Why does one company in Taiwan make so many of the world's advanced chips?

One company in Taiwan makes so many advanced chips because it pioneered a business that suits the industry: a factory that only makes chips designed by other firms. TSMC, the Taiwan Semiconductor Manufacturing Company, is the main supplier for Nvidia, Apple, Broadcom and Qualcomm, and in the second quarter of 2025 it took 70.2 percent of the world's contract chip-making revenue, according to the market research firm TrendForce. Taiwan's exports of integrated circuits amounted to $184 billion in 2022, nearly 25 percent of Taiwan's GDP.

The idea was simple. Companies known as fabless firms only design chips, and merchant foundries only manufacture them for others. Chip factories are expensive to build and maintain, and unless they are kept at nearly full use they become a drain on a company's finances. A foundry that serves many designers can keep its plants busy, and a designer without a factory avoids the cost. TSMC was established in 1987 as a joint venture of Taiwan's government, a research institute and private investors, and its founder Morris Chang made it the world's first dedicated semiconductor foundry.

Getting started was hard. Chang had been offered a blank cheque by Taiwan's government to build a chip industry, but Texas Instruments and Intel turned him down. Only Philips agreed to put up $58 million for a 27.6 percent stake.

Today such concentration worries some people: TSMC's role as a supply chain bottleneck raises concerns that a disruption could cause another worldwide chip shortage. Since the early 2020s TSMC has opened fabs in Japan and the United States, an expansion described as a way to mitigate business risks in the event of war between Taiwan and the People's Republic of China.