Ian King, Debby Wu

Irish Independent - Business Week - - TECHNOLOGY -

FOR more than 30 years, In­tel has dom­i­nated chip­mak­ing, pro­duc­ing the most im­por­tant com­po­nent in the bulk of the world’s com­put­ers. That run is now un­der threat from a com­pany many have never heard of.

Tai­wan Semi­con­duc­tor Man­u­fac­tur­ing Co (TSMC) was cre­ated in 1987 to churn out chips for com­pa­nies that lacked the money to build their own fa­cil­i­ties. The ap­proach was fa­mously dis­missed at the time by Ad­vanced Mi­cro De­vices founder Jerry San­ders. “Real men have fabs,” he quipped at a con­fer­ence, us­ing in­dus­try lingo for fac­to­ries.

These days, ridicule has given way to envy as TSMC plants have risen to chal­lenge In­tel at the pin­na­cle of the $400bn (€354bn) in­dus­try. AMD re­cently chose TSMC to make its most ad­vanced pro­ces­sors, hav­ing spun off its own strug­gling fac­to­ries years be­fore.

TSMC’s threat to In­tel re­flects a sea change in chip­mak­ing that’s seen one com­pany af­ter an­other hire TSMC to man­u­fac­ture the chips they de­sign.

Hs­inchu-based TSMC has scores of cus­tomers, in­clud­ing tech gi­ants Ap­ple and Qual­comm, sec­ond-tier play­ers like AMD, and min­nows such as Am­pere Com­put­ing. The ex­plo­sion of com­po­nents built this way has given TSMC the tech­ni­cal know-how needed to churn out the small­est, most ef­fi­cient and pow­er­ful chips in the high­est vol­umes.

“It’s a once-in-a-50-year sit­u­a­tion,” said Re­nee James, the for­mer No 2 at In­tel who heads startup Am­pere. Her com­pany is less than two years old and yet it’s go­ing af­ter In­tel’s dom­i­nant server chip busi­ness. That Am­pere thinks it can com­pete is a tes­ta­ment to stum­bles by In­tel, and TSMC’s abil­ity to ben­e­fit from those mis­takes.

In­tel has a plant in Leixlip in Co Kil­dare. It first es­tab­lished an Ir­ish op­er­a­tion in 1989 and has in­vested close to €14bn. It now em­ploys al­most 5,000 peo­ple here hav­ing won out on a num­ber of ma­jor in­vest­ment de­ci­sions since then.

It’s been a decade since In­tel faced ma­jor com­pe­ti­tion and its 90pc rev­enue share in com­puter pro­cess­ing will again de­liver record re­sults this year.

But some on Wall Street are con­cerned, and ri­vals are em­bold­ened, be­cause TSMC has a real chance to re­place In­tel as the

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