Baillie Gifford’s McPadden highlights TSMC, SK Hynix’s near-monopoly in advanced chip manufacturing

Paulina McPadden, investment manager at Baillie Gifford, laid out a blunt assessment of the global semiconductor landscape in a Bloomberg interview: TSMC and SK Hynix hold near-monopoly positions in advanced chip manufacturing, and China isn’t catching up anytime soon. The comments from one of the world’s most prominent growth-focused investment firms carry weight. Baillie Gifford has held TSMC since 1999 and SK Hynix since 2000, making this less a hot take and more of a thesis the firm has been building for over two decades. The moat that keeps getting wider McPadden’s argument rests on a structural reality that’s hard to argue with. US export restrictions on extreme ultraviolet lithography technology have effectively locked Chinese manufacturers out of the most advanced chipmaking processes. Without EUV machines, primarily made by the Dutch company ASML, producing cutting-edge logic and memory chips at scale is somewhere between extremely difficult and impossible. Chinese DRAM producer CXMT, the country’s most prominent domestic memory chipmaker, sits one to two generations behind Samsung and SK Hynix as of Q1 2026. In semiconductors, where each generation leap represents billion...