Morris Chang – A fab visionary

Seventy-year-old Chang has been in this line for more than four decades, having served at Texas Instruments for 25 years before founding his present company, Taiwan Semiconductor Manufacturing Corporation (TSMC) in 1987.

TSMC is the first dedicated foundry that provides manufacturing services to chip-designing businesses that lack their own fabrication plants. This has spurred the proliferation of so-called “fabless” semiconductor companies. “Fabless” chipmakers are expected to grow at a faster pace than integrated manufacturers, simply because substantial cost savings can be obtained by farming out the manufacturing process.

What Chang envisions is ultimately a “virtual fab” that eliminates the hassle and cost of production and organizational difficulties for customers. His company goes beyond chip fabrication; it provides technical and logistic support, foundry selection criteria, quality assurance and post-sales support. Customers can also license chip designs from TSMC and use its design-testing tools.

TSMC is now the largest dedicated semiconductor foundry in the world, with an approximate 50% share in the global pure play foundry market. Chang has stated that the company will make an investment of some US$4 billion in plant and equipment in order to maintain this share.

For fiscal year 2000, TSMC recorded an impressive 127.3% growth in net sales over 1999, totaling NT$166,229 million (US$5.1 billion). The company’s net income was NT$65,106 million (US$2 billion), registering a 165.1% increase over 1999, while earnings per share rose 128.9 percent to NT$5.70.

Chang hopes that the Taiwan government will adopt a more open attitude toward investments on the mainland. In November last year, Chang along with president of the Acer Group, Stan Shih, urged the government to relax its policies limiting cross-straits trade. Government officials have since announced that it will ease certain restrictions to help Taiwan businesses expand into China.

Chang, however, has no immediate plans to make any significant investment in China at the moment. Citing political instability and US technology transfer regulations as reasons, Chang has announced that TSMC will only enter the China market in two to three years time.

The chip veteran believes that for a semiconductor player to survive, innovation is key. In the fast-paced chip industry, the company that can deliver the most innovative products sought by the market will be the eventual winner.

Chang also wants TSMC to be seen as being in the service industry. Technical production knowledge, though necessary, is not sufficient. In an interview conducted in January, Chang declared that a successful foundry firm has to be an excellent service company at the same time. Service to him means being “extremely flexible in coping with customer needs”.

Chang is determined to bring TSMC to an even greater level of success. With his ageless vigor and sound business acumen, it looks like he will lead TSMC into semiconductor fabrication superstardom by doing it the “fabless” way. – Ariel Tam, ZDNet Asia