Starting a Business at 56: Becoming the Absolute Semiconductor Leader Surpassing Samsung [News Inside]

Morris Chang, Founder of TSMC

▲Morris Chang, Founder of TSMC

[Asia Economy Reporter Kwon Jae-hee] Bill Gates founded Microsoft (MS) at the age of 19. Steve Jobs founded Apple at 21. Mark Zuckerberg founded Facebook at 19.

However, there is a figure who started a business at 56 and grew it into a global company that rivals these enterprises.

He is Morris Chang, known as the 'Father of Taiwan's Semiconductor Industry.' Although he started his entrepreneurial journey late, he devised the world's first foundry (contract manufacturing) business model, elevating TSMC to the status of a bona fide global company.

Born in 1931 in Ningbo, Zhejiang Province, China, former Chairman Chang fled the Chinese Civil War and the Second Sino-Japanese War, moving through Nanjing, Guangzhou, and Hong Kong before immigrating to the United States. Originally named Zhang Zhongmao, he began to be known as Morris Chang from that time.

After immigrating to the U.S., he became a symbol of the 'American Dream.' He entered Harvard University in 1949 but, pursuing his dream as an engineer, enrolled at the Massachusetts Institute of Technology (MIT) in 1952, majoring in mechanical engineering. He then joined Texas Instruments (TI), a leading American semiconductor company at the time, as an engineer, entering the semiconductor industry. By 1978, he had risen to the position of vice president.

Then, suddenly in 1985, at the age of 54, he headed to Taiwan. At that time, the Taiwanese government asked him to serve as the director of the Industrial Technology Research Institute to foster advanced industries. His move to Taiwan led to the founding of TSMC.

Returning to Taiwan, he founded TSMC in 1987 at the age of 56.

[Image source=EPA Yonhap News]

Having risen to vice president at a leading American corporation, everyone discouraged him from giving up a comfortable retirement to start a business. However, looking back, 56 was not the peak but merely a leap in his life.

He embarked on entrepreneurship with a mission to develop Taiwan's advanced semiconductor industry to enhance national competitiveness.

Based on the know-how he accumulated as a semiconductor engineer in the U.S. for many years, Chang devised a new business model called the 'foundry.' TSMC was the first company to apply this model globally.

At that time, the semiconductor industry was dominated by integrated device manufacturers (IDMs) such as IBM and TI in the U.S. and Toshiba in Japan. IDMs handled both design and manufacturing, using their massive scale to pressure smaller fabless (design-specialized) companies, sometimes hindering competition. Understanding this industry structure, Chang conceived the pure foundry concept, focusing solely on contract manufacturing without competing with design firms. As a result, small fabless companies could place semiconductor orders with TSMC, establishing a stable business environment, and TSMC experienced rapid growth.

This laid the foundation for fabless companies like Broadcom and Nvidia, which focus exclusively on semiconductor design.

While others retired, Chang started a business; when it was truly time to retire, he returned to management. He stepped down as TSMC chairman in 2005 but returned to management in 2009 at age 78 when TSMC faced a crisis during the financial downturn. Upon his return, he made large-scale investments, turning 'crisis into opportunity.' The annual investment, which had shrunk to $1.5 billion, rose to $1.9 billion in just two months and later reached TSMC's largest-ever scale of $4.8 billion.

▲Morris Chang, Founder of TSMC

He reinstated employees who had been laid off due to the financial crisis and increased research and development (R&D) personnel by 30%.

This was a completely different path from companies slimming down their organizations during crises. There was much concern around him, but his prediction proved correct.

One year after his return to management, in 2010, TSMC's revenue increased by 41.9% from the previous year, reaching 419.5 billion New Taiwan dollars.

Could it be that Chang's beliefs have become part of TSMC's DNA? TSMC continues aggressive investments that astonish the semiconductor industry once again. Taking advantage of the ongoing global semiconductor supply shortage since last year, it announced record-breaking investment plans early this year. TSMC plans to invest $12 billion in Arizona, USA, by 2024 to build a 5-nanometer process foundry and invest 210 billion yen in Japan to establish a semiconductor R&D company.

According to Taiwan market research firm TrendForce, as of last year, TSMC holds a dominant 54% share of the global foundry market, far ahead of Samsung Electronics at 17%, which ranks second. The U.S.'s GlobalFoundries (GF) and Taiwan's UMC share third place jointly at 7% each, followed by China's SMIC at 5%.

TSMC's company motto is 'We do not compete with our customers.'

Chang said, "The reason TSMC has been successful so far is that we have always discovered the right partners," citing that in the era of graphics, they did business with Nvidia, and in the era of mobile phones, with companies like Apple and Qualcomm. This statement well reflects his vision of 'sharing value.'