The simple version
Foundries manufacture chips designed by other companies. If chip design is architecture, the is the builder that turns the blueprint into physical silicon.
What the technology does
- A process node is a manufacturing generation. Smaller nodes usually mean better performance and power, but also much harder production.
- matters: a chip design is not commercially useful if too many manufactured chips fail.
- Advanced manufacturing depends on lithography, deposition, etch, metrology, materials, process recipes, and decades of know-how.
Market scale
- TSMC is the global benchmark, with 2024 revenue around NT$2.9 trillion, roughly US$90 billion.
- Samsung and Intel are the main leading-edge alternatives; GlobalFoundries and UMC are important mature-node players.
- SMIC is mainland China's largest , at roughly US$8 billion revenue in 2024, much smaller than TSMC but strategically central.
China angle
SMIC and Hua Hong are the anchors. China can make a lot of mature-node chips, which matters for cars, industrial, and consumer hardware. The bottleneck is leading-edge logic at competitive and cost.
How we got here
The model was pioneered by TSMC in the late 1980s and let fabless chip companies flourish. China built capacity later and now treats it as core strategic infrastructure.
- 1987
TSMC is founded and popularizes the pure-play model.
- 2000s-2010s
Fabless design grows around TSMC, Samsung, UMC, GlobalFoundries, and others.
- 2020-2024
Export controls and Huawei-related demand make SMIC's advanced-node progress globally scrutinized.
- Next phase
Watch evidence, mature-node capacity, and whether China can scale advanced chips economically.
Why it matters
The determines whether ambitious chip designs can be made at the required performance, power, cost, and .
EUV access, advanced lithography, , process control, and equipment/material restrictions.
Where this sector shows up
- Core
- AI training, AI inference
- High
- Robotics, EV / auto, Consumer / IoT, Industrial
What to watch
- 7nm-class claims
- Mature-node capacity
- Huawei/SMIC linkage
- Tool import restrictions
- Capex signals