Why it matters: Taiwanese TSMC's indispensable manufacturing services have made it a juggernaut capable of capitalizing on increased demand. Looking ahead, the company seems poised to hold onto the top spot with its expertise in cutting-edge production that's left rivals in the dust.

Silicon giant TSMC became the world's largest semiconductor maker by revenue for the first time in 2023. Taiwan-based analyst Dan Nystedt notes the chip supplier generated $69.3 billion in revenue last year, surpassing Intel's $54.23 billion and Samsung's $50.99 billion semiconductor divisions.

Its earnings reflect a significant shift in the industry, formerly dominated by Intel, which held the top revenue spot for decades going back to 1992, aside from 2017 when Samsung briefly took the title. The company's rise has been more steady, fueled by its position as the leading pure-play chip foundry serving fabless clients like Apple, AMD, Nvidia, and Qualcomm.

While TSMC does not sell self-branded processors, its manufacturing services have become indispensable in producing advanced chips. As the world's need for electronics skyrocketed during the pandemic, TSMC capitalized on demand by charging a premium for its leading-edge production capabilities. The manufacturer dominates its competition in process technologies, translating to improved bargaining power.

Trailing TSMC in revenue is Nvidia, which may eclipse both Samsung and Intel's 2023 figures when it reports earnings on February 21. Based on Q4 guidance, analysts expect Nvidia to post around $58.8 billion for the calendar year – enough to grab the 'standard' semiconductor revenue top spot but still short of TSMC's new industry record.

In 2023, TSMC became the world's biggest #semiconductor maker by revenue, topping Intel and Samsung Electronics for the 1st time.

2023 Revenue in US dollars
TSMC: $69.30 billion
Intel: $54.23 billion
Samsung (chip division): $50.99 billion
Thread 1/9 $TSM $INTC #Samsung pic.twitter.com/FUqm6xha5O

– Dan Nystedt (@dnystedt) February 4, 2024

Nystedt points out that TSMC is not generally counted among the top semiconductor companies because it is a pure-play foundry. However, it now generates more revenue than any IDM (integrated device manufacturer) like Intel or Samsung, making an intriguing comparison.

The company has also bested foundry rivals Samsung and Intel every quarter. Its Q4 2023 revenues of $19.55 billion surpassed Samsung's $16.42 billion and Intel's $15.41 billion chip divisions. It's the 6th straight quarter TSMC has led in quarterly revenue.

In related news, TSMC announced Tuesday that it will open a second chip fabrication plant in Japan in partnership with Sony and Toyota. The new factory will come online in late 2027 as part of the Japan Advanced Semiconductor Manufacturing joint venture, in which TSMC holds a majority stake. The company's total investment in Japan should exceed $20 billion, including an existing plant set to begin operations this year.

The expansion highlights the Japanese government's concerted efforts to rebuild domestic semiconductor manufacturing capabilities. While not producing bleeding-edge logic chips, the TSMC factories will focus on automotive, industrial, and high-performance computing applications.