TSMC, the world's leading chip foundry, is embarking on an unprecedented global expansion that is testing the resilience of Taiwan's "silicon shield" while drawing skepticism about rumored partnerships with struggling competitors like Intel.
The chipmaker is simultaneously constructing multi-billion-dollar factories in the US, Japan, and Europe while maintaining its technological dominance in Taiwan — a strategic balance that industry experts view as strengthening rather than weakening the company's position.
Credit: DIGITIMES
TSMC's competitive advantage and expansion strategy
TSMC's competitive advantage stems from its exclusive focus on manufacturing chips without competing with its customers in design. This approach has allowed the company to secure relationships with the world's largest technology firms while maintaining manufacturing excellence.
Industry insiders have dismissed rumors of a potential TSMC-Intel joint venture. According to Marco Mezger, Executive VP and COO at Neumonda, TSMC has earned its market leadership through decades of strategic investments and technological innovation, contrary to accusations that it has somehow taken semiconductor expertise from the US.
"Why should you even take a minority share from Intel, which is lagging behind in technology, does not have the ability to ramp up, and does not have the customer mindset?" Mezger questioned.
Despite concerns about diluting Taiwan's technological edge, Mezger and other experts believe TSMC's global expansion actually strengthens the island's position in the semiconductor ecosystem. While the company faces challenges in replicating Taiwan's distinctive engineering culture abroad, Mezger expects varying levels of success across regions, with Japan likely to perform best, followed by Germany with its strategic local partnerships, and then the US, where production yields are reportedly improving.
Saxony, Dresden: Future site of TSMC's chip factory, a joint venture with Bosch, Infineon, and NXP. Credit: AFP
The Dresden facility exemplifies TSMC's differentiated approach to global expansion, with three European semiconductor companies holding 30% ownership stakes and ensuring steady factory utilization. According to Mezger, this global strategy ultimately strengthens Taiwan by fostering international connections rather than isolation.
"I think it's rather strengthening Taiwan in getting connected to the other cultures instead of just being on this island," Mezger said. "It's about going out and making connections."
Intel's structural challenges
Intel's strategic direction has become a focus of industry discussion following Lip-Bu Tan's appointment as CEO. While some investors reportedly favor shifting Intel toward an asset-light model similar to Qualcomm or Broadcom, Mezger believes Tan will likely continue prioritizing manufacturing capabilities. This strategic tension highlights the challenges Intel faces when competing against TSMC's focused business model.
Konrad Young, a former independent director at SMIC and technical advisor to Intel, points to deep-seated operational issues that have accumulated over many years at the company. Intel has declined significantly from the highly efficient operation it maintained under Andy Grove's leadership.
Credit: AFP
Young describes a fundamental cultural divide between integrated device manufacturers (IDMs) like Intel and pure-play foundries like TSMC. "IDM and foundry are completely different cultures," Young emphasized.
He explained that he witnessed TSMC undergo what he called a "cultural revolution" as it transformed from a manufacturing-focused company to a service-oriented enterprise. This shift established customer priorities throughout the organization, from top management to the factory floor.
Intel's corporate structure, by contrast, has traditionally elevated technology leadership above customer needs. "The technology guy seems like the king of the company. They don't listen to their own internal customer, not to mention external customers," Young noted.
Future outlook
Despite considering Tan a strong choice for CEO, Young expressed skepticism about whether any leader could transform Intel's entrenched organization rapidly enough. Samsung faces similar foundry transition challenges, according to Young.
Any potential TSMC collaboration would provide limited value without Intel's internal transformation. TSMC can offer assistance, but Intel must develop its own capability to create a customer-centric culture, Young concluded.
Article edited by Jack Wu
