TSMC is the most important parts manufacturer of almost every Megatrend including Smart Phone, Big Data, AI and IoT.
TSMC is the largest company on the Taiwan stock market. It has a market capital value of $182 billion. Revenue in 2016 reached Baht 29,415 million and profit of Baht 10,317 million. Net profit margin up to 35%
TSMC has many leading companies. Apple, for example, hired TSMC to produce the A11 chip to be used in Iphone8, or a company like NVIDIA that hired TSMC to produce parts used in the iconic GPU (Graphic Processing Unit).
IT MAY BE WONDERING WHY GIANTS LIKE APPLE AND NVIDIA DON’T PRODUCE THEMSELVES, AND WHY OEM-LIKE COMPANIES HAVE SUCH HIGH PROFIT MARGINS.
I have to say, chips. Nowadays, there is a lot of variety. Each chip acts differently depending on the equipment to be used, so it is very complicated, making it hundreds of steps to produce one chip. The factory used to produce the plant requires highbarrier to entry, so it is not easy for new players to take over the market share. The profitability of leaders like TSMC is therefore quite high. Then any other player can produce. That technology is old, making it sell at a lower price.
In addition, TSMC is investing in research with its clients to achieve new technologies that meet the needs of customers. It’s quite difficult to find a company that can easily take over market share from TSMC.
TSMC or Taiwan Semiconductor Manufacturing Company was founded by Maurice Zhang, a Taiwanese businessman. 34 years ago. The company’s main business is to hire chipset makers for other companies.
It covers chipset production in the technology business, divided into 4 main groups.
That is, smartphones, IoT devices, cars, as well as HPC or high-end processing.
In the past year, TSMC earned 1.4 trillion baht. Profit 5.6 billion baht
- Revenue growth 25.2%
- Profit growth 50.0%
Last year, TSMC benefited from the growth of technology manufacturers as demand for computers and smartphones grew during the pandemic crisis.
Another interesting thing is that TSMC has a net profit margin of up to 39%.
This is up from 32.3% in the same period last year.
If we look at TSMC’s net profit margin compared to both luxury brands and technology companies, we’re going to have to look at TSMC’s net profit margins.
- LVMH 13%
- Ferrari 18%
- Apple 21%
- Google 21%
- Facebook 26%
- TSMC 39%
TSMC is highly profitable than both the owners of global luxury brands as well as technology companies, and this is because the chip manufacturing industry is a niche business.
It requires research and development of highly sophisticated manufacturing technologies.
It also requires a lot of investment to build factories.
R&D value. TSMC
- 2019 worth 9.8 billion baht
- 2020 worth 1.2 billion baht
Just R&D value. TSMC That’s more than the revenue of other small chip companies.
These make the chip maker business highly barrier to entry, making it difficult for new players to compete.
Or even a tech company that, despite successfully designing its own chips like Apple, doesn’t have its own manufacturing plant and must hire another company to produce it.
And now TSMC considers that it has a lot of manufacturing technology ahead of other manufacturing contractors in the market.
The company’s high-tech technology is preferred by many big companies.
Such as Apple, Nvidia, AMD, Broadcom, and Qualcomm.
As in the case of Apple, it has partnered with TSMC.
From the A8 chip on the iPhone 6 to the A14 Bionic model in the current model.
It also includes the M1 chip on Apple’s latest MacBook series.
Apple’s electric cars are also expected to use chips made from TSMC.
And now, Global Chip Manufacturers Market Share Who’s there?
- TSMC 55.6%
- Samsung 16.4%
- UMC 6.9%
- GlobalFoundries 6.6%
- SMIC 4.3%
- Others 10.2%
From here, TSMC occupies more than half of its market share and is 3.4 times Samsung’s market share.
In the future, the value of TSMC has increased by 3.4 times in five years.