Last time we did a SWOT analysis of Adobe, an American multinational computer software company. Today, we will do an extensive SWOT Analysis of TSMC to identify the company’s performance.
Taiwan semiconductor manufacturing company is one of the world’s top semiconductor manufacturers. Its business model exclusively focuses on manufacturing clients’ semiconductor needs. Thus, the key to TSMC’s success has always been to focus on its client’s success.
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In today’s blog, we are going to do an extensive SWOT Analysis of TSMC and find out the company’s overall performance. Before we begin our analysis let’s have a look at its founding, products, financial status and competitors.
TSMC was established in the year 1987 with its headquarters in Hsinchu Science Park, Taiwan. TSMC pioneered its business model by exclusively focussing on manufacturing semiconductors for its clients like AMD, Apple, ARM, Broadcom, Marvell, MediaTek, and TSMC. Its foundry business model has made it rise globally and it is since its inception that TSMC is one of the world’s leading semiconductor foundries.
TSMC makes semiconductors that are used in a variety of end markets such as mobile devices, high-performance computing, automotive electronics, and the internet of things. This in turn enables TSMC to maintain a higher level of profitability and get healthy returns for future investment.
In May 2020, TSMC set forth to build and operate a semiconductor fab in the United States to support the customers and partners as well as to attract global talent. TSMC has its offices located in North America, Europe, Japan, China, and South Korea. And the company is also listed on Taiwan Stock Exchange.
|No. of Employees||56,500+|
|Market Cap||$564.16 Billion (2022)|
|Annual Revenue||NT$1.33 Trillion (2020)|
|Net Income/ Profit||NT$517.89 Billion (2020)|
What’s new with TSMC?
Here’s what was buzzing around TSMC recently:
- 3nm mass production: TSMC began mass production of 3nm chips in 2022, and it is expected to ramp up production in 2023. 3nm chips are the most advanced chips currently available, and they are expected to be used in a variety of products, including smartphones, laptops, and servers.
- 2nm development: TSMC is developing 2nm chips, which are expected to be even more powerful and efficient than 3nm chips. TSMC is expected to begin mass production of 2nm chips in 2025.
- New Arizona fab: TSMC is building a new fab in Arizona, which is expected to begin production in 2024. The new fab will produce 5nm and 3nm chips.
- New Japan fab: TSMC is also building a new fab in Japan, which is expected to begin production in 2024. The new fab will produce 2nm and 1nm chips.
- New R&D centers: TSMC is opening new R&D centers in Taiwan, the United States, and Europe. The new R&D centers will focus on developing new chip technologies.
- New partnerships: TSMC is partnering with a number of companies, including Intel, AMD, and Nvidia, to develop new chip technologies and products.
- New AI investments: TSMC is investing heavily in artificial intelligence (AI). The company is using AI to improve its chip design and manufacturing processes.
- New sustainability initiatives: TSMC is committed to sustainability, and it has launched a number of new initiatives to reduce its environmental impact.
- New employee training programs: TSMC is investing in new employee training programs to develop the skills of its workforce.
- New customer support programs: TSMC is launching new customer support programs to provide better support to its customers.
- New social responsibility programs: TSMC is supporting a number of social responsibility programs, including programs to support education and healthcare in developing countries.
Let’s now understand the target audience of TSMC better with the help of a buyer persona.
Buyer Persona of TSMC
A buyer persona generally refers to the detailed information of an ideal customer of a company. When it comes to TSMC, people from India use it the most. This buyer persona will help you understand the attributes of a regular TSMC user.
Hsinchu City, Taiwan
Semiconductor Engineer and Senior Manager at TSMC
- Technological Advancement
- Industry Leadership
- Innovation and R&D
- Sustainability and Green Initiatives
Interest & Hobbies
- Semiconductor Technology
- Leadership and Management
- Environmental Sustainability
- Travel and Culinary Experiences
- Competitive Industry Challenges
- Supply Chain Disruptions
- Talent Retention
- Regulatory Compliance
Social Media Presence
- Industry Forums
- TSMC’s Official Channels
- Occasional Professional Blog
As we discussed the company’s core business, let’s begin with the SWOT Analysis of TSMC.
SWOT Analysis of TSMC
SWOT stands for Strengths, Weaknesses, Opportunities and Threats. SWOT Analysis is a tool that helps to analyse where the company is performing well, where it lacks, how it can grow in future and what are things it has to beware of. It helps the internal as well as external users to compare the company with its competitors and industry as a whole.
To better understand the SWOT analysis of TSMC, refer to the infographics below:
So let us go ahead and first have a glance at the strengths of TSMC from the SWOT analysis of TSMC.
Strengths of TSMC
Strengths are the factors that contribute to the success of the company. Strengths are those features and key areas where the company is performing better than its competitors. Following are the strengths of TSMC:
- First Mover Advantage: TSMC enjoys a first-mover advantage in terms of the world’s first dedicated semiconductor foundry and has long been the leading company in its field.
- Sells to Leading Companies: Big companies like AMD, Apple, ARM, Broadcom, Marvell, MediaTek, and Nvidia through which the computer and technological world is known and is operating are the main customers of TSMC.
- Research & Development: The company is always ahead in terms of expanding its R&D operations and its production capacity. As recently TSMC planned to increase its R&D expenditure by 30% and expand its capacity by 30% to meet strong market demand.
- Market Capitalization: TSMC has surpassed Intel in terms of market capitalization in 2017 hitting US$168.4 Billion, with Intel at US$165.7 Billion. Also, TSMC became the world’s 10th most valuable company, with a market capitalization of US$410 Billion.
- Strong Financial Position: TSMC has a strong financial position and large accumulated profits that can be used to make further capital investments.
- Intellectual Property Rights: The company owns several intellectual property rights that include patents and trademarks. This allows the company exclusive rights over its products and competitors can’t copy or reverse engineer them.
- Product Quality: Its products – semiconductors and chipsets have good quality which smoothens the experience of users, which is why it is still valued by the customers and increases brand loyalty. This helps to fulfil customer satisfaction as they find it as a good value for the money they pay and improves their performance in the competitive market.
Weaknesses of TSMC
Weaknesses are the characteristics of the company that places it at a disadvantage relative to others. The weaknesses stop the company from performing at an optimum level and become barriers to achieving goals.
- Lack of Critical Talent: TSMC is facing problems in attracting talent with appropriate technical know-how as it is struggling in the field of AI and machine learning.
- Low Return on Investment: Even though TSMC enjoys the advantage of having the most stable balance sheet, it needs to put a reflection on one metric that is “Return on invested capital” which indirectly indicates low returns on investment.
- Shortage of Chipset: The company is facing short of chipset internally and externally due to the Covid-19 wave. TSMC reports that it will continue facing this situation until the year-end 2024.
- Competitor’s R&D: Even though the company is spending a certain amount on research and development, it is still less than what its competitors spend on it and therefore they have a significant advantage of innovative products and more market share.
- Track Record on Environment Consideration: The production of semiconductors produces carbon emissions due to which TSMCs records higher environmental considerations.
Opportunities for TSMC
Opportunities are the favourable external factors that give the company a competitive advantage to improve its performance and increase profit.
- Changing Technology Landscape: AI and Machine learning are completely transforming the IT industry, TSMC should focus on developments of semiconductors and chipsets using the latest technologies to improve its efficiencies and lower its cost.
- Improve its Digital Presence: Being one of the top producers of semiconductors in the world, TSMC should take the opportunity of the booming digital era and build a stronger relationship with its customers online using digital marketing strategies. Having a strong digital presence creates a lasting impression and attracts new customers.
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- Establish New Subsidiary: TSMC is planning to establish a new subsidiary with JASM – Japan Advanced Semiconductor Manufacturing in Japan. They both are planning to manufacture 22 and 28-nanometer processes which can bring a revolution in the semiconductor industry.
- Rise in Gaming Sector: There is a significant increase in the use of gaming consoles such as the all-new PS5 and Xbox which requires high-end gaming chipsets, graphics and drivers, this becomes an opportunity for TSMC to produce the required quality and take the contract for installations.
- Economic Recovery: Economic recovery and rising consumer spending after years of recession and slow industrial growth are opportunities for TSMC to attract new customers and increase market share.
Threats of TSMC
Threats are the unfavourable factors that could harm the functioning of the company.
- Increasing Cost Component: The cost component for semiconductors and chipsets of TSMC is increasing day by day because of environmental regulations. The government imposes higher environmental taxes which in turn increases the cost of packing and logistics also.
- International Geo-Political Factors: TSMC should closely focus on various events impacting international business and should make them integral to strategy making as Russian Sanction, Foreign Exchange Crisis, Inflation in Venezuela, etc.
- User Experience: As TSMC works on improving the performance and user mobile experience with its semiconductors and chipsets. If somehow the client’s users face any lagging and hanging issues it directly questions the accountability of TSMC.
- Quantitative Increases in Commodities: This could jeopardize TSMC’s profitability. A shortage of skilled labour in certain global markets threatens TSMC’s continued earnings growth in the market.
- Patent Disputes: TSMC is facing several patent disputes for the last 3 years, the company GlobalFoundries is imposing allegations against TSMC for false patents. However, the dispute is resolved for the next 10 years.
This ends our SWOT analysis of TSMC.
Failed Campaigns of TSMC
TSMC more than often grabs attention with its unique marketing. But, there have been a few times when the campaign failed to connect with the audiences and gained backlash.
Here are a few examples of failed campaigns of TSMC:
For example, in 2020, TSMC launched a campaign called “The 5G Revolution” to promote its 5G chip manufacturing capabilities. The campaign was criticized for being too technical and for failing to communicate the benefits of 5G to consumers.
Another example of a failed TSMC marketing campaign is the company’s “We Are TSMC” campaign, which was launched in 2021. The campaign was intended to promote TSMC’s brand and culture, but it was criticized for being too generic and for failing to differentiate TSMC from its competitors.
It is important to note that the term “failed marketing campaign” is subjective. What one person considers to be a failed campaign, another person may consider to be a success. Ultimately, the success of a marketing campaign is measured by its results, such as brand awareness, leads, and sales.
Here are some additional factors that could contribute to a TSMC marketing campaign being considered a failure:
- Poor targeting: If a campaign is not targeted to the right audience, it is likely to be unsuccessful. For example, a campaign that promotes TSMC’s chip manufacturing services to consumers would likely be unsuccessful, as consumers are not typically interested in the technical aspects of chip manufacturing.
- Poor messaging: If a campaign’s messaging is unclear or confusing, it is likely to be unsuccessful. For example, a campaign that uses technical jargon that is not understood by its target audience is likely to be unsuccessful.
- Poor execution: If a campaign is not executed properly, it is likely to be unsuccessful. For example, a campaign that is poorly designed or has technical issues is likely to be unsuccessful.
Competitors of TSMC
TSMC is competing on a global level with many other well-known companies in the information technology sector. The top 5 competitors of TSMC are
- Intel Corporation
As we wrap up our analysis of TSMC’s impressive digital marketing strategy, it’s clear that staying up-to-date with the latest trends and techniques is key to success in the digital marketing world.
Whether you’re a marketing professional or just starting out, be sure to check out our free digital marketing masterclass to gain a solid foundation in the essentials of digital marketing.
Who knows, you might just develop the next big marketing strategy like TSMC’s! Don’t forget to share your thoughts and comments on TSMC’s strategy in the comments below.