Björn Bredehöft @2BSmart: "𝐈𝐬 𝐓𝐒𝐌𝐂 𝐭𝐡𝐞 𝐦𝐨𝐬𝐭 𝐢𝐦𝐩𝐨𝐫𝐭𝐚𝐧𝐭..."

Germany

𝐈𝐬 𝐓𝐒𝐌𝐂 𝐭𝐡𝐞 𝐦𝐨𝐬𝐭 𝐢𝐦𝐩𝐨𝐫𝐭𝐚𝐧𝐭 𝐜𝐨𝐦𝐩𝐚𝐧𝐲 𝐢𝐧 𝐭𝐡𝐞 𝐰𝐨𝐫𝐥𝐝? Dear Investors, Semiconductors are the new oil of our time. The digital world is based on chips and the more complex a product, the more sophisticated the built-in chip has to be. This does not only apply to computers, but also to cars, healthcare, AI, 5G, weaponry and so on. When we think of semiconductor companies, $NVDA (NVIDIA Corporation) and $AMD (Advanced Micro Devices Inc) come to mind. However, we have to differentiate between two types of semiconductor companies: fabless and foundry. The aforementioned companies only research and develop semiconductor chips (fabless). The manufacturing and testing of the chips is done by another type of company, the so-called foundry companies. The biggest and most advanced foundry is TSMC. Unlike Samsung, $TSM (Taiwan Semiconductor Manufacturing Co Ltd - ADR) is a pure contract manufacturer that does not produce its own chips but carries out orders for specific chips developed by the customers according to their requirements. You can imagine it like this: A customer, for example $VOW3.DE (Volkswagen AG), rarely orders chips directly. The carmaker orders its components from a supplier like Bosch. Bosch orders the chips from semiconductor companies such as AMD. And AMD then orders a self-designed chip to be manufactured by TSMC. The outstanding position of TSMC in the global market is based on Taiwan being the unmatched leader of the global semiconductor industry with a complete industry supply chain and major research activities being focused on OEM wafer manufacturing. Apart from the technological advantage, TSMC’s business model perfectly aligns with its clients: As a pure contract manufacturer, there is no risk that TSMC will ever compete with its customers. This used to be a problem for $AAPL (Apple), when it outsourced its iPhone chip manufacturing to Samsung, until Samsung launched its Galaxy phone line. $SMSN.L (Samsung Electronics Co Ltd - GDR), that knew everything about Apple’s chip production process, had become a direct competitor. Since then, Apple contracted TSMC for its advanced chips and remains the biggest customer to this day. TSMC not only accounts for more than 70% of the world foundry market but also produces some of the most sophisticated chips. Roughly speaking, the performance of a chip is dependent on its nanometer-architecture, which means the spacing of the transistors on a chip. The smaller the nm-number, the more transistors per area and less resource consumption per computational effort are possible. The chips are more efficient and (theoretically) create more computing power in less space with less power consumption. In 2025, only TSMC was capable of manufacturing the most advanced next-generation 2-nm chips in series production. However, with a market share of only 10% in the foundry market compared to TSMC’s 53 %, rival Samsung does not seem like a real threat. In another post, we will take a look at the China-Taiwan conflict and TSMC’s geopolitical importance because the latest events surrounding Venezuela and the USA could also cast a shadow towards Taiwan. Have a good day, Björn