TSMC's upstream is ASML. And interestingly ASML just recently managed to come up with a "good enough" pellicle (a transparent protector for the lithography mask

TSMC's upstream is ASML. And interestingly ASML just recently managed to come up with a "good enough" pellicle (a transparent protector for the lithography mask) for EUV, and they are outsourcing the manufacturing of that to Mitsui as fast as they can. "The pellicle production tools have been installed in Mitsui, which this year will ramp up EUV pellicles based on ASML’s technology. Mitsui is no stranger to pellicles, and already produces optical pellicles. ASML will continue to do R&D for future pellicles." https://semiengineering.com/euv-pellicles-finally-ready/ https://semiengineering.com/euv-pellicles-finally-ready/ There is specialization (comparative advantage) outsourcing, with a living connection between the partners. ASML does the R&D an Mitsui scales it up, etc. And there's stubbornness driven outsourcing, where companies for some reason don't want to offer a competitive compensation, but are willing to spend a lot on service contracts. (Because they can claim that the risks are managed by the service provider.) And they end up with subpar solutions supplied by whatever vendors that had the patience to deliver to a completely incompetent client (and the necessary audacity to bill them as much as possible).