DailySandTSMC's annual revenue exceeds $90 billion. Its factories in Taiwan produce the majority of the world's advanced logic chips — including every Nvidia GPU, every Apple silicon chip, and the leading-edge processors used by Google, Amazon, and Microsoft for AI inference. The company's 3nm and 2nm processes are among the most complex manufacturing operations ever developed by human beings.
What is less well understood is how dependent that manufacturing operation is on a global supply chain of highly specialized materials — many of which come from a small number of sources, some of which are in geopolitically sensitive locations.
The Material Inputs of Chip Manufacturing
A modern semiconductor fabrication facility uses over 200 distinct chemical, gas, and material inputs. Most are commodity-grade industrial chemicals. A handful are specialty materials with limited global supply that are irreplaceable at current manufacturing nodes.
Neon: The Laser Gas
Neon is the primary gas used in excimer lasers — the 193nm argon fluoride (ArF) lasers that drive deep ultraviolet (DUV) lithography, which remains the dominant patterning technology even alongside EUV adoption. Neon is separated from air in large industrial air separation units (ASUs) as a byproduct of oxygen and nitrogen production.
Before 2022, Ukraine produced approximately 70% of the world's semiconductor-grade neon, primarily as a byproduct of steel manufacturing. Russia's invasion of Ukraine in February 2022 immediately disrupted that supply and caused neon prices to spike more than 500% within weeks. The chip industry's response — which had been building since a smaller neon shortage in 2014 — was to accelerate diversification to new suppliers in China, the United States, South Korea, and other countries with industrial gas production capacity.
By 2024, the Ukraine neon concentration had been substantially reduced. Linde, Air Liquide, and Air Products — the three dominant industrial gas companies globally — had invested in new neon separation capacity distributed across multiple geographies. The 2022 incident is now considered largely resolved from a supply security standpoint, but it demonstrated how quickly an unexpected geopolitical event can disrupt a narrow specialty gas supply chain.
Fluorine and Fluorinated Compounds
Fluorine chemistry is pervasive in semiconductor manufacturing. Hydrofluoric acid (HF) is used to etch silicon oxide layers and to clean silicon wafers. Various fluorinated gases (NF3, SF6, C4F8) are used in plasma etching processes that define circuit features. Fluoropolymer materials (PTFE, PFA) are used for tubing, fittings, and containment equipment throughout the fab because they are resistant to the highly corrosive chemicals in use.
The key fluorine supply chain concern is not geological scarcity but processing concentration. High-purity electronic-grade HF is produced by a limited number of companies. Japan's Stella Chemifa and Morita Chemical are among the most significant producers of semiconductor-grade HF — and Japan-South Korea trade tensions in 2019 led Japan to restrict exports of HF and two other semiconductor chemicals to South Korea, causing significant disruption for Samsung and SK Hynix before the restriction was eventually resolved.
Cobalt and Tungsten in Chip Manufacturing
These metals appear not as bulk materials but as precision thin films and targets inside the fab.
Cobalt is used as a barrier and adhesion layer in certain advanced interconnect structures. At sub-10nm nodes, tungsten vias (the vertical electrical connections between chip layers) have been replaced in part by cobalt and ruthenium liners that reduce electrical resistance at the nanoscale. Intel's Eagle Stream platform and TSMC's N3 process both use cobalt-containing interconnect schemes.
Tungsten is used as a target material in physical vapor deposition (PVD) systems that deposit thin metallic films. It is also used in ion implantation — the process of firing dopant ions into the silicon surface to modify its electrical properties. China produces approximately 82% of global tungsten supply, making it a potential future export control candidate.
Chemical Mechanical Planarization (CMP) Slurries
Between each layer of a chip's structure, the wafer surface must be polished to atomic-scale flatness before the next layer can be deposited. This is done using CMP slurries — aqueous suspensions of abrasive particles in a chemical medium.
The abrasive particles are typically silicon dioxide (colloidal silica) or cerium oxide (ceria). Cerium oxide is derived from cerium, a rare earth element produced primarily in China. Ceria-based CMP slurries are used for polishing oxide and interlayer dielectric (ILD) layers — a step that occurs dozens of times in manufacturing a complex chip.
The CMP slurry market is dominated by Cabot Microelectronics (now CMC Materials), DuPont, and Fujimi Incorporated. These companies source cerium oxide from Chinese and non-Chinese suppliers, but China's cerium production dominance creates input risk.
Photoresist and EUV Pellicles
Photoresist is the light-sensitive polymer film applied to the wafer surface before lithography. For EUV (extreme ultraviolet) lithography — used by TSMC for its most advanced nodes — the photoresist chemistry is highly specialized and produced by a very small number of companies: JSR, Shin-Etsu Chemical, and Tokyo Ohka Kogyo (all Japanese) and a few others.
EUV pellicles are thin membranes placed over the EUV reticle (mask) to prevent particle contamination from reaching the mask surface. They must be transparent to EUV light (13.5nm wavelength) while surviving intense radiation exposure. The pellicle material — currently a polysilicon or silicon nitride film — is one of the most technically demanding components in the EUV process. ASML and Mitsui Chemicals are the primary suppliers. Pellicle availability has been a production bottleneck for TSMC and Samsung at times when EUV adoption has outpaced pellicle supply.
The Taiwan Geographic Concentration Risk
TSMC's concentration of advanced manufacturing in Taiwan is itself a supply chain risk factor that does not fit neatly into the materials framework but is inseparable from it.
Over 90% of the world's most advanced logic chips (5nm and below) are manufactured in Taiwan. TSMC's Hsinchu and Tainan fabs are within range of Chinese ballistic missiles and would be the primary targets of any military action. Even without military action, a naval blockade of Taiwan — which Chinese military exercises have simulated — could disrupt the supply of materials to TSMC's factories, since Taiwan imports essentially all of its raw materials by sea.
TSMC's expansion into Arizona (N4P process, production beginning 2024), Germany (N28 process, production beginning 2027), and Japan (N12FFC process, production beginning 2024) represents a partial geographic diversification. However, these international fabs collectively represent less than 10% of TSMC's total capacity and do not include the most advanced nodes. The geographic concentration of leading-edge capacity in Taiwan will not be materially reduced this decade.
The Chip Materials Supply Chain in One Framework
The materials risks in semiconductor manufacturing can be organized by their time horizon to supply disruption:
Immediate risk (disruption possible within weeks): Specialty gases (neon, electronic-grade HF) — global production is geographically concentrated and cannot be substituted.
Medium-term risk (months to quarters): CMP slurries, photoresists, EUV pellicles — supply concentration with limited redundancy.
Structural risk (years to decades): Cobalt, tungsten, rare earths, gallium, germanium — geological and geopolitical concentration that cannot be addressed without long-duration capital investment.
Geographic risk: Taiwan fab concentration — addressed only by multi-decade manufacturing diversification programs that are now underway but will not reach material scale until the 2030s.