Tai­wan’s Richest: Mor­ris Chang, Pi­o­neer­ing Chip­maker

ForbesWeekly - - NEWS - BY LUISA KROLL, FORBES STAFF FW

Mor­ris Chang, a leg­endary fig­ure in the chip in­dus­try, makes his de­but among Forbes

Asia’s new list of Tai­wan’s 50 Richest at age 85, af­ter shares of Tai­wan Semi­con­duc­tor Man­u­fac­tur­ing hit an all-time high in June. Chang, who is worth $930 mil­lion based al­most en­tirely on his 0.5% stake in TSMC, is the old­est per­son in at least two years to join any of the 12 Forbes Asia re­gional wealth lists.

While it’s his first time among the is­land-na­tion’s richest, it is not his first recog­ni­tion from Forbes. The in­ter­na­tional edi­tion of Forbes put Chang on the cover as “The Cat­a­lyst” in 2001. He again ap­peared on the cover of Forbes Asia in 2012, when he was named Busi­ness­man of the Year. Mean­while the New York Times has called Chang the Sil­i­con God­fa­ther and hailed him as the man be­hind Tai­wan’s rise in the semi­con­duc­tor in­dus­try.

It has been a sto­ried jour­ney. Born in main­land China, Chang moved to Hong Kong dur­ing the Chi­nese Civil War and then to the U.S. for his ed­u­ca­tion.

He got his bach­e­lor’s de­gree and a mas­ter’s de­gree in me­chan­i­cal engi­neer­ing from the Mas­sachusetts In­sti­tute of Tech­nol­ogy.

He then spent most of a quar­ter of a cen­tury work­ing at Texas In­stru­ments, a pioneer in the semi­con­duc­tor in­dus­try, in the U.S. His em­ployer sent him to Stan­ford to get his PhD in elec­tri­cal engi­neer­ing, which he earned in 1964. He re­turned to Texas In­stru­ments, where he came up with the strat­egy of low pric­ing of semi­con­duc­tors to gain early mar­ket share. By 1983, he was group vice pres­i­dent re­spon­si­ble for TI’s global semi­con­duc­tor busi­ness.

Tai­wan ‘Chal­lenge’

Chang, who is a U.S. cit­i­zen, spent a brief stint as pres­i­dent of Gen­eral In­stru­ment Corp. and then moved to Tai­wan in 1985 to head the gov­ern­ment’s In­dus­trial Tech­nol­ogy Re­search In­sti­tute. Two years later, he be­came chair­man of a com­mer­cial spinoff called TSMC. “I thought Tai­wan at that time posed a chal­lenge that was new to me,” he told Forbes in 2012.

It was around this time that Chang came up with a new in­no­va­tion that would rev­o­lu­tion­ize the semi­con­duc­tor and elec­tron­ics in­dus­tries. Be­fore the 1980s, sup­pli­ers of chips for ev­ery­thing from com­put­ers to ra­dios mostly spent big sums to de­sign chips them­selves and make them in their own fac­to­ries. Chang’s idea was to pro­vide spe­cial­ized fac­tory ser­vices (also called a “foundry”) for com­pa­nies will­ing to out­source pro­duc­tion. This model has al­lowed en­gi­neer en­trepreneurs to en­ter the field at a much lower cost and helped spur in­no­va­tion.

Un­der Chang, TSMC’s busi­ness took off. He listed the com­pany in Tai­wan in 1994 and it be­came the first Tai­wanese com­pany traded on the New York Stock Ex­change in 1997. Chang stepped down in 2005 and handed the reins to Rick Tsai.

But things didn’t go as well as Chang hoped--stag­nat­ing in­stead, he told Forbes. By the time the global fi­nan­cial cri­sis hit in 2008, things had got­ten worse. Laid-off staff turned up in front of Chang’s house to com­plain. Chang, who was chair­man at the time, shocked in­vestors by re­turn­ing to his post as CEO at age 78 in 2009.

A Sec­ond Wind

Chang’s hard work paid off. TSMC’s shares hit a ten-year high in 2012. A year later he re­tired for a sec­ond time as CEO but held onto his role as chair­man. The com­pany hasn’t missed a beat, with its rev­enues, prof­its and shares soar­ing re­cently. TSMC re­mains one of the largest semi­con­duc­tor com­pa­nies in the world, sup­ply­ing chips to com­pa­nies like Qual­comm, Nvidia and Ap­ple.

Rev­enues hit $31 bil­lion in 2016, up 86% since 2012. Net prof­its dou­bled in that same time. The world’s largest semi­con­duc­tor foundry, TSMC man­u­fac­tured 9,275 dif­fer­ent prod­ucts us­ing 249 dis­tinct tech­nolo­gies for 449 dif­fer­ent cus­tomers in 2016.

Thirty years af­ter its found­ing, TSMC still holds true to Chang’s orig­i­nal vi­sion, stay­ing away from de­sign­ing, man­u­fac­tur­ing or mar­ket­ing semi­con­duc­tor prod­ucts un­der its own brand name so it can avoid com­pet­ing against its cus­tomers. For Chang and the com­pany, that def­er­en­tial strat­egy has proven a wise choice.

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