the long-standing reign of tsmc could be coming to an end

The long-standing reign of the Taiwan Semiconductor Manufacturing Company, also known as TSMC, could be coming to an end soon as some of its toughest rivals including Micron Technologies and Intel Corporation are spending billions to build large chip manufacturing facilities.

Intel’s Chief Executive Officer, Pat Gelsinger, has pledged to invest $4.6 billion in the development of a chip manufacturing operation in Wroclaw, Poland and it has also reached a deal with the German government to establish a factory in the country that would reportedly cost $33 billion.

These ambitious plans are part of Intel’s agenda to expand its installed capacity to deliver as many chips as needed to data centers and cloud infrastructure providers that have seen tremendous growth in the demand for their services, especially amid the growing adoption of artificial intelligence.

The compound will be located in the region of Magdeburg and the land has already been acquired by Intel. The first facility to be built should be completed from four to five years from now and it will reportedly generate 7,000 construction jobs and 3,000 permanent high-tech jobs for Germany.

“Today’s agreement is a milestone for Germany as a location for innovation and investment, for jobs, resilience, and competitiveness. Intel’s investment will raise semiconductor production in Germany to a new level and is an important contribution to growing European sovereignty”, commented Robert Habeck.

Israel is also on Intel’s Crosshairs while Micron Turns to China, India, and Japan

These two new facilities come to join an ongoing construction project in the state of Ohio in the United States that involves a $20 billion investment from Intel to develop two chip manufacturing facilities.

Alongside these projects, Bloomberg News also reported that the chipmaker could soon close a deal with Israel’s government to set up a plan in the Middle East country. The project was valued by a source familiar with the negotiations in $10 billion but government officials have publicly mentioned a higher price tag.

In a similar fashion, Micron, another prominent, yet slightly smaller, player in the semiconductors industry, has pledged to invest $3.6 billion in Japan to develop a memory chip manufacturing facility.

The company is also in talks to make a $1 billion investment in India for a packaging facility and already poured $600 million into a factory in China that packages products at a point when authorities imposed a ban on the company that prevents it from providing chips that are used to power the country’s critical infrastructures.

TSMC Chips Are Currently Critical to the Economic Success of Developed Countries

By the fourth quarter of 2022, data from Statista indicates that TSMC held 58.5% of the global semiconductor foundry market. This company arguably builds and prints the best chips at the lowest cost – at least thus far.

Its geographical location is a matter of controversy and poses a threat to developed economies like the United States and the European Community as Taiwan Semiconductor is located in Taiwan – a country that China refuses to acknowledge as a sovereign nation.

At a point when geopolitical tensions are high amid the ongoing invasion of Ukraine by Russia, ensuring the world’s chip supplies is critical to the economic success of these nations and that is why the US and other countries are enticing companies like Intel and Micron to invest billions into developing manufacturing capabilities that allows them to fill the shoes of TSMC if needed.

Meanwhile, the rapid growth of AI-powered applications is causing a surge in the demand for robust cloud infrastructures including those supplied by companies like Microsoft (MSFT), Amazon (AMZN), and Alphabet (GOOG).

All of these businesses need an ongoing supply of chips to power the significant number of servers that make up their massive data centers and TSMC’s manufacturing capacity could just fall short of what the industry needs at this juncture.