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Taipei and the jungle-covered mountains that encompass the Taiwanese capital, Morris Chang just lately pulled out an outdated e book stamped with technicolor patterns.
It was titled “Introduction to VLSI Methods,” 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 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 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 some other place. The notion went towards the semiconductor trade’s commonplace 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, but it surely has turn into the world’s largest producer of cutting-edge microprocessors for purchasers together with Apple and Nvidia.
As we speak, 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 lots of of billions of {dollars} to recreate what TSMC has achieved.
Mr. Chang’s unlikely entrepreneurial journey helped Taiwan turn into an financial large, restructured the way in which the electronics trade labored and in the end charted a brand new geopolitical actuality by which a linchpin of worldwide financial progress 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 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 might 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 Conflict 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 wish to choke them.”
Greater than a dozen individuals accustomed to Mr. Chang, a lot 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 e book “Chip Conflict” 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 grasp the world by means of Mr. Chang’s eyes and the way he made that preliminary wager when others didn’t. And in contrast to at this time’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 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 instances, skilled bombings in Guangzhou and Chongqing, and crossed the entrance strains 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 making an attempt 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 coloration, 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 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 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 affords arrived from Ford Motor Firm and Sylvania, a lesser-known electronics agency. Ford provided 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 stunned to seek out the provide was $1 lower than the $480 a month that Sylvania provided.
When he known as Ford to ask for an identical provide, the recruiter, who had beforehand been variety, turned hostile and advised 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 part.
“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 turned an American, an identification he considers main.
“Ever since I fled Communist China and went to the US and have become naturalized in 1962, my identification 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 Seventies, the agency produced a chip that would synthesize the human voice, which led to the famed Communicate & Spell toy, a hand-held gadget that helped kids with spelling and pronunciation.
“It’s identical to Camelot, but it surely was not a protracted time period,” 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 in command of 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 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 unravel the yield thriller. The important thing was the employees, he discovered, with turnover surprisingly low amongst well-qualified staff.
However attempt as it’d, 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 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 will solely design chips with out additionally making them, which was then unusual. He noticed a development that will show to have endurance: As we speak most semiconductor corporations design chips and outsource manufacturing.
This remaining 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 US for a spot he knew solely from a number of visits to a Texas Devices manufacturing facility.
“I actually had no plan to spend practically a lot time in Taiwan,” he mentioned. “I believed 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 turned referred to 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 corporations and never design them. That meant it simply needed to win over these contained in the trade after which concentrate on what it may do greatest — manufacturing.
From the get-go, Mr. Chang had plans for TSMC to faucet into a worldwide market. He launched skilled administration methods, which had been unusual in Taiwan, on the firm. To foster a world atmosphere, inside communications had been in English.
His imaginative and prescient proved prophetic. As semiconductors turned extra advanced and costly to supply, only some companies may even afford to attempt. Making chips entails lots of of steps that pull on superior lasers and chemical manipulations to create tiny pathways for digital alerts that do probably the most primary calculations for a pc. Prices had been astronomical.
Over time, Mr. Chang saved going as others dropped out. If TSMC may 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 aim is to be No. 1, barring none,” Mr. Chang mentioned.
Mr. Chiang was stunned. “To be No. 1, you need to spend 3 times as a lot as your subsequent competitor,” he replied, implying that being within the lead can be too lofty and expensive a aim.
“It could be 3 times, however I do wish 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, indignant 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 residence constructing.
As darkish fell, the protesters rolled out sleeping luggage subsequent to a slide and jungle gymnasium, 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 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 troublesome time for the trade, the transfer was not appreciated by buyers. 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 bought the decision that will turbocharge TSMC’s progress and clinch its lead over Samsung and Intel. Jeff Williams, a senior vp at Apple, reached out by means 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, but it surely was in search of a brand new associate, partly as a result of Samsung had turn into a significant 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 sophisticated — 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 may need intervened.
Frightened, 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 rivals. 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 cope with Apple was full, Mr. Chang borrowed $7 billion to construct the capability for making thousands and 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 main 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 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 assume 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 pictures 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 appreciated 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 turned the world’s most vital 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 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 now not smoke a pipe — as soon as his trademark in pictures — after he had stents put into his coronary heart a number of 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 likelihood,” he mentioned. “A blockade of some variety, I believe I nonetheless put it as low likelihood, but it surely’s nonetheless an opportunity and I wish to keep away from that.”
Mr. Chang mentioned he was not fearful about U.S. insurance policies which have minimize off Chinese language companies from entry to cutting-edge semiconductor know-how.
“I believe it’s nonetheless OK,” he mentioned, although he famous U.S. corporations 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 know-how and never politics.
“I used to be actually positive that we had achieved know-how management,” he mentioned of that point. “I don’t assume we’ll lose it.”