Breaking through bottlenecks
At the 20th-anniversary summit forum, Morris Chang predicted that in the coming ten years the growth rate of the global semiconductor industry would slow down to only 5-10% per year. He said that without a "breakthrough" material in the offing, the wafer industry would hit a technological bottleneck.
Facing the challenge of slower overall industry growth, Chang thinks that IC design companies and contract wafer manufacturers must move from the current "relay-race" model of cooperation between upstream and downstream entities to an intimate relationship over the whole course, setting up even deeper and closer partnerships.
Further, there is the increasing investment in advanced semiconductor processes. During the era of the eight-inch wafer, it cost only US$1.2 billion to build a factory. When the scale went to the 12-inch wafer, the price of construction jumped to US$3 billion. For the next generation, that of the 18-inch wafer, costs will rise to some US$12-15 billion. In the future the barriers to entry to the contract wafer manufacturing industry will be more difficult to overcome and the number of those entering the field will decline.
Another aspect is that product design costs for IC design companies have already greatly increased from less than US$10 million at the 0.13-micron level to more than US$45 million at the 65-nanometer level. This increase in cost may force many large vendors to abandon their own independent design work and to cooperate on design with TSMC and other contract wafer manufacturers. This also represents an opportunity.
For the future, Morris Chang thinks that while in the past TSMC concentrated on contract manufacturing of logic chips, in the future it will produce a diversified product line that will include embedded DRAM as well as flash memory, niche memory, mixed-signal chips, high-pressure process technology and image sensors, all virgin markets for TSMC. Chang believes that just by strengthening the partner relationship with customers, in the next ten years TSMC's compound annual revenue growth rate will beat the industry average of 5-10%.
At the end of the 20th anniversary forum, CEO Rick Tsai summed it all up: IC products are uniquely capable of being used in every branch of industry and totally changing the lives of all mankind. "We must continue to advance to higher and higher levels and move forward to the top of the value chain, in step with everyone else."
What is certain is that the future semiconductor world will rest on the three legs of a tripod: Intel for CPUs, Samsung for memory and TSMC for contract wafer fabrication. Will the next movement in this symphony see TSMC capable of overawing their competitors and taking the field? It's something worth looking forward to.
TSMC Fact FileFounded February, 1987
Capital NT$258,181.66 million
Revenue 2006: NT$313.881 trillion
Products and services Large-Scale and Very-Large-Scale IC wafer fabrication, wafer packaging, probing, photomask fabrication and design assistance.TSMC has one six-inch, five eight-inch and two 12-inch wafer fabs.
Ranking According to IC Insights (March, 2007), TSMC was the 6th largest global semiconductor company in 2006.The London Financial Times ranked TSMC at No. 136 in its "Top 500 Listed Companies" in 2006. Forbes ranked TSMC at No. 310 in its "Global 2000" in 2007.