TSMC did not beat the incumbents' products; it turned their edge into baggage (Kevin Kwok)

TSMC's real achievement was not building better chips than its rivals. It changed what it took to be a chip company at all.

Kevin Kwok's essay on how TSMC made its own market is the clearest account I have read. Before TSMC, designing chips meant owning the factory that made them. Integrated manufacturers like Intel and AMD designed and fabricated their own chips, and the cost and difficulty of running fabs kept the field to a small group of large players. A designer without a fab had to ask a competitor to make its chips, and could not count on capacity being there.

TSMC unbundled the two. It built fabs only for other companies, committed not to compete with its customers, and turned the fab into an interface that designers could use without knowing what happened inside it. A large fixed cost became a variable one. Nvidia, Qualcomm and Broadcom could start as fabless companies and scale their manufacturing spend as their business grew.

What strikes me is where TSMC aimed. It did not attack the incumbents' products. It attacked the thing that made them strong. Owning a fab had been the edge, and TSMC turned it into baggage. Kwok describes AMD spinning off its fabs as GlobalFoundries in 2009 and then taking years to become properly fabless, while Intel kept manufacturing at its core and has since split design and foundry into separate businesses with their own accounts.

The point travels well beyond semiconductors. Most market sizing treats demand as fixed and asks what share you can win. Kwok argues that the defining companies treat the market as something they make, by lowering the minimum viable shape of a customer. TSMC grew the fabless market, and the fabless market grew TSMC.

I think that is the more useful question for an Australian executive team. Not how to take share from a rival, but which cost in your industry is so large that it keeps customers from existing, and whether you could turn it into shared infrastructure before someone else does.

Source: Kevin Kwok, "Abstract Warfare: How TSMC Made Its Own Market", kwokchain (8 October 2026), https://lnkd.in/g9qWYc6H

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