Then, The PC Market Came 💻
- The product cycle for PCs was extraordinarily fast in the 80s and 90s, and the business was scaling rapidly
- By this point, Taiwanese OEMs had expertise in managing complex supply chains and have deep relationships with retailers and distributors. The next step is to expand
- While South Korea expanded into chemicals and cars, the Taiwan government formed TSMC as a joint venture with Philips Electronics (Netherland) to be a dedicated foundry for other chip design houses like Intel and Nvidia. Basically, an OEM for chip-designing companies
- At that time, there was no pure-play foundry, all chips were built in-house. TSMC was the first, the next one would exist 10 years later
- Taiwan's head start in the pure-play foundry model made it extremely difficult for others to catch up and the rest was history
A capital-intensive business like chip fabbing is exactly the appropriate one for a country* like Taiwan, with no comparative advantage in labour-intensive businesses. And chips are, like oil, one of those products that basically every country wants to consume but that many aren’t able to produce.
P.S. To my Malaysian readers, stay safe out there 🙏 If you would like to contribute, here's a list of flood relief emergency funds.