For more than 30 years, Intel Corp has dominated chipmaking, producing the most important component in the bulk of the world’s computers. That run is now under threat from a company many Americans have never heard of.
Taiwan Semiconductor Manufacturing was created in 1987 to churn out chips for companies that lacked the money to build their own facilities. The approach was famously dismissed at the time by Advanced Micro Devices founder Jerry Sanders. “Real men have fabs,” he quipped at a conference, using industry lingo for factories.
These days, ridicule has given way to envy as TSMC plants have risen to challenge Intel at the pinnacle of the $400 billion industry. AMD recently chose TSMC to make its most advanced processors, having spun off its own struggling factories years before.
TSMC’s threat to Intel reflects a sea change in chipmaking that’s seen one company after another hire TSMC to manufacture the chips they design. Hsinchu-based TSMC has scores of customers, including tech giants Apple and Qualcomm, second-tier players like AMD, and minnows such as Ampere Computing. The explosion of components built this way has given TSMC the technical know-how needed to churn out the smallest, most efficient and powerful chips in the highest volumes.
“It’s a once-in-a-50-year situation,” said Renee James, the former No. 2 at Intel who heads startup Ampere. Her company is less than two years old and yet it’s going after Intel’s dominant server chip business. That Ampere thinks it can compete is a testament to stumbles by Intel, and TSMC’s ability to benefit from those mistakes.
It’s been a decade since Intel faced major competition and its 90 percent revenue share in computer processing will again deliver record results this year. But some on Wall Street are concerned, and rivals are emboldened, because TSMC has a real chance to replace Intel as the best chipmaker in the business.