Core Viewpoint - The semiconductor industry is undergoing significant internal differentiation, and merely being labeled as "domestic" does not guarantee success. Companies must possess both offensive and defensive capabilities to thrive in this competitive landscape [1][6][57]. Group 1: Industry Dynamics - The semiconductor equipment and materials sector is heavily influenced by policy and technological breakthroughs, leading to varying growth potentials among companies [6]. - Companies that survive must be "dual-capable monsters," excelling in both new technology development and existing product iteration to maintain stable cash flow [6][57]. - The demand in the semiconductor market is split into two distinct tracks: advanced processes driven by a "technology arms race" and mature processes driven by massive chip demand from sectors like electric vehicles and IoT [8][9]. Group 2: Investment Opportunities - Investment in semiconductor equipment and materials is fundamentally about investing in the underlying infrastructure of the digital world, which offers strong certainty and sustainability [13]. - The investment landscape is layered, with higher technical barriers and profit margins in upstream sectors (EDA/IP, equipment) compared to downstream (design, manufacturing) [14]. - The real investment opportunities lie in the growth of domestic supply chains, particularly in critical components like RF power supplies and specialty ceramics [16][34]. Group 3: Market Trends - The global equipment market is dominated by major players like AMAT, ASML, and LAM, with a concentration ratio (CR3) exceeding 50%, indicating significant challenges for domestic players [33]. - China's semiconductor market is growing at a rate higher than the global average, driven by internal demand and policy support, making it a unique investment opportunity [36]. - The demand for advanced logic chips (≤28nm) is expected to grow rapidly, while mature logic (>28nm) represents the largest incremental opportunity, particularly in automotive and industrial control applications [40][41]. Group 4: Geopolitical Factors - Geopolitical pressures are creating a survival space for domestic manufacturers, with sanctions leading to a "stair-step" replacement rhythm, opening new opportunities for local firms [10][45]. - The timeline of sanctions indicates a systematic and long-term approach to containment, emphasizing the necessity for domestic substitution as a survival strategy [45]. Group 5: Challenges and Risks - The complexity and high costs associated with semiconductor manufacturing create significant barriers to entry, with any misstep potentially leading to substantial losses [20]. - The rapid pace of technological iteration requires high R&D investments, with projected R&D expenditures in the equipment sector exceeding 10 billion in 2024, reflecting a 42.5% increase [47]. - The materials sector faces high certification barriers and a lower domestic production rate, making it more challenging to achieve self-sufficiency compared to equipment [50][53].

Core Viewpoint - TSMC has established itself as the leading player in the foundry industry through strategic technological advancements and expansions over the decades, starting from its inception in 1986 to becoming a dominant force in semiconductor manufacturing [2]. Phase 1 - Initiation - TSMC was founded in 1986 with an initial capital of $48 million, primarily funded by the Taiwanese government and Philips [4]. - The company began production in 1987 using 6-inch wafers and quickly advanced to 3.0-micron technology, marking its first significant production milestone [4][5]. - By 1994, TSMC had developed a 0.6-micron process and achieved a sales increase from NT$2.2 billion to NT$19.3 billion between 1990 and 1994, indicating a robust growth trajectory [7]. Phase 2 - Expansion and Catch-Up - In 1995, TSMC launched its 8-inch Fab III and introduced tungsten plugs, enhancing its manufacturing capabilities [11]. - The company achieved NT$50 billion in revenue in 1998, despite a semiconductor downturn, and began producing 0.22-micron nodes [14]. - By 2000, TSMC's sales grew by 127% compared to 1999, with a compound annual growth rate of 50% from 1992 to 2000 [19]. Phase 3 - Leveling Up and Leading - TSMC's 180nm node positioned it competitively against major manufacturers like IBM and Intel, with a slight edge in the use of fluorosilicate glass (FSG) [24]. - Despite a 32% decline in the semiconductor market in 2001, TSMC's 150nm products still accounted for 21% of sales by Q4 [26]. - The introduction of 130nm technology in 2002 marked a significant milestone, with TSMC adopting copper interconnects and low-k dielectrics [29]. Phase 4 - 300mm and Consolidation - TSMC's 90nm process was the first to achieve full production on 300mm wafers, adopted by over 30 customers in its launch year [37]. - By 2006, TSMC had become the largest foundry globally, with a sales figure 2.5 times higher than its nearest competitor [46]. - The establishment of "GigaFabs" aimed at enhancing manufacturing excellence through automation and efficiency [49]. Phase 5 - HKMG and Expansion - In 2010, TSMC announced the construction of its third 300mm fab, focusing on 40nm and 28nm processes, while also developing high-k metal gate (HKMG) technology [63]. - The introduction of 20nm technology in 2014 required advanced double patterning techniques, showcasing TSMC's commitment to cutting-edge manufacturing [84]. - By 2011, TSMC's monthly capacity exceeded 270,000 wafers, reflecting significant growth despite a challenging semiconductor market [80]. Conclusion - TSMC's journey from a startup to a semiconductor powerhouse illustrates its strategic focus on innovation, capacity expansion, and technological leadership, solidifying its position in the global market [2].