Business sense / TSMC

A wafer start is not a saleable chip.

Advanced nodes at 7nm and below generated 69% of wafer revenue in 2024; capacity still needs node-level analysis.

How the choices connect

Analytical map · test the links rather than assuming causation
  1. 01

    Qualify

    Customer designs must be qualified on the process.

  2. 02

    Start wafers

    Node-specific tools constrain usable capacity.

  3. 03

    Recover good dies

    Defects and yield determine accepted output.

  4. 04

    Earn contribution

    Price, variable cost and capital cost determine returns.

The economic question

A diversified customer base does not make every production line interchangeable. A demand shift to a newer process can leave older capacity underused. Analyze node demand, qualifications and yield separately before recommending more fabs.

What to investigate

Test whether the constrained tool, packaging step or process can actually use spare capacity elsewhere. Separate wafer-sales economics from a downstream customer’s good-die economics; the yield exercise below is deliberately simplified.

Explore the yield grid →

Separate the fact from the inference

Reported · historical snapshot

TSMC manufactured 11,878 products for 522 customers using 288 process technologies in 2024. Processes at 7 nanometers and more advanced nodes generated 69% of wafer revenue.

TSMC FY2024 annual report · Letter to shareholders ↗

Reporting period is stated above; this is not a live financial feed.

Method · Harper analysis

Model capacity by process node: wafer starts × good dies per wafer × realized price. Compare contribution after variable costs with depreciation and the cash cost of adding capacity.

A falsifying check

Test utilization, yield and customer qualification separately. Aggregate customer count does not reveal whether a particular fabrication line has enough demand.

If demand shifts toward a newer node, can spare older-node capacity meet it? Ask which equipment and processes can transfer before recommending an expansion.

Original case lab · illustrative, not company results

How much does yield change accepted output?

Illustrative batch: 100 wafers × 500 gross dies. A hypothetical customer values each good die at $10 contribution before a fixed $300,000 batch cost. This is not TSMC’s reported pricing or accounting.

Good dies = 100 × 500 × yield; batch surplus = good dies × $10 − $300,000.

Each tile represents 1% of gross dies. Break-even yield is 60%; process compatibility remains a separate constraint.

Carry the method into a complete fictional case. The Studio exercise practices a related skill; it does not simulate TSMC.

Open related Case Studio practice →Read the framework →