The Secret Sauce for Taiwan's Chip Superstardom

upstart writes:

(A bit on the long side, but well worth the read. --Marty)

The secret sauce for Taiwan's chip superstardom:

When 23-year-old Shih Chin-tay boarded a plane for the United States in the summer of 1969, he was flying to a different world.

He grew up in a fishing village surrounded by sugarcane fields. He had attended university in Taiwan's capital Taipei, then a city of dusty streets and grey apartment buildings where people rarely owned cars.

[...] Today's Taipei is rich and hip. High-speed trains zip passengers along the west coast of the island at 350km/h (218mph). Taipei 101 - briefly the tallest building in the world - towers over the city, an emblem of its prosperity.

Much of that is down to a tiny device no larger than a fingernail. The silicon semiconductor - wafer-thin and best-known now as a chip - sits at the heart of every technology we use, from iPhones to airplanes.

Taiwan now makes more than half the chips that power our lives. Its biggest manufacturer, Taiwan Semiconductor Manufacturing Company (TSMC), is the ninth-most valuable business in the world.

That makes Taiwan nearly irreplaceable - and vulnerable. China, fearing it could be cut off from the most advanced chips, is spending billions to steal Taiwan's crown. Or it could take the island, as it has repeatedly threatened to do.

But Taiwan's path to chip superstardom will not be easy to replicate - the island has a secret sauce, honed through decades of laborious work by its engineers. Plus, the manufacturing relies on a web of economic ties that the escalating US-China rivalry is now trying to undo.

[...] Back then, he quickly realised that taking on US and Japanese giants at their own game was a losing proposition. Instead TSMC would only manufacture chips for others, and not design its own.

This "foundry model", which was unheard of in 1987, changed the landscape of the industry and paved the way for Taiwan to become the pack leader.

[...] "Rule number one at TSMC is don't compete with your customers," Dr Shih says.

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