TSMC used to be a global chip foundry giant, but after joining the US chip sanctions, the company began to stop taking orders from manufacturers in Chinese mainland and focused on the US market. Although the move was considered a wise decision at the time, it now appears that it has put TSMC in a difficult position.
After the U.S. ban tore up the order, it took Huawei four full years to recover. The incident has led to reflections on whether relying on the U.S. market will put TSMC in a vulnerable position when competing for orders. In addition, the rise of Intel, a chip foundry in the United States, has also brought huge competitive pressure to TSMC.
The reason for all this is that TSMC has turned away from the Chinese mainland market, abandoning Chinese mainland customers while pursuing American orders, resulting in its inability to compete in the American market.
Due to the change in the situation, TSMC was forced to cut prices to compete for more orders. Recently, TSMC has reduced the price of foundries** with mature processes of 28nm and above by 2% to 5%, and also plans to reduce foundry of 7nm chips by 5% to 10%.
However, price cuts are not a sustainable solution, especially for a global chip giant. TSMC's price cuts caused its revenue to collapse, with revenue falling 10% year-on-year in the third quarter8%, net profit fell 25% year-on-year. The capacity utilization rate is also only about 80%.
TSMC's past glory is a thing of the past, and now they have to cut prices to compete for orders, but this approach does not solve the underlying problem and can only be regarded as a temporary response.
Contrary to TSMC, Chinese manufacturers are speeding up the localization process of chips. According to the blueprint, China plans to complete 70% of the localization of chips by 2025.
At present, SMIC is able to build 1With 4 mature chips, Huawei and the industrial chain behind it have achieved mass production of 7nm chips. In addition, Huahong's acquisition of GF and BYD's takeover of Unisplendour also indicate that a new round of chip expansion is coming.
The accelerated localization process of Chinese manufacturers has enabled them to no longer rely on TSMC and can produce chips independently and controllably, improving the competitiveness of the domestic chip industry.
TSMC turned its back on the Chinese mainland market in pursuit of U.S. orders, which proved to be a wrong decision. Without the support of a strong motherland, TSMC can only allow American companies to bargain and face competition from local foundry Intel.
This story teaches us a profound lesson, that is, enterprises should not only look at the immediate benefits, but also think about the long-term development. Combined with personal thinking and insights, we can realize that it is very important for enterprises to adhere to independent innovation and maintain the advantages of independent technology and industrial chain. At the same time, it is necessary to seek diversified markets and customers, and avoid over-reliance on one market or customer.
All in all, TSMC's short-sighted decisions in the past have led to today's embarrassing situation. At the same time, Chinese manufacturers have accelerated the localization process of chips, which will further weaken TSMC's position in the Chinese market. This story tells us that only by maintaining independent innovation and diversified development can enterprises be invincible in the fierce market competition.