How Morris Chang's thinking on silicon manufacturing evolved
the evolution of silicon-manufacturing thinking · 1958–2026
Open the interactive atlas →How the thinking evolved
1931→58
From war-torn China to silicon
A childhood in war-torn China, emigration, Harvard/MIT/Stanford. In 1958 he joins Texas Instruments — entering semiconductors.
1958
Manufacturing
The learning curve, aggressive pricing ahead of cost, mastering yield. He rises to VP at TI.
„It works, the learning curve, the experience curve, it works only when you have a common location. Learning is local.”
1987
Foundry
At 54 he founds TSMC. The radical idea: a fab that designs NO chips of its own — it only manufactures for others.
„What very few people saw, and I can't tell you that I saw the rise of the fabless industry, I only hoped for it. But I probably had better reasons to hope for it than people at Intel, and TI, and Motorola, etc because I was now standing outside.”
1995
Trust
"We never compete with our customers" — trust as the moat. TSMC enables the whole fabless ecosystem: Nvidia, Qualcomm, Apple, AMD.
„We don't compete with our customers.”
2015
Frontier
Relentless process leadership (executing Moore's Law), enormous capital. TSMC becomes an indispensable node of the world economy.
„...Manufacturing, I thought we were better than Intel. And customer trust, we thought that our customers trusted us more than Intel's customers trusted Intel.”
2018→2026
The silicon shield
He steps into retirement; the foundry as the world's pivot. Taiwan's "silicon shield", the geopolitics of chips — Arizona, the CHIPS Act.
„Almost everyone in the developed world, about 2.5 billion people, uses semiconductor products made by TSMC in their daily life or work.”
Key concepts
Manufacturing
Manufacturing Excellence
The learning curve, aggressive pricing that anticipates cost declines, mastery of yield — a foundation forged at Texas Instruments and carried over to TSMC.
Learning-Curve Pricing
Price ahead of future unit-cost declines — aggressive price cuts force volume growth and drive weaker rivals out of the market.
Yield Mastery
Yield (the fraction of good dies per wafer) is the key to cost and quality — Chang raised it from zero to 25–30% at TI through systematic process parametrization.
Learning Is Local
The experience curve works only with physical concentration of production in one place; geographic dispersion destroys the pace of yield improvement.
Foundry
Dedicated Foundry
A radical model: a factory that does NOT design its own chips — it manufactures exclusively for others. The idea was forged at GI (1984) and realized at TSMC (1987).
Fabless Ecosystem
The foundry enables companies without fabs (fabless) to design chips — Nvidia, Qualcomm, Apple, and AMD could emerge without spending hundreds of millions on building a factory.
Economies of Scale
Pooling demand from many fabless customers on a single platform delivers volume and cost unachievable by any IDM manufacturing solely for its own needs.
Trust
Customer Trust
We never compete with the customer — trust as a moat; it enables the entire fabless ecosystem and creates a barrier that no IDM can replicate.
We Never Compete with the Customer
TSMC has no products competing with its customers — a structural elimination of conflicts of interest; a prerequisite for trust that an IDM cannot offer.
Trust as a Moat
Decades of kept promises (delivery, yield, IP confidentiality) build a moat of relational capital that no new entrant can quickly replicate.
Grand Alliance
TSMC + customers + EDA/IP/equipment suppliers (OIP 2008, Grand Alliance 2012): a shared innovation ecosystem against integrated IDMs — cooperation instead of profit monopolization.
Manufacturing Culture
An engineer paged at 1 a.m. drives to the fab without asking why; zero layoffs in the down-cycle; plant managers evaluated by customer satisfaction, not internal KPIs.
Frontier
Technology Leadership
Relentless process-node leadership (nm), capital intensity as a barrier, Taiwan's silicon shield — TSMC as an indispensable node in the global economy.
Process-Node Leadership
Being the first foundry on successive nodes (7/5/3/2 nm) = control over the technology frontier of the global semiconductor industry.
Capital Intensity
Fabs cost tens of billions of dollars; the sheer scale of capex is itself a barrier to entry that eliminates every would-be rival except TSMC and Samsung.
Silicon Shield
TSMC’s indispensability to 2.5 billion people makes Taiwan strategically protected — chips as the geopolitical currency of the 21st century.
Steady 8% for R&D
R&D budget locked at 8% of revenue regardless of the economic cycle — Chang’s decision held through the 2008–2009 crisis, the bedrock of enduring process leadership.
Selected quotes
„It works, the learning curve, the experience curve, it works only when you have a common location. Learning is local.”
„What very few people saw, and I can't tell you that I saw the rise of the fabless industry, I only hoped for it. But I probably had better reasons to hope for it than people at Intel, and TI, and Motorola, etc because I was now standing outside.”
„We don't compete with our customers.”
„...Manufacturing, I thought we were better than Intel. And customer trust, we thought that our customers trusted us more than Intel's customers trusted Intel.”
„Almost everyone in the developed world, about 2.5 billion people, uses semiconductor products made by TSMC in their daily life or work.”
„In 1974, when I was still with Texas Instruments, I used the strategy of 'continuing to cut prices on TTL'. My strategy at the time was to sow despair in the minds of my opponents.”
„When even Texas Instruments could only achieve a profit margin of 40% by asking the lowest price, they knew they had to get out of the business.”
„When I was at TI and General Instrument I saw a lot of IC designers wanting to leave and set up their own business, but the only thing, or the biggest thing that stopped them from leaving those companies was that they couldn't raise enough money to form their own company.”
„Without TSMC, the rise of the fabless industry would have been much slower. Without the fabless industry, the semiconductor industry would not be as vibrant and innovative.”
„My values are: integrity, commitment, innovation and trust from customers. Integrity means honesty and willingness to fulfill a promise, even at a high cost. Trust from customers of course has to be earned, and I try to earn it by integrity and commitment.”
„I evaluate them according to how much complaints I get from customers about their fab. We don't even keep P&L in each fab. But we do keep very good track of how satisfied the customers are. If a fab manager has got very unsatisfied customers, he is in big trouble. I don't care how much money he makes.”
„No, we don't compete with them. We're in the foundry business. Those other companies are not in the foundry business. They may do some foundry work just to fill their fab, but they are not our competitors. We are going to start a new business.”
Key events
- 01.06.1958 Chang joins Texas Instruments
- 01.01.1972 Promoted to Vice President of TI’s Semiconductor Group
- 01.06.1983 Leaving TI — After 25 Years
- 01.10.1985 Gordon Campbell: “I’m not going to build a fab”
- 01.12.1987 Intel runs a qualification and becomes TSMC's first American customer
- 05.09.1994 TSMC IPO on the Taiwan Stock Exchange (TWSE)
- 01.06.1997 Jensen Huang’s Letter: TSMC–Nvidia — A Partnership Without a Contract
- 17.10.2007 CHM: An Evening with Morris Chang and Jensen Huang
- 12.06.2009 Chang returns as CEO after covert layoffs
- 01.01.2013 Apple–Chang dinner: contract for the 20 nm node
- 23.10.2017 TSMC 30th Anniversary: ‘Without Us, Innovation Would Have Slowed’
- 05.06.2018 Chang Retires — Succession: Mark Liu / C.C. Wei
- 01.09.2022 Volume Production of 3 nm (N3) in Fab 18
- 31.12.2024 TSMC surpasses $90 billion in revenue and $1 trillion in market capitalization