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The Rise of Taiwan’s Semiconductor Industry

Besides leading in semiconductor production, Taiwan is also becoming a new force in chip design to compete with the US.

According to TrendForce’s statistics on the world’s top chip design companies based on revenue in 2021, there are four Taiwanese companies including MediaTek ranked fourth, Microelectronics ranked sixth, Realtek Semiconductor eighth and Himax Technologies first-time export. appeared on the list at 10th place. The remaining six positions belong to American businesses.

Photo: LA Times

Image: LA Times

Over the years, the US has always been a powerhouse in semiconductors with famous names like QualcommBroadcom, Nvidia, AMD… Meanwhile, 2021 marks the first time that Taiwan has featured in four of the top 10 positions for semiconductor design in TrendForce’s ranking, showing their growing presence in this field. .

Chip design is considered as one of the difficult areas of the semiconductor industry. Advanced design capabilities are a must for high-performance chip development. This model has been pioneered by the US since the 1980s and many businesses have poured hundreds of billions of dollars to get where it is today.

Previously, the US followed the path of holding the design copyright, then ordering production at outsourcing facilities in Asia. Qualcomm’s growth and becoming a power in the semiconductor industry since 1985 or Nvidia since 1993 is also thanks to this model.

Meanwhile, Taiwanese companies, previously considered only as subcontractors, are gradually posing a threat to the US. According to experts, the rapid growth of Taiwanese chip designers is partly due to the fact that they have top domestic partners in outsourcing, such as TSMC or United Microelectronics Corp (UMC).

In fact, design and production always need to work closely together. “The closer the distance is, the faster the project progress will be because there are no customs clearance problems, such as border closures causing supply chain disruptions during the recent pandemic,” an expert commented. .

According to Nikkei Asia, the strong relationship between semiconductor companies has come into play in the current chip shortage. With a continuous flow of orders from all over the world, TSMC and UMC prioritize Taiwanese design companies, thereby helping partners increase their rankings significantly in the market.

This is evident in the field of smartphone chips, where MediaTek – a company with a close relationship with TSMC – surpassed Qualcomm to become the market leader at the beginning of the year. According to the financial report for the first quarter of 2022, MediaTek’s profit reached 1.13 billion USD, up 30% compared to the same period last year and the highest ever. Meanwhile, revenue grew 32% to a record $4.8 billion on chip demand 5G for smartphones.

In fact, the four Taiwanese companies on TrendForce’s list all rely heavily on TSMC and UMC. “The compatriot factor has helped Taiwanese chip design companies gain a great advantage in the past time. They have advantages in terms of geography and relationships, from which the process from design to production becomes easy, more effective”, commented Chris Hung, Deputy Director of Market Intelligence & Consulting Institute.

Many American semiconductor companies also have a Taiwanese presence. Seven of the top 10 chip enterprises in TrendForce’s ranking have leaders from Taiwan. “Their connection to Taiwan could be the link in future mergers or acquisitions in the industry.” Nikkei Asia forecast.

Bao Lam (according to Nikkei Asia)

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