Most of the chips behind AI servers, new phones and modern cars are made on one island. In 2022, Taiwan held 69% of the world’s manufacturing capacity for the most advanced logic chips, those made on processes below 10 nanometres, according to a May 2024 report by the Semiconductor Industry Association and Boston Consulting Group. South Korea held the other 31%. The United States, the report says, “did not produce any advanced logic chips” that year.
Our 45-second explainer above sets out why that matters. This article gives the sources and the caveats behind each number.
One company sits at the centre
Most of that capacity belongs to TSMC, the Taiwanese contract chipmaker that builds designs for other companies. The research firm TrendForce estimates that TSMC took 72.5% of the revenue earned by the world’s ten biggest foundries in the second quarter of 2026, about $40.2bn. Samsung was a distant second at 5.9% and China’s SMIC third at 5.4%. That is a share of revenue, not of chips made, and it is one firm’s estimate.
The range of customers explains why the share matters. In its 2025 annual report, TSMC says it “manufactured 12,682 products for 534 customers” last year, using 305 different process technologies. Those products end up in data-centre servers, smartphones, cars, connected devices and consumer electronics.
Why the capacity built up in one place
Leading-edge chipmaking is extraordinarily expensive and hard to copy. A single plant needs years of construction, specialist tools, a deep pool of engineers and nearby suppliers. Over three decades the industry spread its work across regions according to their strengths, and Taiwan became the centre for advanced manufacturing.
That specialisation has delivered cheaper, faster chips. But it also creates what the 2021 SIA and BCG study called single points of failure that “could be disrupted by natural disasters, infrastructure shutdowns, or international conflicts”. The same report noted that China and East Asia, home to about 75% of the world’s chipmaking capacity, are “significantly exposed to high seismic activity and geopolitical tensions”.
A long stoppage would reach far beyond chips
Two studies have tried to put a size on a long disruption. In an “extreme hypothetical scenario of complete disruption for one year”, the 2021 SIA and BCG report estimated that electronics makers would lose about $490bn in revenue and concluded that “the global electronics supply chain would come to a halt”. It treated the scenario as a stress test, not a forecast.
In May 2024, Bloomberg Economics modelled a blockade that cut off Taiwan’s shipments entirely. As reported by Taiwan’s Central News Agency, it put the first-year cost to the world economy at about $5tn, or roughly 5% of global GDP. That model also includes trade sanctions, so it is not the cost of missing chips alone, and like any model it rests on its assumptions.
New fabs are spreading the load, slowly
The more hopeful part of the picture is that capacity is already moving. The 2024 SIA and BCG report forecasts that Taiwan’s share of sub-10nm capacity will fall to 47% by 2032, and that the US share will rise from zero to 28%. It expects more than 40% of advanced capacity to sit outside Taiwan and South Korea by then, with Europe and Japan hosting about 12%.
TSMC itself is part of that shift. Its annual report says its first Arizona fab entered high-volume production in the fourth quarter of 2024, a second is due to follow in the second half of 2027 and a third is under construction. Its first plant in Kumamoto, Japan, began volume production at the end of 2024, with a second under way, and a fab for car and industrial chips is being built in Dresden, Germany. Taiwan also plans a Texas industrial park for TSMC’s suppliers.
Others are trying too, with mixed timing. Intel says its Fab 62 in Arizona should start operations by the end of 2028, while Vietnam’s first chip fab is set to miss its 2027 trial target, a reminder of how hard new fabs are to start.
Diversification lowers the risk but does not remove it
Even on the 2032 forecast, Taiwan would still hold almost half the world’s most advanced capacity, and TSMC says it is preparing several phases of 2nm fabs in Hsinchu and Kaohsiung. The 47% is a projection that depends on announced plants being finished, staffed and supplied on time, and on demand holding up. Chips also depend on materials, which is why Taiwan’s research institute ITRI plans a rare-earth demonstration plant meant to meet about half of the island’s needs.
The useful way to read the numbers is as a resilience problem rather than a forecast of crisis. Spreading production across several regions makes any single shock, from an earthquake to a trade dispute, less likely to stop everything at once. That costs money: the 2021 study estimated that fully self-sufficient local supply chains would need at least $1tn of extra upfront investment. Spreading the load is the cheaper middle path, and the report’s own figures suggest it is under way.
The UK bets on design rather than fabs
The UK is not trying to build leading-edge factories. Its National Semiconductor Strategy, published in May 2023, focuses on chip design and intellectual property, compound semiconductors and research. “Mitigating the risk of supply chain disruptions” is one of its three core objectives, alongside growing the sector and protecting national security. In practice, that leaves British firms as reliant as anyone on the new fabs in the US, Japan and Europe coming online.
Sources
- Semiconductor Industry Association and BCG, “Emerging Resilience in the Semiconductor Supply Chain”, May 2024
- TrendForce, top-10 foundry revenue, 2Q26, 9 September 2026
- TSMC, 2025 Annual Report
- Semiconductor Industry Association and BCG, “Strengthening the Global Semiconductor Supply Chain in an Uncertain Era”, April 2021
- Central News Agency, report on Bloomberg Economics’ blockade estimate, 25 May 2024
- Department for Science, Innovation and Technology, National Semiconductor Strategy, 19 May 2023
Related stories
- Taiwan Plans a Texas Industrial Park for TSMC and Foxconn Suppliers
- Intel Says Fab 62 in Arizona Should Start Operations by the End of 2028
- Reuters: Vietnam’s First Chip Fab Set to Miss 2027 Trial Target
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