Taiwan Semiconductor Manufacturing Co.: The Semiconductor Services Company SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Technology & Operations
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Taiwan Semiconductor Manufacturing Co.: The Semiconductor Services Company
Founded in 1987, Taiwan Semiconductor Manufacturing Co. (TSMC) was the world's first pure foundry, focused solely on the manufacturing of semiconductors. Operating in the cyclical semiconductor market, the company managed to grow rapidly and to become the world's 8th largest semiconductor manufacturer with more than a 50% market share in the foundry business. In the company's early days, TSMC management focused on manufacturing excellence and technology leadership. As competition in the sector intensified in the late 1990s, the company began to focus on customer service to differentiate itself further from companies like UMC, its next-door neighbor and closest competitor, and the rapidly growing Chinese foundries. The company invested heavily in the development of innovative, value-added services and proprietary information systems that would facilitate better communication and improve customer service, putting in place eCommerce applications such as eFoundry and Enterprise Supply Chain Management suites. TSMC management believed that customers, typically U.S.-based integrated circuit design houses facing high financial stakes, rapid technological innovations, short product life cycles, and intensive competition, would choose a foundry business partner based on quality, trustworthiness, and reputation, as opposed to price only. Could superior customer service make an impact in a capital-intensive, process- and quality- oriented industry such as the semiconductor industry, or would TSMC have to compete on price? Explores these issues, as well as other factors affecting TSMC's strategic path as it moves forward in the mid-2000s.
Authors :: Hau Lee, Seungjin Whang, Shiri Shneorson
Swot Analysis of "Taiwan Semiconductor Manufacturing Co.: The Semiconductor Services Company" written by Hau Lee, Seungjin Whang, Shiri Shneorson includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Semiconductor Tsmc facing as an external strategic factors. Some of the topics covered in Taiwan Semiconductor Manufacturing Co.: The Semiconductor Services Company case study are - Strategic Management Strategies, Customer service, Globalization, IT, Marketing, Strategic planning, Supply chain and Technology & Operations.
Some of the macro environment factors that can be used to understand the Taiwan Semiconductor Manufacturing Co.: The Semiconductor Services Company casestudy better are - – geopolitical disruptions, banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing commodity prices, digital marketing is dominated by two big players Facebook and Google, increasing inequality as vast percentage of new income is going to the top 1%, increasing energy prices, increasing government debt because of Covid-19 spendings,
there is increasing trade war between United States & China, competitive advantages are harder to sustain because of technology dispersion, etc
Introduction to SWOT Analysis of Taiwan Semiconductor Manufacturing Co.: The Semiconductor Services Company
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Taiwan Semiconductor Manufacturing Co.: The Semiconductor Services Company case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Semiconductor Tsmc, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Semiconductor Tsmc operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Taiwan Semiconductor Manufacturing Co.: The Semiconductor Services Company can be done for the following purposes –
1. Strategic planning using facts provided in Taiwan Semiconductor Manufacturing Co.: The Semiconductor Services Company case study
2. Improving business portfolio management of Semiconductor Tsmc
3. Assessing feasibility of the new initiative in Technology & Operations field.
4. Making a Technology & Operations topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Semiconductor Tsmc
Strengths Taiwan Semiconductor Manufacturing Co.: The Semiconductor Services Company | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Semiconductor Tsmc in Taiwan Semiconductor Manufacturing Co.: The Semiconductor Services Company Harvard Business Review case study are -
Analytics focus
– Semiconductor Tsmc is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Hau Lee, Seungjin Whang, Shiri Shneorson can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Training and development
– Semiconductor Tsmc has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Taiwan Semiconductor Manufacturing Co.: The Semiconductor Services Company Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Effective Research and Development (R&D)
– Semiconductor Tsmc has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Taiwan Semiconductor Manufacturing Co.: The Semiconductor Services Company - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Diverse revenue streams
– Semiconductor Tsmc is present in almost all the verticals within the industry. This has provided firm in Taiwan Semiconductor Manufacturing Co.: The Semiconductor Services Company case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Innovation driven organization
– Semiconductor Tsmc is one of the most innovative firm in sector. Manager in Taiwan Semiconductor Manufacturing Co.: The Semiconductor Services Company Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Cross disciplinary teams
– Horizontal connected teams at the Semiconductor Tsmc are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Operational resilience
– The operational resilience strategy in the Taiwan Semiconductor Manufacturing Co.: The Semiconductor Services Company Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Low bargaining power of suppliers
– Suppliers of Semiconductor Tsmc in the sector have low bargaining power. Taiwan Semiconductor Manufacturing Co.: The Semiconductor Services Company has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Semiconductor Tsmc to manage not only supply disruptions but also source products at highly competitive prices.
Ability to recruit top talent
– Semiconductor Tsmc is one of the leading recruiters in the industry. Managers in the Taiwan Semiconductor Manufacturing Co.: The Semiconductor Services Company are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
High brand equity
– Semiconductor Tsmc has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Semiconductor Tsmc to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
High switching costs
– The high switching costs that Semiconductor Tsmc has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Highly skilled collaborators
– Semiconductor Tsmc has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in Taiwan Semiconductor Manufacturing Co.: The Semiconductor Services Company HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Weaknesses Taiwan Semiconductor Manufacturing Co.: The Semiconductor Services Company | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Taiwan Semiconductor Manufacturing Co.: The Semiconductor Services Company are -
Slow to strategic competitive environment developments
– As Taiwan Semiconductor Manufacturing Co.: The Semiconductor Services Company HBR case study mentions - Semiconductor Tsmc takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
Capital Spending Reduction
– Even during the low interest decade, Semiconductor Tsmc has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Interest costs
– Compare to the competition, Semiconductor Tsmc has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Aligning sales with marketing
– It come across in the case study Taiwan Semiconductor Manufacturing Co.: The Semiconductor Services Company that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Taiwan Semiconductor Manufacturing Co.: The Semiconductor Services Company can leverage the sales team experience to cultivate customer relationships as Semiconductor Tsmc is planning to shift buying processes online.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Semiconductor Tsmc is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Taiwan Semiconductor Manufacturing Co.: The Semiconductor Services Company can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Increasing silos among functional specialists
– The organizational structure of Semiconductor Tsmc is dominated by functional specialists. It is not different from other players in the Technology & Operations segment. Semiconductor Tsmc needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Semiconductor Tsmc to focus more on services rather than just following the product oriented approach.
Slow decision making process
– As mentioned earlier in the report, Semiconductor Tsmc has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Semiconductor Tsmc even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Semiconductor Tsmc supply chain. Even after few cautionary changes mentioned in the HBR case study - Taiwan Semiconductor Manufacturing Co.: The Semiconductor Services Company, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Semiconductor Tsmc vulnerable to further global disruptions in South East Asia.
Lack of clear differentiation of Semiconductor Tsmc products
– To increase the profitability and margins on the products, Semiconductor Tsmc needs to provide more differentiated products than what it is currently offering in the marketplace.
High bargaining power of channel partners
– Because of the regulatory requirements, Hau Lee, Seungjin Whang, Shiri Shneorson suggests that, Semiconductor Tsmc is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
Skills based hiring
– The stress on hiring functional specialists at Semiconductor Tsmc has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Opportunities Taiwan Semiconductor Manufacturing Co.: The Semiconductor Services Company | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Taiwan Semiconductor Manufacturing Co.: The Semiconductor Services Company are -
Using analytics as competitive advantage
– Semiconductor Tsmc has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Taiwan Semiconductor Manufacturing Co.: The Semiconductor Services Company - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Semiconductor Tsmc to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Better consumer reach
– The expansion of the 5G network will help Semiconductor Tsmc to increase its market reach. Semiconductor Tsmc will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Semiconductor Tsmc can use these opportunities to build new business models that can help the communities that Semiconductor Tsmc operates in. Secondly it can use opportunities from government spending in Technology & Operations sector.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Semiconductor Tsmc can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, Taiwan Semiconductor Manufacturing Co.: The Semiconductor Services Company, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Manufacturing automation
– Semiconductor Tsmc can use the latest technology developments to improve its manufacturing and designing process in Technology & Operations segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Leveraging digital technologies
– Semiconductor Tsmc can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Semiconductor Tsmc can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Semiconductor Tsmc in the consumer business. Now Semiconductor Tsmc can target international markets with far fewer capital restrictions requirements than the existing system.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Semiconductor Tsmc to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Semiconductor Tsmc to hire the very best people irrespective of their geographical location.
Learning at scale
– Online learning technologies has now opened space for Semiconductor Tsmc to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Semiconductor Tsmc in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Technology & Operations segment, and it will provide faster access to the consumers.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Semiconductor Tsmc can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Loyalty marketing
– Semiconductor Tsmc has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Threats Taiwan Semiconductor Manufacturing Co.: The Semiconductor Services Company External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Taiwan Semiconductor Manufacturing Co.: The Semiconductor Services Company are -
Environmental challenges
– Semiconductor Tsmc needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Semiconductor Tsmc can take advantage of this fund but it will also bring new competitors in the Technology & Operations industry.
Regulatory challenges
– Semiconductor Tsmc needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Technology & Operations industry regulations.
Shortening product life cycle
– it is one of the major threat that Semiconductor Tsmc is facing in Technology & Operations sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Semiconductor Tsmc needs to understand the core reasons impacting the Technology & Operations industry. This will help it in building a better workplace.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Increasing wage structure of Semiconductor Tsmc
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Semiconductor Tsmc.
High dependence on third party suppliers
– Semiconductor Tsmc high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Semiconductor Tsmc in the Technology & Operations industry. The Technology & Operations industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Stagnating economy with rate increase
– Semiconductor Tsmc can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Semiconductor Tsmc can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Taiwan Semiconductor Manufacturing Co.: The Semiconductor Services Company .
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Semiconductor Tsmc in the Technology & Operations sector and impact the bottomline of the organization.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Semiconductor Tsmc with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Semiconductor Tsmc.
Weighted SWOT Analysis of Taiwan Semiconductor Manufacturing Co.: The Semiconductor Services Company Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Taiwan Semiconductor Manufacturing Co.: The Semiconductor Services Company needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Taiwan Semiconductor Manufacturing Co.: The Semiconductor Services Company is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Taiwan Semiconductor Manufacturing Co.: The Semiconductor Services Company is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Taiwan Semiconductor Manufacturing Co.: The Semiconductor Services Company is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Semiconductor Tsmc needs to make to build a sustainable competitive advantage.