Original article appeared at http://www.wired.com/wired/archive/10.07/Semiconductor.html
Quick: What do your Xbox, your Compaq laptop, and your Nokia handheld have in common? Hint: It's in the chips. Even though the circuits are all designed by different companies - Nvidia, Via Technologies, and Qualcomm, respectively - the silicon (that) they're built on is milled by Taiwan Semiconductor Manufacturing Company, a foundry that makes the wafers at the heart of integrated circuits.
When the outfit was formed 15 years ago in Hsin-Chu, Taiwan, it manufactured chips on a contract basis for established players like Philips and, later, Texas Instruments. But TSMC founder and CEO Morris Chang soon noticed that top engineers were leaving old-guard firms to start their own chip businesses, and he foresaw the need for a dedicated manufacturer to build out their designs. These "fabless" firms now represent more than two-thirds of TSMC's revenue, and the company offers them access to engineering and supply-chain information online. "We like our fabless customers to feel that they have their own fab," says deputy CEO F. C. Tseng.
While rival foundries UMC and Charter Semiconductor got crushed by last year's telecom implosion, TSMC escaped the worst of it. The firm's diverse client base, which includes PC and consumer electronics companies, provided a badly needed cushion. In fact, as the rest of the industry reeled, TSMC invested $6 billion in two new fabrication plants that use a 300-mm wafer standard, which can more than double the number of chips that fit on one wafer.
Now, the onetime bottom-feeder is giving its former old-line clients a run for their money: This spring, it unveiled a chip with 90-nm circuit density a week before Intel. And although the chip giant can point to the many computers with "Intel inside," TSMC can claim that its products are the foundation for the electronics industry's biggest successes.- Chris Baker-