With the rise in demand for AI chips, big-tech companies like Google, Microsoft, Amazon, Apple, and NVIDIA have turned to Taiwan Semiconductor Manufacturing Co (TSMC) for production. And there’s no sign of stopping this partnership as TSMC continues to solidify its leadership in the global semiconductor market.
For Q2 FY25, the chip maker reported a significant 54.2% year-over-year increase in net income, reaching NT$325.3 billion ($10.2 billion), surpassing analysts’ expectations of NT$297.7 billion.
TSMC has outpaced its rivals Samsung and Qualcomm in the semiconductor foundry space with its advanced technology, manufacturing capabilities, research, and strategic partnerships.
For instance, TSMC has been NVIDIA’s long-standing partner for over two decades, producing high-end GPUs for the technology company. Reflecting on the partnership with TSMC, Jensen Huang, co-founder and CEO of Nvidia, recently stressed that the company has no intentions of reducing dependency on TSMC.
“Our reliance on TSMC stems from their status as the world’s best in semiconductor manufacturing, not just by a small margin, but by a significant lead. TSMC’s expertise is matched, not only in technology but also in scalability and the deep trust and agility they bring to their partnerships,” Huang said at the Nvidia AI Summit, in Mumbai.
He also mentioned that during the well-known “Blackwell yield challenge,” TSMC mobilised tremendous resources to help the company recover, leading to full production and a groundbreaking scale.
According to MarketsandMarkets data, the global AI chip market is expected to grow at a CAGR of 20.4% from 2024 to 2029. Regions like Asia Pacific and North America are anticipated to exhibit significant demand for AI chips during the forecast period.
The strong earnings from the TSMC chipmaker have eased concerns about the sustainability of the AI hardware boom and global chip demand.
So, looking ahead, TSMC expects further growth in sales during the fourth quarter, fueled by the expanding need for the chips. Well, the impressive growth underscores investors’ confidence in TSMC’s ability to capitalise on the booming AI and semiconductor markets.
TSMC for All
At AWS re:Invent 2023, the cloud giant took a major leap forward by unveiling the next generation of its in-house chips, AWS Graviton4 and AWS Trainium2. Earlier, Microsoft also introduced its own homegrown chips, the Azure Maia 100 AI Accelerator and Azure Cobalt 100 CPU. Interestingly, both AWS and Microsoft turned to the same source for manufacturing: TSMC, the world leader in advanced chip fabrication.
And it doesn’t stop there, Apple is working with TSMC to incorporate generative AI features into iOS 18, built on the company’s advanced N3E 3-nanometer node.
TSMC is also behind Google’s Tensor Processing Units (TPUs), which have been powering AI workloads since their debut at Google I/O 2016. Beyond that, Google is developing a custom chip to run its Pixel smartphones, replacing Samsung with TSMC for future production.
Samsung is Also Here
Meanwhile, Samsung is racing to catch up with TSMC. During its annual Foundry Forum in San Jose, California, Samsung laid out a roadmap for chipmaking and outlined its vision for the AI-driven future.
According to data from TrendForce, Samsung’s position in the foundry space slipped slightly this year, with its market share falling to 11% in Q1, down from 11.3% the previous quarter, while TSMC widened its lead, growing its share from 61.2% to 61.7%.
Nevertheless, Samsung’s earnings are rebounding thanks to the surging demand for AI computing components. This demand has invigorated Samsung’s core memory chip business and opened new doors for contract manufacturing.
However, for Samsung to seriously compete in the foundry arena, it needs to convince major clients like NVIDIA, which relies on high-performance chips for AI accelerators, that its production capabilities are advanced and dependable. Adding to the pressure is the emergence of Intel as a contender, with the American chipmaker reopening its plants to attract orders from former rivals.
But with Samsung’s latest breakthrough such as a backside power delivery network, a technology that enhances power, performance, and chip efficiency by placing power rails on the backside of silicon wafers, coupled with its ability to provide logic, memory, and advanced packaging, the company can be positioned to rapidly secure more contracts for manufacturing AI chips in the future.
What’s Next?
TSMC is up in the pre-market, reporting blowout earnings. The reason is that it is the only company in the world that can make complex semiconductors at scale.
But TSMC’s leadership and its partnership has come under scrutiny recently.
As per the recent updates, an advanced chip made by TSMC was reportedly found in Huawei’s latest AI chips. TechInsights, the Canadian research firm, dismantled Huawei’s AI accelerator and discovered its Ascend 910B chip was made by TSMC. It raised concerns about potential violations of U.S. export controls.
TSMC has notified the US government after being informed. However, Huawei has denied producing any chips via TSMC since 2020 and claims it has never launched the 910B chip. TSMC also reported Huawei’s possible attempts to have AI chips made to the US government.
Amidst this, TSMC is truly at the heart of today’s chip innovations, powering the next wave of AI and cloud computing across the biggest names in tech.
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