“Maharaj, imagine owning the world’s most important kitchen… but never selling food yourself.” Tenali threw a question while discussing on the current chip manufacturing process in the world.
Maharaj looked confused.
“Then how does the kitchen earn money, Tenali?”
Tenali smiled.
“By cooking for everyone.”
Maharaj frowned.
“But why would Apple, NVIDIA, AMD, and Qualcomm trust another company to manufacture their most advanced chips?”
“Because building semiconductor factories is too expensive,” Tenali replied. “One advanced fabrication plant can cost billions of dollars. And even after spending that money, success is not guaranteed.”
“So these companies avoided manufacturing?”
“Exactly. They focused on designing powerful chips while one company mastered manufacturing.
TSMC”
Tenali continued:
“Most companies wanted control over everything – design, manufacturing, distribution. TSMC asked a different question:
What if we only become the best manufacturer in the world?”
Maharaj leaned forward.
“So specialization became the advantage?”
“Not just advantage. Dominance.
The more companies outsourced manufacturing to TSMC, the more scale TSMC gained. The more scale it gained, the more advanced its technology became. And the more advanced it became, the harder it became to replace.”
Maharaj slowly nodded.
“So eventually… the entire industry became dependent on them.”
“Correct,” said Tenali.
“Many businesses think growth means doing everything themselves.
But sometimes the biggest empire is built by becoming indispensable in just one thing.”