TSMC Founded, Inventing the Semiconductor Foundry Model
Morris Chang founded a company in 1987 that made chips and did not design them, and the whole electronics industry reorganised around the idea. He was fifty-five, had spent twenty-five years at Texas Instruments and had been passed over for the top job, and had been invited to Taiwan by a government that wanted an industry and had put up about half the capital. The semiconductor business at the time was integrated: a company designed its chips and built the fabrication plants to make them, which meant that anyone with an idea and no factory had nowhere to go. Chang's proposition was a pure foundry — a plant that would manufacture other companies' designs and would never compete with them by selling its own. That single commitment is what made it work, because it allowed customers to hand over their most valuable intellectual property without arming a rival. The consequence was an industry of fabless design companies that could not otherwise have existed: Nvidia, Qualcomm, Broadcom, Apple's processors and eventually most of the world's advanced chips. The economics compound. Each generation of fabrication costs more than the last, a leading plant now costs some twenty billion dollars, and the manufacturer with the most customers can afford the next node and the others cannot. Taiwan Semiconductor Manufacturing Company now produces the large majority of the world's most advanced chips on an island claimed by China. Everybody's strategic planning has had to account for it. Chang has described the strategic position bluntly. He has said that Taiwan's semiconductor industry is a shield and also a reason to be attacked, and both governments that care about the island have spent the last five years building alternative capacity at enormous cost.
- Year: 1987 CE
- Category: Economic
