the scale required to compete.
For now, TSMC remains the dominant force. Its ability to produce 90 percent of the world’s most advanced chips gives it extraordinary leverage over the global technology industry. The U.S. government’s push for domestic production is an attempt to reduce that leverage, but the process is slow.
The Arizona plant, announced in 2020, is still under construction. The Kumamoto plant, announced in 2021, is also not yet in production. The next few years will determine whether the semiconductor industry remains concentrated in Taiwan or spreads across multiple countries.
The U.S. government has made clear it wants more domestic production. The technology companies that depend on these chips want more geographic diversity.
But the physics and economics of chip manufacturing do not change quickly. For now, the world’s most advanced chips still come from Hsinchu. That is unlikely to change in 2026, but the foundations for a different future are being laid in Arizona, Kumamoto, and Suwon.
