TSMC to change the semiconductor market’paradigm’ [히든業스토리]

Maurice Chang as President of Taiwan Institute of Industrial Technology
TSMC founded at the age of 56
Invented a’pure foundry’ model in the era of general semiconductor companies
Leading the formation of the modern global semiconductor division of labor system

[아시아경제 임주형 기자] Semiconductor is an extremely advanced industry with a global division of labor, and’fabless’ companies that focus on design and foundries that specialize in consignment production dominate. Among them,’TSMC’, one of the world’s largest foundries today, is not only the pride of Taiwanese semiconductors, but is also solidifying its position as a so-called’super-eul’ in the global semiconductor market.

TSMC is the world’s largest foundry and the world’s first. This is because Maurice Chang, the founder and former chairman of TSMC, first devised a business model called Foundry. How did the former chairman Chang, nicknamed’the father of Taiwanese semiconductors’, make TSMC the world’s largest foundry company?

◆From US semiconductor engineer to Taiwan researcher

Former Chairman Morris Chang was born in Ningbo City, Zhejiang Province, China in 1931. Former Chairman Chang’s family traveled through Chinese cities such as Nanjing and Guangzhou to avoid the national and public civil war and the Sino-Japanese War in China at the time, and finally settled in the United States. Former Chairman Chang, who was a Chinese named Jang Jung Mao, also came to be called Morris by an unfamiliar English name.

Former Chairman Chang entered Harvard University in 1949 and entered the semiconductor industry after earning a bachelor’s and master’s degree in mechanical engineering from 1952 to 1953 at the University of Massachusetts.

Former Chairman Chang, who joined Texas Instruments (TI), an American semiconductor conglomerate at the time, as an engineer, rose to the position of vice president of the entire group in 1978. In 1983, he moved to’General Instruments’, an electronic company, and took charge of research and development (R&D).

Chang, who was already a respected engineer in the United States, left the United States in 1985 at the age of 54 and headed to Taiwan. At the time, the Taiwanese government was looking for someone to take the position of the director of the Taiwan Institute of Industrial Technology (ITRI) to foster high-tech industries, and proposed this to the former chairman Chang. Former Chairman Chang accepted the request of the Taiwanese government and was responsible for researching the future industry of Taiwan as the President of ITRI.

◆Founded the world’s first’pure foundry’ TSMC

Former Chairman Chang founded TSMC in 1987 at the age of 56. The reason for the start-up is that in order to strengthen Taiwan’s national competitiveness, it is necessary to foster a high-tech semiconductor industry.

Former Chairman Chang devised a new business model called’Foundry’ based on his long years of experience as a semiconductor engineer in the United States, and TSMC was the first company in the world to apply this business model.

At the time, the global semiconductor industry was dominated by general semiconductor companies such as IBM·TI in the US and Toshiba in Japan. A comprehensive semiconductor company means a company in charge of both semiconductor design and production.

The semiconductor industry dealing with nanometer-level circuits is very demanding in both design and production, and design requires excellent engineer manpower and R&D, and production requires capital and know-how to build and manage astronomical semiconductor manufacturing facilities and factories. Do. Comprehensive semiconductor companies used their enormous scale as a weapon to pressure small fabless companies to transfer technology and hinder competition.

At this time, Chairman Chang came up with the concept of a pure foundry that does not compete with design companies, but only consignments production. Small fabless companies were able to build a stable business environment by requesting TSMC to manufacture semiconductors, and TSMC was able to grow rapidly.

Since then, full-fledged fabless companies focusing only on semiconductor design such as Broadcom, Marvell, and Nvidia were born, and TSMC took charge of their order production and established itself as a’super-euro’ in the semiconductor industry. It is a company that led the division of the global semiconductor division of design-production.

◆Leading a 74-year-old old body to rescue from a corporate crisis

Chang retired in 2005 at the age of 74. However, when TSMC fell into crisis due to the global financial crisis caused by the subprime mortgage crisis in just 4 years, it led a senile body and returned to the front line for a while. After returning to the position of chairman, former chairman Chang first brought back skilled workers who had been fired and expanded their investment aggressively.

Unlike other managers who predicted that the aftermath of the financial crisis would continue, the semiconductor industry predicted that demand would recover.

Former Chairman Chang’s aggressive investment strategy quickly shined. TSMC’s 2010 sales rose 41.95% year-on-year to KRW 4195 billion (about 16.26 trillion won), which rebounded successfully.

◆”TSMC’s Secret to Success, Thanks to Partners”

Last year, TSMC recorded a record-high sales of 1.7 trillion Taiwan dollars (about 41 trillion won). According to’Trend Force’, a semiconductor market research firm, TSMC’s global foundry market share as of the fourth quarter of the same year was 52.7%, surpassing Samsung Electronics (17.8%), which was the second place, to achieve the overwhelming first place.

What is the secret of TSMC’s success? In an interview with Japanese media’Nikkei Asia Review’ on October 7th, 2017, after the declaration of retirement, former chairman Chang stressed, “This is because TSMC does not directly create brands and sell products.”

According to former Chairman Chang, TSMC’s motto has been’Do not compete with customers’ from the beginning to the present. Instead, establishing a strong trust relationship with partners with high potential for success is the key to growing a company.

“Why has TSMC been successful so far? Because we have always found appropriate partners,” said Chang, former chairman. “I did business with companies such as Nvidia in the graphic era and Apple and Qualcomm in the era of mobile phones.”

Reporter Lim Joo-hyung [email protected]