Taiwan Semiconductor Manufacturing Company (TSMC) is the world’s largest semiconductor manufacturer. Semiconductors are sometimes referred to as microchips or integrated circuits (ICs). They’re used in a huge array of electronic devices beyond computers, from smartphones to even refrigerators. Semiconductors and TSMC play a critical role in driving innovation in microchip development and influencing global economies.
What problems are TSMC trying to solve?
TSMC products are helping to solve a real-world problem by addressing some of the most pressing challenges in the global technology ecosystem such as energy efficiency, digital access and even job displacement. As a business, they align with the Impact Plan theme of ‘Planet’ due to their efforts in terms of efficiency, electrification and digitisation.
Healthcare and energy efficiency
The healthcare industry heavily relies on semiconductors in a variety of medical devices. These are essential for accurate diagnosis and monitoring of patients. Devices include heart rate and blood pressure monitors, imaging technology like CT scanning and drug delivery systems such as insulin pumps. The need for social and economic development is driven by advances in technology. This impacts industries from healthcare to construction to finance and beyond. However, advances in technology require large amounts of energy. Power consumption is currently the largest source of CO2 emissions globally. However, it’s also crucial to efforts in the transition to clean energy. In addition to moving to clean sources of energy, lower power-consuming devices also play a role in reducing energy demands.
Digital and technological access
Many people in developing economies need access to low-cost, affordable technology like smartphones. This is particularly the case in regions like Africa and Southeast Asia. Lack of access to technology can create a digital divide. This gap limits opportunities in areas including education, healthcare, and employment. The Alliance for Affordable Internet reports that mobile devices are still too expensive for billions of people. The cost of the components in these phones ultimately impacts the final retail cost to the consumer.
Job displacement and workforce transition
The rise of Artificial Intelligence (AI) and automation is leading to some concerns about job displacement, particularly in industries where repetitive tasks are being automated like manufacturing and retail. This creates challenges such as transitioning to new roles requiring digital or AI-related skills.
How does TSMC create an impact?
TSMC’s contributions to the tech and economic landscapes are transformative. They create an impact by:
Powering the digital economy
The chips produced by TSMC are embedded in products that form the backbone of the modern digital economy. Faster, more reliable connections improve remote work, education, and global communication. These create opportunities for economic growth and enable digital inclusion in underserved areas.
Healthcare
TSMC’s microchips are used in medical devices, telemedicine platforms, and healthcare AI. Together these help improve patient outcomes and enable better diagnostics and treatments. For example, faster processors and AI chips enhance imaging technologies like MRI and CT scans. These allow for earlier and more accurate detection of diseases.
Accelerating green technologies
TSMC is playing an important role in developing energy-efficient technologies. Its cutting-edge 3 mn chip enables reduced power consumption and heat generation. These are crucial for sustainable development in sectors like electric vehicles (EVs), and renewable energy. By enabling low-power chips, TSMC indirectly promotes a greener, more energy-efficient future.
Access to technology
Collaboration with companies like MediaTek has resulted in more affordable smartphone chipsets. These are used in low-cost smartphones in regions like India and Southeast Asia. Increasing affordability contributes to greater access to online education and digital services in low-income regions.
Access to education
Outside of its primary business, TSMC’s activities support other social needs. The company funds initiatives that improve access to education. It does this through its Education and Culture Foundation. This offers scholarships to students from low-income families and provides financial support for STEM programs. The foundation also runs programs that offer students access to advanced technology labs. These help students gain hands-on experience in engineering and semiconductor manufacturing.
What’s the size of TSMC’s impact?
As of 2023, TSMC controls over 50% of the global semiconductor foundry market. It’s the main supplier of high-performance chips for many of the world’s biggest companies like Apple and Alphabet. The company produces an estimated 90% of the world’s most advanced semiconductor chips.
Its semiconductors are crucial to almost every global industry. These include producing chips for major brands such as Nvidia and Apple. These impact the functionality of billions of devices. It also has an increasing presence in the automotive industry. Vehicles rely on semiconductors for systems like advanced driver assistance and electric vehicles. Its semiconductors are also the backbone of data centres that power cloud computing. These are relied on by the likes of Google and Microsoft to power server farms and AI-driven systems, which billions of people use every day.
TSMC as a financial investment
TSMC’s most recent full-year financial report for 2023 showed revenue of $68 billion and net income of $26 billion. These were slightly down on its 2022 performance though overall outperforming revenue generation every year since 2019. More recently, however, its profit for Q3 2024 grew significantly. This was driven in large part by the demand in support for AI-related innovations. From July to September 2024, revenue grew by 36% year-on-year to $23.5 billion and 12% Q2.
2024 has seen its share of uncertainties in the geopolitical landscape and global supply chains. The company has continued to drive forward innovation and expansion. Its most recent 3nm chip is the industry’s most advanced semiconductor. TMSC also expanded manufacturing globally. It established plants in the US and Japan to boost production capacity and expand growth potential. The company also started building a plant in Germany in August 2024. This’ll specialise in serving the needs of the rapidly growing European automotive industry.
TMSC’s inclusion in the Impact Plan
TSMC has been referred to by some as the world’s most important company. It has a big influence on the global economy and technological advancement. These impact critical functions in a wide range of industries. Its influence spans technology, economics, sustainability, and even geopolitical stability. TSMC’s growth shows no signs of slowing down. As more industries adopt advanced technologies like AI, autonomous driving, and augmented reality (AR), the demand for cutting-edge chips is set to increase exponentially. This in turn impacts the everyday lives of billions of people the world over.
TSMC is helping to advance these United Nations Sustainable Development Goals:
- Goal 4: Quality Education; and
- Goal 9: Industry, Innovation and Infrastructure.
Risk warning
As always with investments, your capital is at risk. The value of your investment can go down as well as up, and you may get back less than you invest. This information should not be regarded as financial advice
