From Taiwan to Holland: The Semiconductor Foundry Mafia

Sebs Solomon—March 25, 2022


The Taiwan Semiconductor Manufacturing Company (TSMC) accounts for 90% of the global output in semiconductor chips. Meaning, 90% of all advanced semiconductor chips ever made (that are used in phones, computers, game consoles, modern cars, IoT sensors, bitcoin mining, and other electronics) are manufactured by one company in Taiwan that is primarily owned and controlled by foreign investors. How is such a monopoly even possible? TSMC initially began as a collaboration between the Taiwanese government, the Dutch multinational electronics giant Philips, and other private investors. In 1974, Pan Wen-Yuan, a researcher from Radio Corporation of America or RCA, met with Taiwanese officials and suggested Taiwan build a semiconductor industry from scratch. Pan Wen-Yuan, who participated in the creation of the original Silicon Valley, even co-wrote a paper about oscillator technology with William Hewlett of Hewlett Packard (HP) when he was a graduate student at Stanford.

While Pan Wen-Yuan was visiting Taiwan in 1974, he advised the officials to begin building the semiconductor industry by, first, developing integrated circuits. Shortly after, Taiwan paid $10million for a semiconductor technology transfer deal with RCA—the Taiwanese government even sent engineers to work and train at RCA. Note that it was actually the Industrial Technology Research Institute or ITRI that signed the technology transfer deal with RCA (ITRI is presently involved in everything 4IR).


In 1979, the U.S. congress passed the Taiwan Relations Act to help “maintain peace, security, and stability in the Western Pacific and to promote the foreign policy of the United States” (thank you Aly Alexandra for finding that bill). Pay attention to the psychotic wording in the legislation, “to promote U.S. foreign policy” halfway around the world, give me a break. Side note, RCA (which founded the National Broadcasting Company or NBC) is an American electronics company founded in 1919; it was originally a patent trust owned by companies like General Electric, AT&T, and United Fruit Company. Yes, the same United Fruit Company responsible for exploitation and neocolonialism in Latin America.


Texas Instruments & the Foundry Model

In 1985, Morris Chang became head of the “tech development in Taiwan” sector for Texas Instruments. Two years later in 1987, Chang founded TSMC with the Taiwanese government as a shareholder. Chang decided TSMC would be a pure foundry—only involved in manufacturing semiconductor chips for other companies to use and not involved in design (solely fabrication). In this video, Chang tells the history of TSMC, the Taiwanese government’s vision, RCA and Philips’ involvement, and explains why Japan didn’t end up taking over the entire semiconductor industry (even though Japan was projected to take over in the 1970’s and 80's). At the conclusion of the interview, Chang left the future engineers in the room with a Confucian statement: learn and think—because if you just learn and don’t think, you quickly become lost; however, if you just think and don’t learn, then you quickly run out of material to think about.


The history of foundries is tied with the history of human labor—ancient foundries were factories that produced metal casting by melting them down and then pouring the metal into a mold (commonly used aluminum or cast iron). As for the modern day, this Stanford University National Security Innovation Center paper is a comprehensive overview of the segments that make up the semiconductor ecosystem.


The separation of design and fabrication became known as the foundry model. Basically, instead of becoming a product company, TSMC became a platform company that enabled other companies to build products (using their platform). Since labor was cheap in Taiwan, western countries started placing orders from TSMC soon after it was formed. Taiwan had a specific strategy for developing the semiconductor industry, “small companies, clustered together, and guided in mass by the government.” TSMC is barred from building their most advanced foundries in China because the western multinationals and governments have a tight grip on how much TSMC expands beyond Taiwan. They assert that chip manufacturing is laborious (it’s 1500 steps and takes 3–4 months to produce); therefore, it has to be done in a pristine environment and it requires precision equipment that manipulates particles on sub-atomic levels.

The foundry model can be described as the microelectronics engineering and manufacturing business model—which consists of a semiconductor fabrication plant and an integrated circuit design operation—each belonging to separate companies or subsidiaries. TSMC developed their integrated circuit design operation in the 1970’s with the assistance of RCA via Pan Wen-Yuan.

The separation of design and fabrication is probably optimal for keeping people in their separate silos. The people who design the products won’t know what goes into making them and the people making the products won’t know what the products will be used for (creating plausible deniability on all sides). It’s genius, really, in the most diabolical way.

Dutch ASML Holdings & Lithography Machines


TSMC may dominate the foundry services sector, but the Dutch firm, Advanced Semiconductor Materials Lithography or ASML, is the only company that produces the advanced lithography machines that all semiconductor fabrications (or foundries) rely on to make the microchips. ASML started off as a subsidiary of Philips Company in 1984—the first machine for semiconductor lithography was actually invented in a U.S. military lab in the 1950’s. In addition, upon its formation in 1987, Philips had a 28% share in TSMC. The Dutch had been in Taiwan since 1624, when the Dutch East India Company landed on (what they then called) Dutch Formosa—modern day Taiwan.

Dutch East India Company (pirate) flag.

To sum up, the Dutch had been in the South China Sea for a while and even fought different European countries for other islands that did not belong to them throughout the 1600’s and beyond. For example, during the Dutch-Portuguese War (a global conflict) many islands and nations, from Macau to Angola, were caught in the crossfire. Anyway, for more on how Philips helped get TSMC off the ground, check out this video. Also, shoutout to Human Vibration for bringing to my attention the Taiwan and semiconductor foundry monopoly on this podcast.

Because of the current high demand for advanced microchips, ASML saw its stock price go up by 340% from the end of 2018 to now (2022)—which makes it more valuable than Intel. ASML’s dominance began in 2012 when the company’s ability to research EUV (extreme ultraviolet lithography) was decided by major investments from Intel, Samsung, and TSMC.


To Conclude:

It is no surprise that Taiwan’s semiconductor industry is one of the main reasons (if not the main reason) why the United States has such an openly favorable position toward Taiwan. For instance, pro-Taiwan policies have been passed in Congress since the Taiwan Relations Act. Additionally, in a recent Senate Foreign Affairs Committee, Ely Ratner, a top Pentagon official for Indo-Pacific Security Affairs, not only said that a China attack on Taiwan would get a different response from the U.S. than the Russian attack on Ukraine, but he also made this statement:

Taiwan is also integral to the regional and global economy. Its free-market economy embraces innovation, entrepreneurship, and private-sector led growth, which has helped Taiwan become a valuable economic and trade partner for the United States. Indeed, our economy — like many others around the world — has come to count on Taiwan as a critical supplier of high-technology, including semiconductors.

It is quite fascinating to watch the political theater puppets up in arms about grains of sand (which is essentially what semiconductor chips are made of). Some will protest that it’s more “complex” than that because it’s “ultra-pure super secret sand”—duh!


The point of my writing this post is to show that the same people who own the fabrication plants where they manufacture the chips, are the same people who manufacture its scarcity because they own and control the entire market. From TSMC producing 90% of the global supply of advanced semiconductor chips to ASML being the sole company making the lithography machines that the foundries need to make the chips. It is a controlled industry through and through—which is not shocking because almost everything seems completely controlled, but it’s still important to discuss.

Peace and blessings.





Sebs Solomon—full-time human, part-time gnome. Twitter: @gnomes4truth

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Sebs Solomon—full-time human, part-time gnome. Twitter: @gnomes4truth

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