Apple And Nvidia Supplier Taiwan Semiconductor Leads Semiconductor Market with 64% Share

Apple Inc AAPL is finalizing the verification of its “made in America” processor chips from Taiwan Semiconductor Manufacturing Co’s TSM plant in Arizona.

The first batch of commercial chips will likely by this quarter, Nikkei Asia reports.

The 2020 pandemic prompted countries including the U.S., Europe, and Japan to consolidate their semiconductor position by tapping chipmakers like Taiwan Semiconductor, Intel Corp INTC, Samsung Electronics Co SSNLF, thereby reducing their dependence on China.

Also Read: Taiwan Semiconductor Begins 4nm Chip Production in Arizona, Eyes $11.4 Billion Q4 Profit

Additionally, the U.S. started restricting China’s access to advanced semiconductor technology, which Washington alleged China utilized to boost its military warfare position.

Washington also restricted China’s access to sophisticated Nvidia Corp NVDA and Taiwan Semiconductor’s artificial intelligence chips.

The country also canvassed its allies, including Taiwan and the Netherlands (home to chip equipment maker ASML Holding ASML, to restrict semiconductor trade with China.

Meanwhile, Taiwan Semiconductor bagged a 64% share of the global foundry business in the third quarter of 2024, up from 62% in the second quarter, Taipei Times cites Counterpoint Research.

Last November, Counterpoint said Taiwan Semiconductor owed its moat to high utilization rates in its 5nm and 3nm processes, artificial intelligence (AI) accelerator demand, and smartphone sales.

Samsung came second with a 12% share backed by its 4nm and 5nm processes, Taipei Times cites Counterpoint.

China’s Semiconductor Manufacturing International came third after it secured 6%, backed by its 28nm process, Taipei Times cites Counterpoint.

United Microelectronics Corp UMC tied with GlobalFoundries Inc GFS with a 5% share backed by demand in the Internet of Things and communications infrastructure markets.

The 3nm process scored a second position in the third quarter, bagging a 13% share, on the back of the full utilization of Taiwan Semiconductor’s production capacity, as production by Apple, Qualcomm Inc QCOM, Intel gained momentum.

The 5 and 4nm processes bagged the numero uno position, securing 24% of the market in the third quarter, courtesy of demand for Nvidia’s Blackwell graphics processing units.

Taiwan Semiconductor plans to start producing its 2nm process at its fab in Hsinchu County’s Baoshan Township in 2025.

Goldman Sachs expressed optimism over Taiwan Semiconductor’s prospects, citing AI demand and advanced node growth. Taiwan Semiconductor’s price hikes for 3 and 5nm nodes in 2025 (while Intel and Samsung struggle to develop their AI technology moat) could boost its margins to over 59%.

Taiwan Semiconductor stock surged over 98% in the last 12 months. Investors can gain exposure to the stocks of companies that manufacture semiconductors through VanEck Semiconductor ETF SMH and iShares Semiconductor ETF SOXX.

Price Action: TSM stock is down 0.65% at $200.05 at the last check on Tuesday.

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