Rather than designing its own chips, Taiwan Semiconductor Manufacturing (NYSE: TSM) pioneered the dedicated fabrication business model. This approach proved to be a great fit for the industry, and essentially led to a paradigm shift that saw many semiconductor companies move away from having their own fabrication facilities. Those businesses still design their own chips, but now, they rely on TSMC (and its smaller peers) to manufacture them.

Through its technology and infrastructure advantages, the fab giant is able to leverage economies of scale and deliver superior value for its customers. By some estimates, TSMC has captured roughly 55% of the market for contract chip manufacturing and more than 90% of the contract fab market for advanced semiconductors.

High-performance chips have never been more essential for the technology, industrial, and defense sectors, and they will only become more crucial. Depending on how you look at it, it wouldn't be a stretch to say that TSMC is the most important company in the world. 

Continue reading

Source Fool.com