The Taiwan Semiconductor Manufacturing Company's (TSMC) CEO, Dr. C.C. Wei, assured Morgan Stanley's analyst Charlie Chan that choosing which semiconductor manufacturing process technology to ramp production up is not similar to buying milk from a convenience store. Wei's comments came during TSMC's second-quarter earnings conference call in Taiwan earlier today, where he also said he was jealous of his Korean rival Samsung Foundry "making huge amounts of money."
TSMC CEO C. C. Wei Is Jealous Of Samsung Foundry Making Money Due To High Competition In The Market
As TSMC's earnings came soon after Dutch chip manufacturing equipment provider ASML posted its results, the conversation also covered the chip manufacturer's operations in the context of the earlier release.
During its earnings call, ASML's management had discussed the production for the firm's low numerical aperture (NA) EUV machines. These machines are used to manufacture some of the most advanced chips in the world, and they are currently the latest machines engaged in the volume production of advanced chips.
ASML's chief financial officer, Roger Dassen, outlined that his company was planning to increase its low NA EUV machine production capacity by 30% as it was "close to being fully covered with orders" for the equipment. His remarks suggested that the equipment was in high demand as chip manufacturers rush to fill orders for advanced AI and other chips.
During TSMC's earnings call, when Morgan Stanley's Charlie Chen asked management about their thoughts regarding ASML's capacity expansion, as it indicated the potential for competitors to build their capacity to compete with the firm, Wei commented on the process of choosing a foundry.
The executive remarked that when chip designers, such as Apple, NVIDIA and AMD, decide which foundry to choose, the process is more complex than simply picking based on production capacity. Likening the idea of simply using production capacity to pick a technology node to buying milk from a convenience store, Wei stated:
"From the competition point of view, choosing a technology, ramping it up, is not buying a milk from 7-Eleven. Well, I’m quoting the sentence from my customer, anyway. It says that you’re choosing a kind of technology partner. It is no shortcut. You need to understand the technology. You need to really utilize it using the test chip, and then something, and work together, and then prepare the capacity and ramp it up. That’s why I say it takes about five years. It’s not that today you think this milk is better, you go to the next store, it’s a 7-Eleven. You don’t like it, you go to another store. No."
Chan's question also covered TSMC's competitors Intel and Samsung. The analyst wondered how TSMC was going to compete with Intel, which was getting US government support, and with Samsung, which made hefty profits from its foundry business. In response, the CEO outlined that TSMC "also got the government support, by the way, although we don’t announce it." As for Samsung, Wei admitted that "they make a huge amount of money," and added that he was jealous "about it." However, the TSMC executive believes that customer trust and technological capability remain the true drivers of a foundry's success.
About the author: Ramish is a seasoned technology writer and editor with more than a decade of experience. He specializes in semiconductor fabrication and market analysis. With a background in finance and supply chain management - via his bachelors in Finance and a micromasters in supply chain management from MIT - Ramish combines financial rigor with deep industry insight to deliver accurate and authoritative coverage.
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