In a wood-paneled workplace overlooking Taipei and the jungle-covered mountains that encompass the Taiwanese capital, Morris Chang just lately pulled out an previous e book stamped with technicolor patterns.
It was titled “Introduction to VLSI Programs,” a graduate-level textbook describing the intricacies of pc chip design. Mr. Chang, 92, held it up with reverence.
“I need to present you the date of this e book, 1980,” he mentioned. The timing was vital, 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 business.
The perception that Mr. Chang gained from the textbook was deceptively easy: the concept microchips, which act because the brains of computer systems, might be designed in a single place however manufactured some place else. The notion went in opposition to the semiconductor business’s normal observe 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 US, and moved to Taiwan the place he based Taiwan Semiconductor Manufacturing Firm, or TSMC. The corporate doesn’t design chips, however it has turn into the world’s largest producer of cutting-edge microprocessors for patrons together with Apple and Nvidia.
Right this moment, 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 vital are its airplane-hangar-size chip factories, known as fabs, that the US, Japan and Europe have courted TSMC to construct them of their neck of the woods. Over the previous decade, China has additionally invested a whole bunch of billions of {dollars} to recreate what TSMC has executed.
Mr. Chang’s unlikely entrepreneurial journey helped Taiwan turn into an financial big, restructured the way in which the electronics business 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 not be capable of keep underneath the radar.
“It doesn’t make me really feel significantly good,” mentioned Mr. Chang, who retired in 2018 however nonetheless seems at TSMC occasions. “I’d somewhat 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 Struggle between the US 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 US 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 folks aware of 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 folks 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 individual left within the chip business who was current on the creation of the business itself,” mentioned Chris Miller, the writer of the e book “Chip Struggle” and an affiliate professor of worldwide historical past on the Fletcher College at Tufts College. “That he’s not solely nonetheless within the business however on the middle and prime of it’s extraordinary.”
To grasp the tech business’s future, it’s essential to know the world by way of Mr. Chang’s eyes and the way he made that preliminary guess when others didn’t. And in contrast to at present’s tech moguls — comparable to Elon Musk and Mark Zuckerberg, who’ve publicly thought of a cage battle — Mr. Chang has proven extra restraint. If competitors between the worldwide tech giants is a sequence 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 Struggle II.
When he made it to Hong Kong in 1948 along with his household, who by then had been making an attempt to get away from the Chinese language Communist Get together’s advancing military, there was no going again.
“My previous 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 US, attending Harvard earlier than transferring to the Massachusetts Institute of Know-how to check 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 Know-how’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 improvement middle in Detroit. Although charmed by the corporate’s recruiters, Mr. Chang was shocked to search 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 variety, turned hostile and instructed him he wouldn’t get a cent extra. Mr. Chang took the engineering job with Sylvania. There, he discovered about transistors, the microchip’s most simple element.
“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 will inform how he later ran TSMC.
“From the start, the semiconductor business has been a fast-paced and unforgiving business,” 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 per week and sleeping in a single day within the workplace. 4 years later, Mr. Chang grew to become an American, an identification he considers major.
“Ever since I fled Communist China and went to the US and have become naturalized in 1962, my identification has all the time 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 Nineteen Seventies, the agency produced a chip that would synthesize the human voice, which led to the famed Converse & Spell toy, a hand-held system that helped kids with spelling and pronunciation.
“It’s similar to Camelot, however it was not an extended time frame,” 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 answerable for the semiconductor facet, 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 tip 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 would, Texas Devices couldn’t discover the identical caliber of technicians in the US. 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 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 will solely design chips with out additionally making them, which was then unusual. He noticed a pattern that will show to have endurance: Right this moment most semiconductor firms design chips and outsource manufacturing.
This last piece coincided with Taiwan’s transition from a labor-intensive and heavy business financial system to a high-tech one. When Taiwanese officers set their sights on growing the semiconductor business, they requested Mr. Chang, whose status as a chip professional was established, to steer an institute for supercharging innovation.
So in 1985, Mr. Chang, then 54, left the US for a spot he knew solely from a number of visits to a Texas Devices manufacturing facility.
“I definitely had no plan to spend practically a lot time in Taiwan,” he mentioned. “I assumed I used to be going again in perhaps 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 called the godfather of Taiwan’s tech improvement, 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 business after which give attention to what it may do finest — manufacturing.
From the get-go, Mr. Chang had plans for TSMC to faucet into a worldwide market. He launched skilled administration techniques, which had been unusual in Taiwan, on the firm. To foster a global surroundings, inside communications had been in English.
His imaginative and prescient proved prophetic. As semiconductors grew to become extra advanced and costly to supply, only some companies may even afford to strive. Making chips entails a whole bunch 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.
Over time, Mr. Chang saved going as others dropped out. If TSMC may 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 improvement, Chiang Shang-yi. He instructed Mr. Chiang to benchmark TSMC in opposition to the business chief, Intel.
“Our aim is to be No. 1, barring none,” Mr. Chang mentioned.
Mr. Chiang was shocked. “To be No. 1, it’s a must to spend thrice as a lot as your subsequent competitor,” he replied, implying that being within the lead could be too lofty and dear a aim.
“It might be thrice, 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 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 house constructing.
As darkish fell, the protesters rolled out sleeping luggage subsequent to a slide and jungle fitness center, masking 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 may 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 troublesome time for the business, 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 in opposition to a wall.”
However the guess paid off. In 2010, Mr. Chang acquired the decision that will turbocharge TSMC’s development and clinch its lead over Samsung and Intel. Jeff Williams, a senior vp at Apple, reached out by way of 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 changed into negotiations the subsequent day. Apple had labored with Samsung to supply the microchip it designed for the iPhone, however it was searching 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 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.
Fearful, 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 prospect 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 discovered from Invoice Bain, who based the consulting agency Bain & Firm, again at Texas Devices.
Mr. Bain, then a guide 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 will 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 grew to become 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 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 an announcement, Mr. Williams, now Apple’s chief working officer, mentioned Mr. Chang had “pushed the semiconductor business to new frontiers.”
In 2018, Mr. Chang, at 86 years previous, retired once more. By then, TSMC had succeeded the place others lagged, mass producing chips with digital pathways the dimensions 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 images 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 vital 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 favored him,” Mr. Chang mentioned of Mr. Huang.
By taking that probability, Mr. Chang helped spur the A.I. revolution in the US. With TSMC’s manufacturing, Nvidia grew to become the world’s most vital A.I. chip designer. Breakthroughs like generative A.I. depend on big numbers of Nvidia chips to search out patterns in huge quantities of information.
In a 2018 speech at Mr. Chang’s retirement gathering, Mr. Huang mentioned Nvidia — now price $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 images — after he had stents put into his coronary heart just a few years in the past.
At his workplace, he nonetheless retains a Bloomberg terminal. He additionally makes common public appearances round Taiwan to debate world politics and the financial system. Like many, he worries a few potential battle between the US and China over Taiwan, although he believes the prospect of such a confrontation is low.
“The prospect 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 variety, I believe I nonetheless put it as low chance, however it’s nonetheless an opportunity and I need to keep away from that.”
Mr. Chang mentioned he was not nervous about U.S. insurance policies which have minimize off Chinese language companies 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 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.”
