What is TMSC and why is it so important to the global economy? – Tech News (Trending Perfect)

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As Taiwan recovers from a deadly 7.2-magnitude earthquake, people may feel symbolic aftershocks as far away as Silicon Valley. As the producer of almost all of the world's most advanced microchips, the East Asian island nation plays a big role in providing the brains for everything from computers to cars to the latest artificial intelligence technology — and any disruption could be damaging.

Here's what you need to know about the effects of the earthquake on Taiwan's semiconductor industry (TSMC), why it matters, and how it relates to ongoing tensions with China.

TSMC is one of the few companies in the world that can manufacture microchip components at the nanometer scale.

TSMC is one of the few companies in the world that can manufacture microchip components at the nanometer scale.credit: Bloomberg

What is TSMC?

Taiwan's largest company, TSMC, is also the world's largest semiconductor foundry. Together with other Taiwanese manufacturers, which are headquartered in the northwestern city of Hsinchu, the company builds about 90 percent of the world's most powerful microchips.

Almost all of the world's other major semiconductor companies are “fabless” companies, meaning they design the chips but send the blueprints to an outside manufacturer (generally TSMC) to manufacture them. This includes Nvidia, Apple, AMD, and Qualcomm.

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Why is TSMC so important?

For the Taiwanese government, the company's largest shareholder, TSMC is vital because it accounts for about 30 percent of the Taiwan Stock Exchange's main index, and exports chips worth hundreds of billions of dollars every year. But TSMC is also essential in providing a huge amount of the world's advanced technology.

With the boom in artificial intelligence requiring more and more powerful chips, and continued demand for smartphones and other processor-intensive devices, TSMC is already struggling to scale fast enough to meet demand. It is opening new factories in Japan, Germany and the United States, but will not turn out chips to full capacity until 2028 at the earliest.

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