Taiwan Semiconductor Manufacturing Company, better known as TSMC, is currently the king of the mountain in the world of computer chips. According to a new research report from Citibank, the company is unlikely to face any major threats to its crown anytime soon. Even though rivals like Intel are pushing hard to catch up, TSMC has built a massive lead in both making chips and the advanced “packaging” that holds them together.
The main reason TSMC is so far ahead is the global explosion of artificial intelligence. Big tech companies are currently spending over $100 billion a year on AI infrastructure, and almost all of that hardware relies on TSMC’s specialized technology. Specifically, a process called CoWoS packaging has become the industry standard for the most powerful AI processors. Citibank analysts predict that the demand for this technology will grow significantly through 2026 and 2027.
While making a tiny, fast chip is important, how you connect that chip to the rest of the computer is just as vital. TSMC has several other high-tech tools in its belt, including “system on integrated chips” and another method called “chip-on-panel-on-substrate.” These complicated-sounding names simply mean that TSMC knows how to pack more power into smaller spaces better than anyone else. This keeps the world’s biggest tech firms coming back to them year after year.
Intel is not giving up without a fight, though. The American chipmaker has been aggressively marketing its own version of advanced packaging, which they call EMIB-T. Recent industry reports suggest that giant companies like Google are looking closely at Intel’s technology for their own custom AI chips. Intel claims that its method can lower costs because it uses an “organic substrate” instead of the more expensive silicon layers that other companies use.
Intel also says its EMIB-T design is better at handling electricity. They claim it reduces “leakage,” which essentially means the chip wastes less power and runs more efficiently. If Intel can prove these claims at a massive scale, it might convince some customers to leave TSMC. However, there is a major catch. Intel’s success depends entirely on a very specific material called ABF, or Ajinomoto Buildup Film.
According to the Citibank report, Intel’s plan will only work if the companies that supply this special film can keep up with the demand. It is a classic supply chain problem. If the ABF ecosystem doesn’t grow fast enough, Intel won’t be able to build enough chips to satisfy a customer like Google. TSMC is currently facing its own “bottlenecks” because they have more orders than they can handle, but they already have a mature network of suppliers ready to go.
Another big topic in the tech world is Intel’s upcoming “18A” manufacturing process. This is the technology Intel hopes will finally make them faster and better than TSMC. There has been a lot of buzz lately about Apple showing interest in this new process. While that sounds like a win for Intel, Citibank analysts warned investors to stay cautious. They pointed out that while many companies “tape out” a design—which is like finishing a blueprint—it does not mean they are ready for mass production.
In the chip industry, moving from a successful test to making millions of working parts is an incredibly difficult and expensive task. Even a small 1.5% failure rate in the factory can lead to $1 billion in lost revenue for a company of this size. TSMC has spent decades perfecting its “yields,” which is the percentage of chips that actually work when they come off the assembly line. It takes a long time for a competitor to reach that same level of reliability.
The research also highlights that for the biggest players in AI and high-performance computing, the next few years are already “locked in.” Most of the designs for the chips coming out in 2027 and 2028 are already finalized. Because it takes years to plan these projects, customers cannot just switch manufacturers on a whim. They stay with the partner they trust can deliver the parts on time, and right now, that partner is TSMC.
As we look toward the end of the decade, the competition will certainly get tighter. Intel is spending billions of dollars to build new factories in the United States and Europe to challenge the Taiwanese giant. But for now, TSMC’s combination of proven reliability and the massive “tailwinds” from the AI boom makes them almost untouchable. They are the backbone of the modern digital economy, and they seem prepared to hold that position for a long time.
