Participating in an event yesterday (October 26), TSMC founder Morris Chang offered his take on the latest US efforts to boost its semiconductor industry. “It won’t turn back the clock,” commented the semiconductor industry veteran who founded TSMC in 1987, after leaving his former post as Texas Instruments’ Vice President.
“Back in the 1980s, the United States accounted for 40% of global semiconductor manufacturing, and now its share has been reduced to 17%. Even though the US is now hoping to reverse the decline, localized production would lead to an incomplete semiconductor supply chain as well as higher production costs.” said Chang.
The US$52 billion earmarked to revive the US semiconductor industry, according to Chang, was not sufficient. It would require ever more investments and subsidies, eventually burdening the taxpayers, he observed. All in all, the TSMC founder was pessimistic towards the ongoing US effort to strengthening semiconductor industry. Believing the effort to be futile, Chang indicated that even after spending tens of billions, the US semiconductor supply chain would still remain incomplete.
Using the occasion, Chang also reminded the audience some of TSMC’s founding principles. According to him, TSMC’s business model focused on “who the customers were” instead of “what the products were”. In addition, he emphasized that low-cost competition would be one of TSMC’s no-go areas.
Commenting on TSMC’s expansion in the United States, Morris Chang observed that Taiwanese managers could not replicate their management principles in the US. In this sense, Chang believed that TSMC managers couldn’t manage the Arizona operations as well as their counterparts in Intel. Compared to TSMC, Chang pointed out, Intel had accumulated enough experiences of US operations as an American company, especially regarding labor law, environmental health and safety, and tax. Despite the fierce competition from Intel, Chang found Intel’s current CEO, Pat Gelsinger, a worthy opponent. The two met when Gelsinger was the CEO of VMware, and the TSMC founder shared the belief that Gelsinger’s technical background made him more well-equipped to lead a global tech company like Intel.
Despite certain disadvantages, Morris Chang also indicated that expansion into the US was TSMC’s only choice, as perfect competition existed no more. However, Chang believed TSMC could stay competitive as long as its major operation remained in Taiwan.
Reference: Storm Media