In a wood-paneled workplace overlooking Taipei and the jungle-covered mountains that encompass the Taiwanese capital, Morris Chang just lately pulled out an outdated guide stamped with technicolor patterns.
It was titled “Introduction to VLSI Techniques,” a graduate-level textbook describing the intricacies of pc chip design. Mr. Chang, 92, held it up with reverence.
“I wish to present you the date of this guide, 1980,” he mentioned. The timing was essential, he added, because it was “the earliest piece” in a puzzle that got here collectively for him — altering not solely his profession but in addition the course of the worldwide electronics trade.
The perception that Mr. Chang gained from the textbook was deceptively easy: the concept microchips, which act because the brains of computer systems, may very well be designed in a single place however manufactured elsewhere. The notion went towards the semiconductor trade’s normal apply on the time.
So on the age of 54, when many individuals start pondering extra about retirement, Mr. Chang as a substitute put himself on a path to show his perception right into a actuality. The engineer left his adopted nation, the USA, and moved to Taiwan the place he based Taiwan Semiconductor Manufacturing Firm, or TSMC. The corporate doesn’t design chips, nevertheless it has turn out to be the world’s greatest producer of cutting-edge microprocessors for purchasers together with Apple and Nvidia.
At the moment, the corporate that partially exists due to a textbook is a $500 billion juggernaut that has put essentially the most superior chips in iPhones, vehicles, supercomputers and fighter jets. So crucial are its airplane-hangar-size chip factories, known as fabs, that the USA, Japan and Europe have courted TSMC to construct them of their neck of the woods. Over the previous decade, China has additionally invested tons of of billions of {dollars} to recreate what TSMC has accomplished.
Mr. Chang’s unlikely entrepreneurial journey helped Taiwan turn out to be an financial big, restructured the best way the electronics trade labored and in the end charted a brand new geopolitical actuality through which a linchpin of world financial development lies in one of many world’s most risky spots.
That has thrust Mr. Chang, and the corporate he created, into the highlight. And on the twilight of his profession, a person who has most popular to stay within the shadows mirrored on what he has constructed and what it means to not be capable to keep below the radar.
“It doesn’t make me really feel notably good,” mentioned Mr. Chang, who retired in 2018 however nonetheless seems at TSMC occasions. “I might moderately keep comparatively unknown.”
Over a latest three-hour dialogue in his workplace, Mr. Chang made it clear that he identifies as American — he obtained his U.S. citizenship in 1962 — at a time when the corporate he based is on the middle of a technological Chilly Conflict between the USA and China. Even because the rivalry for tech management intensifies, he doesn’t give China a lot of an opportunity for semiconductor supremacy.
“We management all of the choke factors,” Mr. Chang mentioned, referring collectively to the USA and its chip-making allies such because the Netherlands, Japan, South Korea and Taiwan. “China can’t actually do something if we wish to choke them.”
Greater than a dozen individuals conversant in Mr. Chang, lots of whom knew him as a colleague at TSMC, mentioned he constructed the corporate — and outmaneuvered giants like Samsung and Intel — by being meticulous, cussed, trusting his finest individuals and, crucially, having boundless ambition and making daring strikes when justified. When TSMC stumbled after the 2008 monetary disaster, he returned as chief govt at age 77 to take over once more.
“He’s most likely the one particular person left within the chip trade who was current on the creation of the trade itself,” mentioned Chris Miller, the writer of the guide “Chip Conflict” and an affiliate professor of worldwide historical past on the Fletcher Faculty at Tufts College. “That he’s not solely nonetheless within the trade however on the middle and prime of it’s extraordinary.”
To know the tech trade’s future, it’s essential to know the world via Mr. Chang’s eyes and the way he made that preliminary guess when others didn’t. And in contrast to at this time’s tech moguls — akin to Elon Musk and Mark Zuckerberg, who’ve publicly thought-about a cage battle — Mr. Chang has proven extra restraint. If competitors between the worldwide tech giants is a collection of high-stakes poker video games, he’s the quiet man who runs the on line casino.
Virtually an automaker
Mr. Chang was born in 1931 in a China on the point of warfare. Earlier than the age of 18, he lived in six cities, modified colleges 10 occasions, skilled bombings in Guangzhou and Chongqing, and crossed the entrance traces as his household fled Japanese-occupied Shanghai throughout World Conflict II.
When he made it to Hong Kong in 1948 together with his household, who by then had been attempting to get away from the Chinese language Communist Get together’s advancing military, there was no going again.
“My outdated world crumbled because the mainland modified its shade, and a brand new world was but to be established,” he wrote in his autobiography, which was printed in 1998.
In 1949, Mr. Chang moved to the USA, attending Harvard earlier than transferring to the Massachusetts Institute of Know-how to review mechanical engineering. In 1955, when he twice failed a qualifying examination for a doctoral diploma at M.I.T., he determined to check out the job market.
“A few years later, I thought-about failing to be admitted to the Massachusetts Institute of Know-how’s Ph.D. program as the best stroke of luck in my life!” he wrote in his autobiography.
Two of one of the best provides arrived from Ford Motor Firm and Sylvania, a lesser-known electronics agency. Ford supplied Mr. Chang $479 a month for a job at its analysis and growth middle in Detroit. Although charmed by the corporate’s recruiters, Mr. Chang was shocked to seek out the supply was $1 lower than the $480 a month that Sylvania supplied.
When he known as Ford to ask for an identical supply, the recruiter, who had beforehand been sort, turned hostile and instructed him he wouldn’t get a cent extra. Mr. Chang took the engineering job with Sylvania. There, he realized about transistors, the microchip’s most elementary part.
“That was the beginning of my semiconductor profession,” he mentioned. “On reflection, it was a rattling good factor.”
Three years at Sylvania opened doorways and cemented Mr. Chang’s ardour for semiconductors. However Sylvania struggled, educating him a lesson that might inform how he later ran TSMC.
“From the start, the semiconductor trade has been a fast-paced and unforgiving trade,” Mr. Chang wrote of Sylvania’s eventual collapse in his autobiography. “When you fall behind, catching up turns into significantly tough.”
In 1958, he jumped to a buzzy new semiconductor firm, Texas Devices. The Dallas firm was “youthful and energetic,” with many staff working over 50 hours every week and sleeping in a single day within the workplace. 4 years later, Mr. Chang turned an American, an id he considers major.
“Ever since I fled Communist China and went to the USA and have become naturalized in 1962, my id has at all times been American, and nothing else,” he mentioned.
Mr. Chang turned a pillar of Texas Devices’ then world-beating semiconductor enterprise. Breakthroughs had been fixed. Within the Nineteen Seventies, the agency produced a chip that might synthesize the human voice, which led to the famed Communicate & Spell toy, a hand-held machine that helped kids with spelling and pronunciation.
“It’s identical to Camelot, nevertheless it was not a protracted time period,” he mentioned.
Within the late Nineteen Seventies, Texas Devices turned its focus to the burgeoning marketplace for calculators, digital watches and residential computer systems. Mr. Chang, then in control of the semiconductor aspect, realized his profession there was approaching a “useless finish.”
It was time for one thing completely different.
Placing the puzzle items collectively
If the primary puzzle piece that led to TSMC’s creation was the textbook, the second was an expertise that Mr. Chang had towards the top of his time at Texas Devices.
Within the early Eighties, Texas Devices opened a chip manufacturing unit in Japan. Three months after the manufacturing line started churning out chips, the plant’s “yield” was double that of the corporate’s factories in Texas. Yield is a key statistic that refers to what number of usable chips emerge from manufacturing.
Mr. Chang was dispatched to Japan to resolve the yield thriller. The important thing was the employees, he discovered, with turnover surprisingly low amongst well-qualified staff.
However strive as it would, Texas Devices couldn’t discover the identical caliber of technicians in the USA. At one U.S. plant, the highest candidate for a supervisor job had a level in French literature and no engineering background. The way forward for superior manufacturing gave the impression to be in Asia.
In 1984, Mr. Chang joined Basic Instrument, one other chip agency, the place a 3rd puzzle piece fell into place. He met an entrepreneur who later began an organization that might solely design chips with out additionally making them, which was then unusual. He noticed a pattern that might show to have endurance: At the moment most semiconductor firms design chips and outsource manufacturing.
This ultimate piece coincided with Taiwan’s transition from a labor-intensive and heavy trade financial system to a high-tech one. When Taiwanese officers set their sights on growing the semiconductor trade, they requested Mr. Chang, whose repute as a chip professional was established, to guide an institute for supercharging innovation.
So in 1985, Mr. Chang, then 54, left the USA for a spot he knew solely from a number of visits to a Texas Devices manufacturing unit.
“I actually had no plan to spend practically a lot time in Taiwan,” he mentioned. “I assumed I used to be going again in possibly just some years, and I actually had no plan to arrange TSMC, to arrange any firm in Taiwan.”
Inside weeks of Mr. Chang’s arrival, Li Kwoh-ting, a authorities official who turned generally known as the godfather of Taiwan’s tech growth, requested him to make the state-led chip mission commercially viable.
When Mr. Chang assessed Taiwan’s strengths and weaknesses, he sensed a gap. “I concluded that Taiwan was much more just like Japan than the U.S.,” he mentioned, referring to his expertise with the Texas Devices’ manufacturing unit in Japan.
In 1987, Mr. Chang based TSMC. The enterprise mannequin was clear in his head: TSMC would make chips for different firms and never design them. That meant it simply needed to win over these contained in the trade after which deal with what it might do finest — manufacturing.
From the get-go, Mr. Chang had plans for TSMC to faucet into a worldwide market. He launched skilled administration programs, which had been unusual in Taiwan, on the firm. To foster a world surroundings, inner communications had been in English.
His imaginative and prescient proved prophetic. As semiconductors turned extra complicated and costly to provide, just a few companies might even afford to strive. Making chips entails tons of of steps that pull on superior lasers and chemical manipulations to create tiny pathways for digital alerts that do essentially the most primary calculations for a pc. Prices had been astronomical.
Through the years, Mr. Chang saved going as others dropped out. If TSMC might appeal to sufficient prospects, leveraging economies of scale, it had an opportunity to take out the kings: Intel and Samsung.
In 1997, Mr. Chang recruited a brand new head of analysis of growth, Chiang Shang-yi. He instructed Mr. Chiang to benchmark TSMC towards the trade chief, Intel.
“Our purpose is to be No. 1, barring none,” Mr. Chang mentioned.
Mr. Chiang was shocked. “To be No. 1, you must spend 3 times as a lot as your subsequent competitor,” he replied, implying that being within the lead could be too lofty and expensive a purpose.
“It might be 3 times, however I do wish to spend sufficient in order that we turn out to be No. 1,” Mr. Chang mentioned. And he was ready to be affected person, even after stepping down as TSMC’s chief govt in 2005 and staying on as the corporate’s chairman.
Closing the Apple contract
In April 2009, offended TSMC staff — many who had just lately been let go by the corporate — arrange a protest camp at a leafy playground in Taipei’s quiet residential neighborhood of Dazhi. They had been down the road from Mr. Chang’s upscale condominium constructing.
As darkish fell, the protesters rolled out sleeping baggage subsequent to a slide and jungle fitness center, protecting themselves with a big signal that learn “TSMC lies lies lies.” All through its greater than two-decade historical past, TSMC had by no means laid off staff. But after the 2008 monetary disaster, Mr. Chang’s successor, Rick Tsai, started letting staff go.
Mr. Chang, then 77, determined he might not keep on the sidelines. He took again his job, rehired the expertise Mr. Tsai had let go and greater than doubled TSMC’s spending.
Coming at a tricky time for the trade, the transfer was not appreciated by traders. Elizabeth Solar, TSMC’s former head of investor relations, recalled her response to the information: “Once I heard it, I felt like banging my head towards a wall.”
However the guess paid off. In 2010, Mr. Chang received the decision that might turbocharge TSMC’s development and clinch its lead over Samsung and Intel. Jeff Williams, a senior vp at Apple, reached out via Mr. Chang’s spouse, Sophie Chang, who’s a relative of Terry Gou, the founding father of Foxconn, Apple’s largest assembler.
The decision led to a Sunday dinner with all 4 of them, which became negotiations the following day. Apple had labored with Samsung to provide the microchip it designed for the iPhone, nevertheless it was on the lookout for a brand new accomplice, partly as a result of Samsung had turn out to be a serious smartphone competitor. TSMC, which doesn’t compete with its prospects, was in pole place for the contract.
The discussions stretched on for months. “It was very difficult — the contract itself,” Mr. Chang mentioned. “It was the primary time we bumped into this type of factor.”
At one level, Apple introduced a two-month pause in talks. Mr. Chang heard Intel might need intervened.
Frightened, Mr. Chang flew to San Francisco to fulfill Tim Prepare dinner, Apple’s chief govt, who reassured him. In a 2013 interview, Paul Otellini, then Intel’s chief govt, mentioned he had turned down the possibility to make the chips for the iPhone as a result of Apple wouldn’t pay sufficient.
Mr. Chang wouldn’t make the identical mistake. Apple demanded higher phrases and decrease costs than others, however he understood the contract’s scale would assist TSMC rocket previous opponents. That was a lesson he realized from Invoice Bain, who based the consulting agency Bain & Firm, again at Texas Devices.
Mr. Bain, then a advisor for Boston Consulting Group, had labored in an workplace subsequent to Mr. Chang for nearly two years. He had analyzed Texas Devices’ manufacturing and gross sales numbers and argued that the extra the corporate produced, the higher it could carry out.
When the take care of Apple was full, Mr. Chang borrowed $7 billion to construct the capability for making hundreds of thousands of chips for the iPhone.
Within the ensuing years, Apple briefly turned to Samsung for iPhone chip manufacturing once more, however TSMC turned its major chip maker. Apple is now TSMC’s largest consumer, accounting for about 20 % of income.
Mr. Chang stays cautious about what he says about TSMC’s prospects even now. After starting a narrative about Apple at his workplace, he puzzled whether or not he had mentioned an excessive amount of.
“I don’t suppose I’ve exceeded Apple’s limits of what to inform you,” he mentioned.
In a press release, Mr. Williams, now Apple’s chief working officer, mentioned Mr. Chang had “pushed the semiconductor trade to new frontiers.”
In 2018, Mr. Chang, at 86 years outdated, retired once more. By then, TSMC had succeeded the place others lagged, mass producing chips with digital pathways the scale of a DNA double helix. That gave Mr. Chang confidence that he had achieved a key tenet for TSMC: technological management.
Spurring the A.I. revolution
Among the many awards and photographs with world leaders that stud the partitions of Mr. Chang’s Taipei workplace, one is a framed comedian portraying his shut relationship with Jensen Huang, a founding father of the chip agency Nvidia.
If Apple turbocharged TSMC, it was Mr. Chang who helped make Nvidia the world’s most essential designer of synthetic intelligence chips. The cartoon tells the story. Within the mid-Nineteen Nineties, when Nvidia was a start-up, Mr. Huang despatched a letter to Mr. Chang asking if TSMC would make its chips. After a name with Mr. Huang, Mr. Chang agreed.
“I favored him,” Mr. Chang mentioned of Mr. Huang.
By taking that probability, Mr. Chang helped spur the A.I. revolution in the USA. With TSMC’s manufacturing, Nvidia turned the world’s most essential A.I. chip designer. Breakthroughs like generative A.I. depend on big numbers of Nvidia chips to seek out patterns in huge quantities of information.
In a 2018 speech at Mr. Chang’s retirement gathering, Mr. Huang mentioned Nvidia — now value $1 trillion — wouldn’t exist with out TSMC. An inscription on the comedian, which Mr. Huang gave to Mr. Chang, reads: “Your profession is a masterpiece — a Beethoven’s Ninth Symphony.”
For Mr. Chang, the ultimate notes of that masterpiece haven’t but been performed. He’s wholesome for a nonagenarian, although he can not smoke a pipe — as soon as his trademark in photographs — after he had stents put into his coronary heart a couple of years in the past.
At his workplace, he nonetheless retains a Bloomberg terminal. He additionally makes common public appearances round Taiwan to debate international politics and the financial system. Like many, he worries a few potential battle between the USA and China over Taiwan, although he believes the possibility of such a confrontation is low.
“The possibility of China invading Taiwan, amphibious warfare and all that stuff, I feel that’s a really, very low chance,” he mentioned. “A blockade of some sort, I feel I nonetheless put it as low chance, nevertheless it’s nonetheless an opportunity and I wish to keep away from that.”
Mr. Chang mentioned he was not anxious about U.S. insurance policies which have minimize off Chinese language companies from entry to cutting-edge semiconductor expertise.
“I feel it’s nonetheless OK,” he mentioned, although he famous U.S. firms would lose enterprise and China would discover methods to battle again.
Because the dialog wound down, Mr. Chang mentioned he had some regrets that he couldn’t be within the driver’s seat as TSMC faces geopolitical challenges. However he mentioned the timing of his retirement in 2018 made sense, pushed by expertise and never politics.
“I used to be actually positive that we had achieved expertise management,” he mentioned of that point. “I don’t suppose we’ll lose it.”
