TSMC Foundry 2.0: Strategic Shift Or Brand Tinkering?
Far more has already been written about Foundry 2.0 than was ever revealed on the earnings call...
In his prepared remarks during the latest TSMC earnings call on on July 18 last, Chairman and CEO C.C. Wei surprised investors with his introduction of what he called “Foundry 2.0”
At this time, we would like to expand our original definition of foundry industry to Foundry 2.0, which also includes packaging, testing, mask-making, and others, and all IDM excluding memory manufacturing.
For the record, TSMC has long been offering its customers both packaging and mask-making services. Indeed, TSMC’s packaging capabilities include some of the most advanced the broader industry has to offer:
By the same token, TMSC’s mask-making operation is equally as advanced, and is arguably the largest such operation on the planet..
It therefore makes sense for TSMC to include both packaging and mask making in its scope of work as far as defining /determining its addressable market, as noted by Dr Wei:
We believe this new definition better reflects TSMC's expanding addressable market opportunities in the future. However, I want to emphasize here that TSMC will only focus on the most advanced back-end technologies, which help our customers in leading-edge products.
His clarification here that the company will only focus on the “most advanced” back end packaging technologies will no doubt come as a big relief to the broader OSAT community, the likes of ASE and Amkor for example.
However, if we return to the opening part of Dr. Wei’s statement, you will no doubt have spotted the fact that he also includes “all IDM excluding memory” as the final item on his list of what now constitutes the company’s addressable market.
At first blush, this is a very odd thing to do. After all, TSMC was founded on the principle that the company will never compete with its customers. Of course, foundry customers by definition, are pretty much exclusively fabless companies, not IDMs, the likes of NVIDIA, Apple, Qualcomm etc. So why is TSMC now including IDMs, who are not their traditional customers, in their Foundry 2.0 scope? Is this a fundamental strategic shift for TSMC or more of a rebranding exercise? Finally, whatever the motivation, why do it at this particular juncture? Let’s dig in…
