Fabs are in kind of a catch 22. They need big business to improve and to get lots of business they need to be competitive. Im mostly familiar with that narrative in terms of Intel's current uphill battle - was it really the same for TSMC? I guess maybe there was a similar dynamic except the playing field was more even at that time, so it was a bit less of a catch 22.
Yes, it was. Intel was well ahead of TSMC for quite some time. But TSMC had a diversified and hungry list of clients, with Apple at the forefront. Apple got the taste for wanting their own chips which pushed TSMC to be hungrier. Meanwhile, Intel got fat and complacent. It also helped that phone chips were considerably smaller, so managing yields was easier.
