Meet the 90-year old semi-conductor king
What do Apple, Qualcomm, Nvidia and AMD have in common? They all source their chips from Taiwan Semiconductor Manufacturing Co (TSMC).
TSMC makes about 50% of all the semiconductors on the plan, and is currently the 10th largest company on the planet.
…and it was started and currently managed by a man name Morris Chang.
In 1983, as a 52-year-old senior executive at Texas Instruments Chang passed over for the company’s top job. Big mistake.
He would go on to build the most strategically important company in the world.
Morris Chang was born into a middle-class family in 1931 in Ningbo, Chekiang, China and much of his early life was spent in hardship.
Wars and widespread poverty overwhelmed the country, exposing him to much suffering at a young age.
Attempting to flee the violence of the ongoing wars, Morris moved frequently, including Hong Kong and eventually Harvard University in in1949.
After just one year at Harvard, he transferred to The Massachusetts Institute of Technology (MIT) to study engineering.
After failing his PhD exam twice, he took an entry-level job with Sylvania Semiconductor, but quickly realized the company wasn’t forward-thinking enough for his style.
He very quickly left Sylvania and accepted an engineering supervisor role at Texas Instruments, a growing tech company in Dallas, Texas.
By 1961, Morris had helped TI perfect the manufacturing line for a complex new chip and he was managing a full department. TI sponsored his PhD and Morris passed with flying colors.
After a few more years later, he was promoted to Vice President of TI’s entire semiconductor business.
But after being passed up for CEO, Morris Chang’s career took an unexpected turn.
He was transferred from department to department, “put out to pasture” as Morris puts it, eventually resigning in 1983 from TI.
There is a lot of speculation about why Morris wasn’t selected for the top job — some believe he was passed over due to being of Chinese origin.
Just Getting Started
Now 52, an age where most careers are winding down, Morris Chang’s journey was just beginning.
Shortly after his departure from TI (and after a short stint at its competitor, General Instrument), the government of Taiwan called on Morris Chang.
Their proposal was simple: come to Taiwan and help the country modernize its technology by creating a semiconductor industry.
At the time the industry in Taiwan was not encouraging — no R&D, no design capabilities, and no IP.
In 1987, Morris Chang came up with the idea of founding Taiwan Semiconductor Manufacturing Company (TSMC), a pure-play chip manufacturer.
In the same way that Amazon Web Services has enabled agile startups to deploy their app, TSMC enabled independent chip designers to start their own companies.
Here’s the twist, Morris Change got no equity in TSMC.
Overtime he was able to buy a large number of shares but none were free to him as a founder.
The Alchemist’s Flywheel
An entire ecosystem of “fabless” (i.e. design-only) chip companies sprouted up over a decade of slow and painful progress for the companies.
The flywheel effects for TSMC were extremely powerful. As the market grew, TSMC was able to gain a steeper competitive year over year thanks to heavy R&D investment and exponential learning over time. There is such a steep learning curve to the computer chip industry that it’s almost impossible for new entrants to enter.
When apple introduces their new and improved chip design, it is actually TSMC who are the true geniuses behind the new tech, which Apple just “white labels.”
Today, TSMC is the world’s largest contract manufacturer of chips, with annual revenues approaching ~$50 billion.
A single piece of machinery order goes for $300 million and it’s only producer is Dutch chipmaking equipment company ASML.
Morris Chang’s Legacy
The story of Morris change continues to develop and there will surely be more to tell in the future.
Morris Chang retired from the CEO role in 2018, but remains TSMC’s chairman.
His net worth is estimated to greater than $3 billion.