In a wood-paneled workplace overlooking Taipei and the jungle-covered mountains that encompass the Taiwanese capital, Morris Chang not too long ago pulled out an outdated guide stamped with technicolor patterns.
It was titled “Introduction to VLSI Techniques,” a graduate-level textbook describing the intricacies of laptop chip design. Mr. Chang, 92, held it up with reverence.
“I need to present you the date of this guide, 1980,” he mentioned. The timing was necessary, he added, because it was “the earliest piece” in a puzzle that got here collectively for him — altering not solely his profession but additionally 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, could possibly be designed in a single place however manufactured some place else. The notion went towards the semiconductor trade’s normal apply on the time.
So on the age of 54, when many individuals start considering extra about retirement, Mr. Chang as an alternative 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, but it surely has turn into the world’s greatest producer of cutting-edge microprocessors for patrons together with Apple and Nvidia.
Immediately, the corporate that partially exists due to a textbook is a $500 billion juggernaut that has put probably the most superior chips in iPhones, automobiles, supercomputers and fighter jets. So essential 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 finished.
Mr. Chang’s unlikely entrepreneurial journey helped Taiwan turn into an financial large, restructured the way in which the electronics trade labored and finally charted a brand new geopolitical actuality wherein 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 well-liked to stay within the shadows mirrored on what he has constructed and what it means to now not be capable of keep beneath 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’d quite keep comparatively unknown.”
Over a current 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 heart of a technological Chilly Battle 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 need 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 greatest 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 Battle” and an affiliate professor of worldwide historical past on the Fletcher College at Tufts College. “That he’s not solely nonetheless within the trade however on the heart and high of it’s extraordinary.”
To grasp the tech trade’s future, it’s essential to know the world by Mr. Chang’s eyes and the way he made that preliminary wager when others didn’t. And in contrast to in the present day’s tech moguls — corresponding to Elon Musk and Mark Zuckerberg, who’ve publicly thought of a cage combat — 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 conflict. 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 Battle II.
When he made it to Hong Kong in 1948 together with his household, who by then had been making an attempt to get away from the Chinese language Communist Celebration’s advancing military, there was no going again.
“My outdated world crumbled because the mainland modified its coloration, and a brand new world was but to be established,” he wrote in his autobiography, which was revealed in 1998.
In 1949, Mr. Chang moved to the USA, attending Harvard earlier than transferring to the Massachusetts Institute of Expertise 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 of failing to be admitted to the Massachusetts Institute of Expertise’s Ph.D. program as the best stroke of luck in my life!” he wrote in his autobiography.
Two of the perfect affords 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 heart 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 form, turned hostile and advised 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 simple element.
“That was the beginning of my semiconductor profession,” he mentioned. “Looking back, it was a rattling good factor.”
Three years at Sylvania opened doorways and cemented Mr. Chang’s ardour for semiconductors. However Sylvania struggled, instructing him a lesson that will 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 troublesome.”
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 grew to become 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 grew to become a pillar of Texas Devices’ then world-beating semiconductor enterprise. Breakthroughs had been fixed. Within the Seventies, the agency produced a chip that might synthesize the human voice, which led to the famed Converse & Spell toy, a hand-held system that helped youngsters with spelling and pronunciation.
“It’s similar to Camelot, but it surely was not a protracted time frame,” he mentioned.
Within the late Seventies, Texas Devices turned its focus to the burgeoning marketplace for calculators, digital watches and residential computer systems. Mr. Chang, then answerable for the semiconductor facet, realized his profession there was approaching a “lifeless 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 Nineteen Eighties, Texas Devices opened a chip manufacturing facility 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 workers, he discovered, with turnover surprisingly low amongst well-qualified staff.
However strive as it’d, 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 seemed to be in Asia.
In 1984, Mr. Chang joined Normal Instrument, one other chip agency, the place a 3rd puzzle piece fell into place. He met an entrepreneur who later began an organization that will solely design chips with out additionally making them, which was then unusual. He noticed a pattern that will show to have endurance: Immediately 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 knowledgeable was established, to steer 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 facility.
“I actually had no plan to spend almost a lot time in Taiwan,” he mentioned. “I assumed I used to be going again in possibly only a few 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 grew to become often 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 much like Japan than the U.S.,” he mentioned, referring to his expertise with the Texas Devices’ manufacturing facility 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 give attention to what it might do greatest — manufacturing.
From the get-go, Mr. Chang had plans for TSMC to faucet into a world market. He launched skilled administration techniques, which had been unusual in Taiwan, on the firm. To foster a global atmosphere, inner communications had been in English.
His imaginative and prescient proved prophetic. As semiconductors grew to become extra complicated and costly to provide, just a few corporations might even afford to strive. Making chips includes tons of of steps that pull on superior lasers and chemical manipulations to create tiny pathways for digital indicators that do probably the most fundamental calculations for a pc. Prices had been astronomical.
Through the years, Mr. Chang saved going as others dropped out. If TSMC might entice sufficient clients, 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 advised 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, it’s a must to spend 3 times as a lot as your subsequent competitor,” he replied, implying that being within the lead could be too lofty and dear a purpose.
“It could be 3 times, however I do need to spend sufficient in order that we turn into 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 not too long ago 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 house 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 now 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 wager paid off. In 2010, Mr. Chang received the decision that will turbocharge TSMC’s development and clinch its lead over Samsung and Intel. Jeff Williams, a senior vice chairman at Apple, reached out by 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 become negotiations the following day. Apple had labored with Samsung to provide the microchip it designed for the iPhone, but it surely was on the lookout for a brand new associate, partly as a result of Samsung had turn into a serious smartphone competitor. TSMC, which doesn’t compete with its clients, 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 sort of factor.”
At one level, Apple introduced a two-month pause in talks. Mr. Chang heard Intel might need intervened.
Nervous, Mr. Chang flew to San Francisco to fulfill Tim Cook 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 marketing consultant 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 might carry out.
When the take care of Apple was full, Mr. Chang borrowed $7 billion to construct the capability for making tens of millions of chips for the iPhone.
Within the ensuing years, Apple briefly turned to Samsung for iPhone chip manufacturing once more, however TSMC grew to become its major chip maker. Apple is now TSMC’s largest consumer, accounting for about 20 p.c of income.
Mr. Chang stays cautious about what he says about TSMC’s clients even now. After starting a narrative about Apple at his workplace, he questioned whether or not he had mentioned an excessive amount of.
“I don’t suppose I’ve exceeded Apple’s limits of what to let you know,” 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 necessary designer of synthetic intelligence chips. The cartoon tells the story. Within the mid-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 appreciated him,” Mr. Chang mentioned of Mr. Huang.
By taking that likelihood, Mr. Chang helped spur the A.I. revolution in the USA. With TSMC’s manufacturing, Nvidia grew to become the world’s most necessary A.I. chip designer. Breakthroughs like generative A.I. depend on enormous numbers of Nvidia chips to seek out patterns in huge quantities of knowledge.
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 now 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 couple of 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 believe that’s a really, very low chance,” he mentioned. “A blockade of some form, I believe I nonetheless put it as low chance, but it surely’s nonetheless an opportunity and I need to keep away from that.”
Mr. Chang mentioned he was not anxious about U.S. insurance policies which have lower off Chinese language corporations from entry to cutting-edge semiconductor expertise.
“I believe it’s nonetheless OK,” he mentioned, although he famous U.S. firms would lose enterprise and China would discover methods to combat 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 certain that we had achieved expertise management,” he mentioned of that point. “I don’t suppose we’ll lose it.”