The founder of TSMC got no equity in the company. He was 56 years old. He's worth ~$10B today from buying TSMC stock with his own money.
Ben Thompson called him "a one of one" who belongs on the Mount Rushmore of the greatest tech executives of all time.
This is his story.
Morris Chang was born in Ningbo, China in 1931 and spent much of his childhood fleeing war. At 18, he arrived at Harvard as the only Chinese student in a freshman class of over 1,000.
In 1955 he had two job offers, one from Ford and one from a transistor maker that paid $1 more per month. Ford refused to match, so Chang took the other job.
He spent the next 25 years at Texas Instruments (TI) and eventually rose to run its worldwide semiconductor business. Then his ascent stalled.
TI moved him out of semiconductors and into a job he later described as being "put out to pasture." Two years later, he quit.
He landed next at General Instrument in New York, living on the 53rd floor of Trump Tower, where Donald Trump was his neighbor. The job lasted about a year.
It was there, in 1984, that Gordon Campbell asked him for $50 million to start a chip company. A few weeks later, Campbell called back and said he only needed $5 million. Why? "I'm not going to build a fab."
Taiwan had been trying to recruit Chang for years, determined to move beyond cheap plastics and running shoes and build a high-tech economy.
The government had asked him outright to run its industrial research institute, ITRI, back in 1982, while he was still at TI, and he'd said no. After General Instrument let him go, it asked again. In 1985, he said yes.
Donald Lee-Brown, who runs research at Positive Sum, likes to say the very best entrepreneurs can divine where the puck is going.
Chang saw that chip design and chip manufacturing were going to split, and someone would need to do the manufacturing for everyone else.
On his second day at ITRI, he inherited requests from three chip companies, each asking the institute to help fund its own fab.
Instead of building three factories, Chang proposed building one they could all share. That idea became TSMC.
Taiwan put in $70 million for 48% of the company. Philips invested $40 million, and private investors contributed another $35 million. Chang, despite founding and running it, got none of the equity.
Intel, TI, Motorola, AMD, Panasonic, and Sony all passed on funding it.
TSMC grew revenue 49% annually for its first decade. By 2000, most of its revenue came from fabless companies like Qualcomm, Broadcom, and Nvidia.
In 1997 Chang got a letter from the CEO of a four-year-old company that was facing bankruptcy and whose calls TSMC's sales office had been ignoring. Chang called the number printed on the stationery.
Jensen Huang picked up amid a bunch of shouting, then said to his team, "Quiet, Morris Chang is calling me."
Chang stepped down as TSMC's CEO in 2005. Four years later, at 77, he came back. One of the first problems waiting for him was Nvidia.
A manufacturing failure had damaged the relationship, and TSMC's management had refused Jensen’s request for compensation.
Chang emailed Jensen and told him he would be at his house at six. Salad and pizza at 6:30. Business at eight sharp. In Jensen's study he offered more than $100 million, good for 48 hours, no negotiating.
Jensen accepted it in two days.
Back in the CEO seat, Chang nearly tripled capital spending in a single year to own the 28-nanometer node.
In his memoir he quotes Shakespeare on the decision, "there is a tide in the affairs of men which, taken at the flood, leads on to fortune." The tide turned out to be the smartphone.
And then Apple literally showed up at his front door. Chang's wife, Sophie, is the second cousin of Foxconn founder Terry Gou.
One evening in 2010, Gou invited himself to dinner and brought Apple’s COO, Jeff Williams. Eventually, over lunch at Apple, Tim Cook told Chang: "Intel just does not know how to be a foundry."
Today, TSMC manufactures the A- and M-series processors at the heart of Apple's iPhones, iPads, and Macs.
When Chang founded TSMC, the global semiconductor market was about $26 billion. Last year it reached $795 billion. Roughly 30x since 1987.
Philips did even better. Chang estimated that by the time Philips sold its final TSMC shares in 2008, it had earned 135x its original investment.
Patrick OShaughnessy @patrick_oshagMy conversation with @benthompson. Ben has been writing Stratechery for over a decade and remains one of my favorite business thinkers. We covered a lot. Every important company in the industry and the forces acting on all of them. - Why he thinks it would be problematic for the US to win the AI race - Will we run out of money to fund AI - Google becoming Berkshire Hathaway - Why ads are amazing - TSMC, Intel, and Samsung - Nvidia's invisible price cuts + biggest competitors - Microsoft, Amazon, Apple, and Meta I love talking to Ben about everything happening in markets and technology. Enjoy! TIMESTAMPS 0:00 Intro 0:59 America and the AI Race 8:26 AI’s Funding Problem 15:31 AI’s Capabilities and Limits 20:30 Aggregation Theory, AI, and Ads 31:10 Compute, TSMC, and Intel 47:31 Amazon and Apple’s AI Moats 54:43 The Frontier AI Players 74:07 Nvidia and Commoditized Intelligence 82:52 What Survives an AI Bubble?
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