Part of my process to understand $TSM
is to look at semiconductors. Here is an attempt to explain them like I am five. I know there are smarter people than I so please bear with me.
Semiconductors, such as memory chips or processors, are the nervous system of almost every piece of hardware on the planet. Without semiconductors the world would grind to halt. Needless to say we need them, and they remain critical to almost every industry in the world.
So what are semiconductors? Here is my explanation like I am 5.
Think of a toy that can become red or blue. But to change the color, you need to blow on it hard rather than use your hands.
A semiconductor is comparable to this toy.
It's a unique substance that conducts electricity or stops it depending on how you handle it. The semiconductor becomes more conductive to electricity when specific substances are added to it or when it is heated.
Nevertheless, if you eliminate those factors or chill it down, it becomes more difficult for electricity to flow. Making electrical gadgets like computers and phones requires the capacity to quickly flip between conducting and not conducting.
We could consider semiconductors the closest thing humans have created to magic. We are dealing in the micro-realms, one-hundred-millionth of a meter. The most cutting edge, the 3nm chip, possesses almost 300 million transistors per square millimeter.
Chips are produced in specialized Foundries or Fabrication Plants (fabs). Most of the largest semiconductor businesses today are ‘fabless’, designing chips and outsourcing production. The largest fabless companies include $AAPL
, and $QCOM
With increasing costs and the specialization associated with the design and fabrication of leading-edge chips, many companies now specialize in single value chain steps. The largest global producer of semiconductors is Taiwan Semiconductor Manufacturing Company $TSM