[Chip Talk] The Man Who Grew TSMC to 950 Trillion Won... The Second-Generation Leader Leaving on a High Note

Global Expansion and Departure of Ryudeoin
Following Founder Jang Jungmou, Appointed in 2018
Stock Price Surged 264% During Tenure... Market Cap 950 Trillion
Contributed to Expanding Influence in Global Markets
Notable Decisions to Build Factories in US, Japan, Germany

Rudy Lin, chairman of TSMC, the world's largest foundry (semiconductor contract manufacturing) company, will step down from his position in June. Following founder Morris Chang, Lin, the second-generation leader of TSMC, is regarded as the key figure who transformed the company into a core player in the global semiconductor supply chain. During his tenure, Lin expanded the company's presence beyond its home base in Taiwan to the United States, Japan, and Germany, increasing the company's market value to 95 trillion won.

Ryu De-in, Chairman of TSMC
Photo by AP Yonhap News

Tim Culpan, a columnist for Bloomberg News, recently published a column stating, "The semiconductor industry has faced numerous challenges, but the legacy left by Rudy Lin, chairman of TSMC, will endure for decades." TSMC announced Lin's retirement in December last year. Having assumed the chairman position in June 2018, he plans to hand over the role to current co-CEO and Vice Chairman Wei Jea-ja at the board meeting this June. At the time of the announcement, Lin said, "I want to apply the semiconductor experience I have accumulated over decades elsewhere and spend more time with my family," adding, "I am ready to start the next chapter of my life."

Looking at Lin's achievements in numbers, they are nothing short of a great success. First, TSMC's stock price surged 263.7% during Lin's tenure. The stock price, which was $36.56 (about 53,500 won) on the New York Stock Exchange at the end of June 2018, soared to $132.97 as of the 24th. The market capitalization, representing corporate value, increased nearly fourfold from $189.63 billion to $689.7162 billion during the same period. Annual revenue also rose from $34.23 billion in 2018 to $75.99 billion in 2023. TSMC's gross profit margin increased from 48.27% in 2018 to 54.40% in 2023. Culpan explained, "During Lin's tenure, the management increased cash dividends and became a company that generates income while growing."

Based on this, TSMC, led by Lin, solidified its position in the global semiconductor market. According to Taiwanese market research firm TrendForce, TSMC's revenue share in the global foundry market rose from 56.1% in the first half of 2018 to 61.2% in the fourth quarter of last year. Although the market share fluctuated over the past five years, TSMC maintained its top foundry position, widening the gap with second-place Samsung Electronics.

The reason TSMC has maintained strong competitiveness in the foundry market is interpreted as Lin expanding the company's influence in the global market. While founder Morris Chang established the foundry business model and built the framework to develop semiconductor manufacturing technology, Lin maintained TSMC's technological edge while expanding its global bases. Chang was reluctant to build factories outside Taiwan after founding the company in 1987. When Lin took office in 2018, TSMC had factories in Washington State, USA, and China, but their scale was so small that they had little impact on the global semiconductor market. Lin adhered to Chang's principle that "TSMC's headquarters must remain in Taiwan" but swiftly decided to invest in large-scale foundry factories in major countries such as the United States, Japan, and Germany during a period of surging semiconductor demand.

In May 2020, Lin announced plans to build the first foundry factory in Arizona, USA, and has since declared plans to build two more factories there. Currently, $40 billion is being invested to build the first and second factories, with an additional $25 billion planned for the third factory. The most recently announced third factory plans to produce semiconductors using cutting-edge processes below 2 nanometers (nm; 1 nm is one-billionth of a meter). The first factory TSMC announced in October 2021 to be built in Kumamoto, Japan, has already completed its opening ceremony. This factory is scheduled to begin full-scale semiconductor mass production this year. With active support from the Japanese government, TSMC also plans to build a second factory in Kumamoto. Additionally, in August last year, TSMC announced plans to build a factory in Dresden, Germany, establishing a base for European customers.

Chairman Liu Deyin (right in the photo) and Vice Chairman Wei Zheja of TSMC [Image source=AFP Yonhap News]

TSMC faces numerous challenges as Lin departs. When Vice Chairman Wei becomes chairman at the June board meeting, he is expected to complete the overseas factory construction projects initiated by Lin. The Arizona factory's construction period is lengthening due to chronic labor shortages in the US and difficulties in securing personnel caused by cultural differences with Taiwan. Although the US government has pledged $6.6 billion in support through the CHIPS Act, accelerating factory construction and building relationships with local customers will likely fall to Wei.

Industry insiders believe that the management change will not significantly impact TSMC. Wei has been managing the company alongside Lin since 2018, and the management transition has been underway through adjustments in senior vice president roles in the first half of this year. The two senior vice presidents will reportedly divide responsibilities for operations and research and development (R&D), which founder Morris Chang identified as the company's two core areas.