Taiwan's 'Silicon Valley': Hsinchu Science Park
Semiconductor materials, parts and equipment firms cluster around TSMC
"Taiwan's semiconductor ecosystem is driven by small and medium-sized enterprises"
Horizontal collaboration helped Taiwan surpass South Korea in per-capita GDP last year
TSMC puts 'we don't compete with our customers' at the center of its values
Taiwan — with no products of its own — has become an indispensable supply chain for US Big Tech
"If a problem arises, we can gather a semiconductor design engineer, an equipment maker and a materials supplier all in one place within 30 minutes," said Lin Hong-wen, a senior adviser at Jinzhoukan, a Taiwanese business weekly, who has covered TSMC for more than 30 years.
Lin cites collaboration as the secret behind TSMC's success.
TSMC and partners share an equal entrepreneurial mindset
A visit to Hsinchu Science Park on June 4 — about an hour's drive from Taipei — revealed more than 10 TSMC factories packed into a single complex, including cutting-edge 2-nanometer fabs and 6-, 8- and 12-inch facilities.
Spread across roughly 15 square kilometers — about the size of Seoul's Dongdaemun-gu district, or approximately 4.54 million pyeong (1 pyeong equals 3.3 square meters) — the park is home to more than 600 semiconductor companies clustered around TSMC. They include fabless chipmaker MediaTek, foundry UMC and equipment maker Tokyo Electron (TEL), forming a dense ecosystem of upstream and downstream firms. The complex employs some 170,000 people, earning it the nickname "Taiwan's Silicon Valley."
Engineers wearing color-coded lanyards could be seen throughout the park, zipping between facilities on scooters. "The geographic proximity is exceptional," Lin said. "When a problem occurs on a TSMC production line, you can quickly determine whether it's a design error, a materials defect or an equipment issue — and then bring everyone together in one place without delay."
Lin went on to say that "Taiwan's semiconductor ecosystem is not driven by a single large conglomerate like TSMC — it is led by small and medium-sized enterprises banding together. Small companies have a unique entrepreneurial spirit. Because everything is on the line if the company fails to grow, they fight for survival. TSMC and its partners all share an equal 'founder's mindset.' They serve as each other's suppliers, maintaining a horizontal supply chain."
Yang Shang-da, chair of the electrical engineering department at National Tsing Hua University in Taiwan, also said the country's semiconductor industry "has developed over many years on the foundation of small and medium-sized enterprises, with multiple mid-sized firms competing while also cooperating — a style reminiscent of modern Europe." He added that "ultimately, this kind of ecosystem promotes efficiency, collaboration and competition."
Yang also said that "most Taiwanese engineers come from Tsing Hua University, National Chiao Tung University or National Taiwan University, so they already have strong personal networks before they even enter the semiconductor industry." That shared background means "even when working at different companies, they can communicate closely, and knowledge and technology can be shared easily within the semiconductor ecosystem," he said.
Full state backing underpins TSMC
Sweeping state infrastructure support is another pillar of TSMC's strength. At the entrance to Hsinchu Science Park, construction of Fab 20 — a 2-nanometer facility that broke ground in 2022 and began operation in the second half of last year — was still in full swing. Power transmission towers built specifically for TSMC were visible throughout the complex.
To prevent production disruptions, the Taiwanese government has exempted Hsinchu Science Park from rolling blackouts even during large-scale power outages. TSMC alone consumes 8 to 9 percent of Taiwan's total electricity, and the company is given top priority in national power infrastructure planning.
According to the Korea Center for International Finance, Taiwan ranks first or second globally in all three major semiconductor processes — design, manufacturing and back-end packaging. Its foundry market share stands at 71.2 percent, far ahead of South Korea's 9.8 percent.
Backed by this robust semiconductor ecosystem built on small and medium-sized enterprises, Taiwan's per-capita GDP is projected to reach $42,103 this year, surpassing the $40,000 threshold ahead of South Korea. South Korea's per-capita GDP forecast for this year stands at $37,412. South Korea had outpaced Taiwan for 22 consecutive years since 2003, but Taiwan overtook it for the first time last year, and the gap is expected to widen further. Taiwan's economic growth rate is also projected at 9.6 percent this year, far outstripping South Korea's forecast of 2.6 percent.
'We don't compete with customers': TSMC builds on trust with turnkey solutions
That same spirit was evident at the TSMC Museum inside Hsinchu Science Park, visited on June 4, where the principle "we don't compete with our customers" was woven throughout the exhibits.
A museum representative said that before TSMC existed, IC innovation came from integrated device manufacturers, or IDMs, which handled everything in-house — IC design, technology development, global production and product sales. "But TSMC focused on technology development, building a design ecosystem and wafer production, and did not compete with its customers," the representative said. "Once TSMC took over manufacturing, fabless companies specializing in design were able to emerge, triggering a massive wave of innovation."
The representative also said TSMC's mission going forward is "to remain a trusted provider of technology and manufacturing capabilities for the global logic IC industry for a long time to come."
TSMC's R&D investment grows 227-fold over 30 years
TSMC has steadily expanded its research and development investment. Its R&D workforce grew from 140 people in 1995 to 9,994 in 2024 — more than a sevenfold increase. Spending has surged as well, rising from $28 million (about 43.6 billion won) in 1995 to $6.361 billion (about 9 trillion won) in 2024, a 227-fold increase over roughly 30 years.
On the strength of that investment, TSMC has declared it will formally usher in the so-called "angstrom era" of sub-1-nanometer technology next year. The company has confirmed a roadmap calling for a 1.6-nanometer (A16) process next year — a step between its current 2-nanometer and future 1.4-nanometer nodes — followed by 1.4-nanometer (A14), 1.3-nanometer (A13) and 1.2-nanometer (A12) processes by 2028.
TSMC also highlighted its turnkey one-stop solution, which covers design support, mask fabrication services for the lithography process, wafer manufacturing, and 3D packaging and testing — providing front-end and back-end processes in a single offering.
In a video interview displayed at the museum, TSMC founder Morris Chang outlined the company's four core values: integrity and honesty, commitment to customers, innovation, and customer trust. "If a company wants to grow and succeed, it must innovate constantly," he said.
Lin said TSMC founder Morris Chang has long insisted that foundry is a "service industry," not a "manufacturing industry." "It is not enough to simply be ahead in technology — you have to provide perfectly tailored service until the customer is genuinely satisfied," Lin said.
Lin also said that "Taiwan's semiconductor ecosystem has no proprietary branded products of its own. That is precisely why it can earn the complete trust of US Big Tech companies without any conflict of interest — and as that trust accumulates, customers entrust Taiwan with more orders and more advanced technology."
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