Morris Chang_Chris Miller Interview
Wed, Mar 15, 2023 10:13PM
3:59:58
SUMMARY KEYWORDS
taiwan, tsmc, chip, industry, semiconductors, semiconductor industry, world, government, morris,
texas instruments, book, companies, semiconductor, business, chris, transistors, question,
computing power, years, intel
00:00
I believe that for TSMC as well, we are very determined TSMC shall stay where it was born and
race that is Taiwan and continue to develop and grow here. Is there right.
00:22
This is the government's commitment to TSMC. It is also the government's commitment to the
economic developments in Taiwan. It is also our commitment to the world civilization
00:39
do ya sorry.
01:16
Chrissy is essential
01:49
see TSMC will not be able to sustain type Taiwan will continue to reinforce our defense
capabilities protecting the security of Taiwan and in the area of Indo Pacific region.
02:33
And consequences so that is to say if we want to appreciate the achievements of TSMC if we
truly value the democracy in Taiwan we need to work together.
02:48
02:48
So we have to fundamentally address the issue that China tries to invade Taiwan with force. If
we can deter China. We will be able to do the world a favor. I believe. If the world works
together, we can definitely achieve peace as long as we are resolute. Peace is definitely in
everyone's best interest. We have to be committed in our pursuit of peace and stability and
such pursuit is allied with the world's interest. I'm sure we can achieve that. Thank you. I'll pass
here. Thank you Vice President lie, please return to your seat. Well, through his remarks, we
can learn how important this forum is. Chips are going to shape not only our past, but also our
future. We are now going to listen to Professor Mahler. So allow me to pass the microphone to
Isabella who from the Commonwealth magazine who is the editor in chief of our magazine?
04:32
In Taiwan, we all understand how important the semiconductor industry as to us, and the world
is catching on. Since last October, all the major media international media began reporting the
how indispensable Taiwan is to the global chip industry. And all those reports follow.
05:05
One book, Chris Miller's new book, ship war, cheap war as New York Times bestseller, it is
financial times the best business book of the year, and the communist Book of the Year of
attitude and war. has garnered such significant attention because it uncovered the complex of
chip industry and help us to understand the the crucial competition of this era. But Chris is not
from semiconductor industry at all. He is a historian. He got his BA from Harvard, and a PhD
from Yale University. And now he is associate professor of international history at Tufts
University's special school that your school is one of most prestigious international relation
research institutes in the states and on their alumni this there are over 100 diplomats around
the world. And Chris Miller's research focus our economics, technology and the geopolitics in
his especially the relationship between US and Russia and in his massive research, Chris found
that the key to ending the Cold War is winning on technology. And the more three be more
precisely, winning on the computing power. That's chips so and it will be even more so in the
future. In this new Cold War era, the everything we are competing, the cornerstone are the
chips so we have to be more understand this complex relationships. We need a new framework
and cheap war is exactly the perfect framework for us to understand today's competition with
his unique background, and lots of efforts, persistent effort. Chris Miller combines economics,
geopolitics and the technology development all together and elevates the discussion on shifts
to a broader person's perspective. And from Chris perspective, Taiwan plays an important and
the crucial role critical role in the future. And let me quote from the chip wall. Taiwan's Astra
ordinary ascent shows how how one company that is TSMC one company with the vision and
the government's financial support, can remake an entire industry that will Miller was born
about the same time Taiwan began to develop semiconductor industry. Actually, he's the same
age as TSMC. This is Dr. Miller's first time very first time to visit Taiwan. And finally he has the
opportunity to see this extraordinary place, the vastly influential company for himself. And for
us, we finally have the opportunity to learn his observation firsthand how he says our powers
advantage, our impact to the world and our challenge in the near future. So that's we'll come
give a warm welcome big pause. To Dr. Miller.
09:43
09:43
It's an extraordinary honor to have the chance to speak to you all today to Vice President ly to
Dr. Morris Chang to all the executives and diplomats and journalists and writers who are
assembled here today to share some thoughts from my research on the history of the
semiconductor industry. In the context of such a distinguished audience and distinguished
speakers, I thought my value add in this conversation could be to share some of the insights of
a historian which is of course how I came to study this topic trying to understand the key trends
in World Economic History and international politics and the rise of big tech firms. And my
argument that I'd like to put forward to you today and which I put forward in ship war is that
you cannot understand the modern world without putting semiconductors at the center of your
analysis, and that you can't understand the semiconductor industry today without putting TSMC
at the center of the story. And so it's a flip flop opportunity for me to have a chance to speak to
so many people from TSMC and from all of Taiwan Semiconductor Industry while I'm here in
Taiwan.
11:51
out there target computing power at first is something that is only accessible to governments
because it required vast space, huge expenditures, extraordinary energy consumption. And it's
simply too large, expensive, unwieldy for consumers to take advantage of. And so it took a long
time for the process of miniaturizing computing power to be developed in a way that would
make it fit into your smartphone. chip industry emerged actually, from the Cold War arms race,
the US military was one of the key drivers of the miniaturization of computing power. If you
wanted to guide a missile to its target, they found out the best way to do it was to find a way to
make a very small computer, put it in the nose cone of a missile and use that to direct missiles
like this one pictured here, the minimum to ICBM which was one of the first large scale orders
for integrated circuits in the 1960s. But the process of miniaturization of taking transistors and
making them smaller, so more and more of them could be fit on a given piece of silicon began
to take off just like the rockets that they were guiding the industry took off in the 1960s and set
itself on a course of miniaturization that continues all the way to this day. And that pattern of
miniaturization is often known as Moore's Law named after Gordon Moore who coined the term
in the 1960s. And it's led to the discovery of ways to make transistors that are today the size of
a virus in their smallest versions, and so although the first commercially available
Semiconductor had just four transistors on it in the early 1960s, today, if you buy a new
smartphone, just the primary chip on that phone will have billions 10 billion 15 billion
transistors on it, and there's nowhere in the world economy that has seen such extraordinary
progress and doubling capacity every two years or so for now over half a century. Think of the
rest of the sectors of the economy and the progress that they've made. I like to imagine for
example, what the world would look like if planes flew twice as fast every two years we'd now
be approaching the speed of light when it came to aircraft travel, but in fact, we're far far from
that rate in almost any other sector. The chip industry has delivered that because it's learned
how to miniaturize components and no less importantly do so in a commercially viable way.
The science of miniaturization has been hard but the commercial viability I would argue has
been even harder. And in many ways the success of the companies that have defined the
industry is due as much to their technological capabilities as it is to their business model and
their business acumen. So I think it's important when we think about the future of technology to
ask not only which countries or companies will produce the most advanced devices, but also
which ones can produce them efficiently. Sell them profitably gain the revenue as necessary to
invest in the next generation of r&d that's been as critical to the chip industry as any sort of
technological advances. We have, of course, Nobel Prizes for physicists and chemists to create
new devices that can then be commercialized later on. We don't have a similar prize for brilliant
business people that have driven the semiconductor industry forward and I would posit to you
today that if such a prize did exist, several people in this room would be worthy recipients of
that prize because I think that the business people who have made the semiconductor industry
what it is, are, in some ways, just as important in shaping the industry as the Nobel Prize
winners who have provided the basic research behind it. And what I'd like to suggest to you
today is that the fact that we're having this conversation here in Taiwan is something of a
surprise. If you would ask someone in the smart tech industry in 1960, or 1972 project, which
country would have the most advanced process technology half a century later? I think few
people would have guessed that Taiwan would be the answer. And the trajectory of the chip
industry from its origins and Silicon Valley and taxes in the United States to its current state
where Taiwan place an absolutely critical role is partly due to structural factors and Taiwan's
policymaking and shifts in the global economy. But also, as historians like to point out, there's
structural factors, but there's also individuals who shaped the industry in profound ways. Now,
as I mentioned, when the chip industry was, in its early years, it was the defense sector that
consumed most of the chips that were being produced, but that quickly began to change US
companies like Texas Instruments, which was the company to first invent the integrated circuit
Fairchild Semiconductor in California, the company that was second to invent an integrated
circuit began to realize that missile guidance systems weren't the only use for their devices,
corporate computers and pocket calculators there were a whole set of new devices that began
to be transformed by the application of computing power that speaks to a third facet of the
industry's growth over time, there's technological advances. There's business acumen, but
there's also visionary product design. It was far from inevitable that some of the thought of
putting chips inside of phones or chips inside of cars when they were invented in the late
1950s, and early 1960s, and it's taken a visionary set of product designers to envision new
ways to deploy computing power to begin to transform our economy in the way that chips
have. And I think if you look back at the history of the industry, you see, development not only
defined by types of technology, and just through design, for example, the types of tools used to
produce transistors normally defined by the company played a big role in mass producing
chips. It's also defined by use cases. And what we've seen over the past several decades is that
every decade or so there's a new use case that comes online provides a vast new source of
demand for semiconductors and illustrates the ways in which they will continue to transform
the economy and society like I mentioned that the first use of semiconductors was for defense
applications then they were corporate computers, was one of the main end markets, pocket
calculators, PCs after that smartphones more recently and finally today we're in a new wave of
semiconductor demand driven by the desire to apply artificial intelligence both in vast data
centers and on the edge of networks, which is driving semiconductor demand and changing
society and economy in the process. And that's the third facet that I think is critical to
emphasize the new use cases that have driven the industry forward. So how was it that Taiwan
became the center of the world's chip industry? Today, as many of you are? well aware, it's in
Taiwan. 90% of the world's most advanced processor chips are produced. I calculated that over
1/3 of the new computing power the world adds each year comes from Taiwan. It's an
extraordinary ascent for an island that just 50 years ago was a small player in the world chip
industry. And there's some structural factors at play. As I mentioned, from the earliest days of
the chip industry, there was a desire to build assembly facilities in parts of East Asia. On this
image right here you can see behind junk sailing through Kowloon Bay, a building with an F on
its exterior, that's an F for Fairchild Semiconductor, one of the first companies in Silicon Valley's
chip industry. And the first semiconductor company to open a facility in East Asia in this case in
Hong Kong in 1963. So from the earliest days industry, the first integrated circuit was invented
in 1958. Just five years later, supply chains are already beginning to criss cross the Asia Pacific
region but understand Taiwan's unique role. We need to go back to the history I would suggest
of Texas Instruments. One of the great pleasures I had when I was researching this book was
not only interviewing well over 100 executive scientists, government officials who worked in
the semiconductor industry but also spending some time in the historical archives of several
critical semiconductor companies. And in the early stages of my research, I spent some time
digging through the files of Texas Instruments which donated many of its early papers to
Southern Methodist University in Texas and I stumbled early in my research on a very
interesting document from 1976, which I'd like to share with you today. This is a document
from a strategic planning conference in 1976 in March with a number of individuals, some of
whose names you probably don't recognize, but one of whose name you probably do. And it
seems to me when I was reading this document that already in the middle of the 1970s, we see
the origins of the foundry business model that would transform the entire semiconductor
industry and put Taiwan at the center of the map and so I'd like to share with you just briefly,
several quotes from this document argue that the origins of the foundry business model the
idea that you could separate design from manufacturing. As a result, you could scale the
manufacturing process, focus on honing your technological capabilities and thereby build the
world's largest and most advanced semiconductor company. That idea which today we take for
granted, in fact, has its origins over almost almost 50 years ago, in this document, Texas
Instruments
21:49
Dr. Morris Chang wrote in this document, advocating to his colleagues of Texas Instruments
that ti must pursue both internal and external markets aggressively including those
representing leading edge technology for the semiconductor operations to be viable, it is
essential for to have significant market share and therefore fast economies of scale that only
serving external companies, external customers could provide. The document continues. You
may ask why if we have a leading edge semiconductor product that no one else has, why
shouldn't ti retain the exclusive use of that product for at least a while, my answer is the lead is
obtained for the close teamwork in the conceptual and design phase of the end equipment and
the semiconductor product. Many of you may know of TSMC concept of the grand alliance
between TSMC its customers the design tool producers, and it seems to me that that initial
concept was honed almost half a century ago in this initial document. Now outside of the
semiconductor industry, the origins of the foundry model is not something that's widely known
or widely appreciated, but at the time in the industry. It was a radical idea. When TSMC was
founded, there were no customers that were fabulous firms looking for foundry services. There
were no other competitors and guess what you could really benchmark the success or failure of
a foundry operation. And so it was really an extraordinary shift in business model driven by
innovative ideas honed over a decade at Texas Instruments, and afterwards that I think led to
this new business model being created and as many of you do know that the foundry model
has proven extraordinarily successful not only at TSMC, but it's now been replicated by many
other competitors. It's critical to the reason that TSMC today is both the largest and the most
advanced maker of processor chips. In the world. And I think the history dates all the way back
to Texas. But that raises another question for historian like me, which is that if this document is
written in Texas How did the company be started ended up in Taiwan? And that's a question
that I'd like to pose to Dr. Morris Chang when we have our conversation, and just a couple of
minutes but I'll put several hypotheses on the table in some ways, I think the US might sector
industry was a victim of its own success in the early days, it was companies in Silicon Valley
were quite profitable. They were set in their ways of operating and so it took a country like
Taiwan just trying to break in the market at that time to recognize that new ways of doing
business might even be more efficient than the status quo in US chip makers. But it was also I
think, due to several visionary government officials in Taiwan, who from the late 1960s all the
way through the founding of TSMC in 1987, realized that the electronics industry in general and
semiconductors in particular presented an opportunity for Taiwan to build a large and globally
important industry to advance technologically to produce products that would have pricing
power on the international stage and to let Taiwan move technologically up the value chain.
And if you look at the development of Taiwan's electronics industry and the semiconductor
industry, in particular, what you find is not only visionary business thinking but also very
strategic. I think government thinking about what it takes to create an environment in which
the semiconductor industry didn't grow. Already by the late 1960s, the Taiwanese government
was trying very actively to attract investment into Taiwan Semiconductor Industry. Texas
Instruments, for example, opened its first plant in Taiwan in the late 1960s. And it was far from
alone. In doing so in the Taiwanese government also invested very actively in education trying
to build up the workforce that would be needed to staff these facilities and eventually to create
new companies based on the skills that were developed in them. So the question of why TSMC
stands not for the Texas semiconductor manufacturing company, but for the Taiwan
semiconductor manufacturing companies, I think both attributable to the success of Taiwanese
business but also the strategic vision of the Taiwanese government, as well. And that's
important, I think to recognize as we enter a new era in which governments around the world
as we'll discuss later are getting more interested in their chip industries. Now, today, as we've
discussed, Taiwan stands at the center of the world's chip industry. It's almost impossible for
anyone anywhere in the world to live a single day of their lives without touching a
semiconductor produced by TSMC. Most people are totally unaware of course, because they've
never bought a TSMC product. TSMC is products are embedded in all of the devices that they
rely on, but you can can open a smartphone or a PC or a data set a computer attached to it is
and it does not somehow come into contact with chips made in TSMC. And so it seems
important from my perspective to help the entire world understand the critical centrality of
Taiwan in general and TSMC in particular, to producing the technology that we all rely on. I
think the semiconductor shortages of the last several years I've illustrated to many people who
didn't previously understand the ways that semiconductors are only about smartphones, nor
are they only about PCs. They're about everything. Today, it's almost impossible to find a
device with an on off switch except for light bulbs that don't have semiconductors inside. I like
to think about my daily routine. I wake up in the morning, turn off my alarm clock, there's
semiconductors inside of there, I open the refrigerator, there's semiconductors instead of
they're sitting in your car. There's 1000 semiconductors inside, if it's a new car, the entire world
economy is really unthinkable today without the semiconductors that the industry globally
produces and that in particular, Taiwan produces the lion's share of the most advanced ones.
And so as we look at the big, transformative shifts in the international economy and politics and
society and technology, my argument to you is that we have to put semiconductors at the
center of that analysis, and that any analysis of semiconductors has to put Taiwan on the
center of the map. So with that history laid out, I think hopefully that sets a bit of a background
for the conversation that is to come. It's been an extraordinary honor to have the chance to
speak to you all today. And so I'm looking forward to the remainder of our conversation. Thank
you.
29:04
Thank you, Mr. Miller, giving our audience a very comprehensive and perspective of chip
industry bounces here Professor Miller back at what happened can showdown champion that
was Egencia Thank you Professor Miller.
29:18
We do see that semiconductors have a lot to do with military defense and customer product.
After his book was published. He started his tour in many countries in Singapore now he's in
Taiwan next is going to Japan and Hong Kong. Almost all the countries which are involved in
semiconductor industry, have or will receive his invitation. And in fact, 90% of the advanced
semiconductors are produced by TSMC his MC disabled to mass produced advanced
semiconductors. Now moving to the forum. We will then welcome Morris Chang and Professor
Chris Miller. They will talk about how TSMC change the semiconductor industry in the world and
feel free to scan the QR code if you want to submit your questions. Now let's welcome
chairperson Wintrust from Commonwealth magazine as the moderator of this part of the forum.
30:36
I'm infant Wu, Chairperson of Commonwealth magazine. I started as a reporter covering
Taiwan's electronic industry in since 1981 and was branded the first generation of towers tech
reporter to be honest, today, not as savvy as I used to be about semiconductor and the
industry. But I'm glad that the team of reporters led by our own Chen and I carry the best
reading and concise semiconductor reporting for Commonwealth readers over the world. Then
you may as well ask, why are you even here? moderating today's forum Well, this is a
dedicated design by the planner of today's for Commonwealth magazine is the first media
which Morris Grant had his exclusive interview when he came to Taiwan in 1985. And I and my
editor Diane in was were impressed by Morris. He was acclaimed for his stringent management
style, which demands excellence in discipline. And he was a wake up call for all Taiwanese
engineers in eatery, the highest r&d Institute of Taiwan. And he raised the standard of work like
we were standing right next to the best global tech companies. A somehow I seem to have
betrayed Morris exclusive favor when Taiwan's government designated Morris to set up TSMC
in 9686. My first report on this subject on this project was using the title $10 billion high risk
venture some question about Taiwan setting up large scale IC fab no quote, meanie meaning
TSMC was a high stakes gamble. Are we ready to play? Maurice didn't like the title. I was then
later summon for a cup of coffee with him privately. Anyhow and you have TSMC story later
proves maybe I asked the right question. Morris and the army of Taiwanese engineers in TSMC
poof, they are good enough to play this capital intensive game. Chris noodlers you book chip
war did a very Seraph analysis on how Morris and his team Ty weaponized the chip industry.
And this book reminded me and most Taiwanese and the rest of the world that Morris is the
most under estimating this is person off the last 100 years.
33:46
As a personal witness of this history, we are Commonwealth we are honored today to have
them both on stage for a chat. Without further ado, let us welcome most often the founder of
TSMC on stage
34:08
the author Chris Miller, professor of international history at The Fletcher School of Law and
Diplomacy at Tufts University.
Diplomacy at Tufts University.
34:31
And before we start, let us introduce some fresh blood of Taiwan Semiconductor. They are
online listening right now at Taiwan University. Chung Gong University and Ching Hua
University and Yameen gel DAP University. Hi there. Let's say hi to them. Welcome Hi, hello.
Hello. Okay. They've made an effort. Anyway. Thank you. Thank you. Thank you, Maurice and
Chris, for this exciting gathering. What an interesting pair. Chris, you're you're in your 30s
Right. Just saw Isabella just mentioned and Morris has just passed this 90th birthday. I think this
is going to be a very intriguing talk today because this mutual interests across generation I
think that's very unique in today's world. Anyways, let us talk from the talking about the book.
Chris just gave a very quick intro of his book and his insight on the industry earlier. So Morris,
would you care to give us your thoughts on this book, and I know that you've read close to
English and the Chinese version of this book and even pointed out some errors for art Chinese
version. Thank you very much. But anyway, so tell us what's your thoughts on the book are any
What do you agree or disagree with with the book or what impresses you most?
36:14
Thank you. microphone on? Yes. Clearly.
36:26
About the book I think the best compliment one can is to say I wish I had written that
36:51
that is a compliment. That is what I want to say about I was
36:58
no course. I think Chris wrote it better than I could have written it he is. He has seen historians,
impartial,
37:16
impartial, objective, impartial position
37:23
where as I was a combatant in the war, I was a combatant. The wall is really a series of wars
over the last 60 Some years the semiconductor industry actually started with transistors and
diodes and started in 1952. Chris's book basically started with the invention of an integrated
diodes and started in 1952. Chris's book basically started with the invention of an integrated
circuit, which was in 1958. But I joined the industry for an agile in the industry. It was still the
industry was still orange, and that was 1955
38:15
from the very beginning it was
38:20
a mountain dominated industry. The transistor was invented by Americans in the Bell Lab, and
the integrated circuit was invented by Americans subsequently in 1958. Now, so, the chip wall
started the woods was amongst American couples. I was a combatant by then, Texas
Instruments versus Intel wasn't even there. Versus companies like Fairchild, Motorola, and so
on. And then a few years later, we suddenly found that there were the Japanese. So the war
changed to Americans versus Japanese. Although the war
39:28
among the between American companies still continued. And well,
39:38
of course, there were South Koreans. But anyway,
39:45
to me reading the book was a nostalgic journey.
39:52
I lived through the war, all the wars.
39:59
And I know everyone in his cast of characters. Some of those names hadn't even occurred to
me for years now. But
40:13
as I read, because they came back to me names like I feel Marita I knew all these peoples and
almost half of the cast of characters in Chris's book are dead. Those I'm sorry I didn't care for it.
I'm not I'm not sure that my my impression is and I I'm almost the last. The last Mohican allows
I'm not I'm not sure that my my impression is and I I'm almost the last. The last Mohican allows
more you can now anyway, wonderful book. And I think that there, I do in general i I have no
quarrel with the pocket and there may be a few minor corrections Wilson's I think that Chris
probably over emphasized the government role in TSM C's formation. The government actually
was just an investor. And frankly, it was not a very willing investor. There was one guy, a key
guy KTV Ktt one for Katie Lee. The government would wouldn't have any investment. And after
the government invested, as soon as we went on Taiwan stock market went public in the stock
market, which was 94. anti war it was seven years after we we formed after we started to do
business funding for so as we went public, the government started to sell their stock
immediately. The government had 48%. So and they really couldn't sell it fast enough. No, of
course, there was another form of support that TSMC got from the government. And that was
the original group. I call it the nuclear group of TSMC. And it was a came from the IC project in
the Industrial Technology Research Institute, commonly known as a tree. He had been running
happy running a IoT project for 10 years. They started in 1975. And a part of the industry group
came to TSMC when TSMC started and that was about 120 people 120 people including maybe
40 or 50 operators, there was a whole group coming from the pilot line of issue. So, two forms
of government support. I really wouldn't call it subsidy. But two forms of government support
one was two primary to Katie Lee at least did ktd happying, a friend of mine, and he was almost
I will say he was almost the only one that believed he was the only one that believed and
45:22
it was mainly his support that resulted in the government being willing to invest for the 8% I
think it was maybe something like I forgot, it wasn't a it wasn't 10 billion or anything, but a
much smaller number and it's in my autobiography, which already got that part are enrolled,
but I have forgotten about how chance to be who is half a billion and the government and that
was the whole capital. Yeah. And the government investor, put up about half of, of half a billion
NT NT and then the other support, as I said, was it a group of 100 100 product people?
engineers, technicians, operators altogether about 100. So that was it. And the government as
soon as we went public. The government couldn't sell it fast enough. And, in fact, Philips which
was the second largest investor that I was told to have to get in order for other Taiwan
investors to have enough confidence to investing. Has riff on sentence Did you understand
that? shall repeat understood anyway
47:45
they couldn't sell their um, they actually invested in 28% 48% from the government, Taiwan
government. 20% from firms which I got, and then the rest, which was about 24%. The
government said that since a multinational with technology has already invested us Philips.
Haha. Now they can go ask other other rich companies and rich individuals to put the rest of
them to put up the rest of the investment, which is 25% of the half a billion. Anyway, even
Philips couldn't sell our stock fast enough. So in order to allow them to sell the stuff, so we went
public in New York. And that was a reason we went public in New York. For them in order for
them to sell suppressor but so they buy quickly. The third mistake stake went down to almost
zero, which I thought was okay. I didn't really care much for participation on the board anyway.
But the government I thought maybe should order should retain a a significant share. So when I
when I say the government has sold down to 6% I said, Whoa, wait a minute.
49:50
Please stop selling. Now the government did stop selling. And I thank them for that. And that's
why they have now 6% 6.7% Okay, Sophie is making gestures for me. She thinks I'm talking too
long
50:25
would you like to carry I mean, respond or anything that you would like to come back to?
50:31
Or perhaps I could ask one question in response to that. All right. I think I've got a lapel mic
right here does that work? I think it does. Okay. I think I'm good. I've lapel mic right here. So
one question for you then. Which is when when you founded TSMC and looked 10 years into the
future or 20 years into the future? What did you anticipate would the result would look like at
that point,
51:06
both in 10 years into the future. I expect to have that well we found a TSMC in 1987.
51:19
The first two or three years were tough. But from 1991 on we were
51:28
very very fast. More than 50% compounded annual was more than 50% 35% in the 90s all
through the 90s 10 years, become part of any work with what's 90% So I need to answer your
question perhaps in two parts. When we first found the TSMC 87 Frankly, you know, I didn't
Well, I did look 10 years ahead and I just wanted to survive I just wanted
52:21
I just didn't want to let down the government. Basically, well funded. And then but when we
went into the 90s, with whom we were in 9192 93. There my expectation was that, actually,
you know, it was like a case of continual rising of expectations. I certainly did not expect TSMC
to be as big as important as it is. All the way up the 90s or even into 2000 and let's say 2010.
From 2010 on I really expected TSMC to be what it is.
53:38
It was more like this also like Gordon Moore calling was once asked, Did you expect this was
It was more like this also like Gordon Moore calling was once asked, Did you expect this was
when Intel was very successful. Gordon Moore had already retired that he was asked did you
expect Intel to be so successful? And has answers I answered your question. Complete way.
Thank you
54:14
Well just what the first part of the question is about to talk about the book. And this is really a
book of very impact. It's within with impact. It's a first version, published and October the fourth
last year and Biden government analysis, the embargo on advanced equipment and ship tech
to China on October the sevens. You may say it's not directly related maybe, but we're still
thankful that this book for Taiwan on the indispensable list of countries for the world. You can't
imagine the world functioning without Taiwan made chips. And that's a quote from Chris so I it's
a very good for now. With strong risk count notation under it still was 10 Cuz a lot read off your
stories in the book. So allow me to bring our talk to our next subject TSMC which Maurice has
talked about already, but I would like to focus as Chris, you put high price on Maurice and call
him the most underestimated Business Person of the last 100 years. You could sort of elaborate
on that and what's your stock? what's your what's your biggest curiosity about Maurice? And
you mentioned a bit in your presentation or at why is that? I think I
56:02
was struck over the course of my research and I started not as a semiconductor expert, but as
a historian who was just learning about the industry, the extent to which most people are
totally unaware that their their lives, their businesses, their work depends fundamentally on
semiconductors and they're equally unaware or even more unaware, the extent to which just a
couple of companies produce the chips that they rely on. We've We've all heard of Steve Steve
Jobs, for example, because we associated him with the iPhone that we buy, but we I don't think
fully appreciated the extent to which the chips inside of of those phones come from just a
couple of companies whose capabilities have been, in many ways, equally as impressive as, as
the devices that they empower. And so that that seems to me to be one of the key conclusions
of the book that we have underestimated the role of semiconductor companies and creating
the modern tech sector creating a modern economy and there are a small number of
individuals like Morris who have played a critical role in that regard. And I think perhaps lead to
a question if I if I can as well which is Morris in some ways your your life tracks on to the history
of the chip industry, as you said, you were there. In the earliest days, you founded the most
important company in the industry. And so I'd be interested to hear your perspective of what
the world looked like in the 1950s when you were looking forward at how technology might
develop. Could you have imagined it would arrive at a point like this or what did you expect
from that position?
57:42
You're talking about the paper that you're showing me that right nothing's holding the 1960s
the paper was the the the presentation I gave to TI management was in 1976
58:04
58:04
and actually the foundry business model it has turned out to be extremely important. This
model
58:18
actually consists of it was just like a puzzle, you know, a puzzle that children play you know,
you have to fit the pieces together. And the 1976 presentation I made in the Texas Instruments
strategic planning conference, was in my mind, perhaps the initial piece of the puzzle. I mean, I
happened to chanced upon the inside which was really not a very unusual insight. But I
believed in it that semiconductors will be pervasive. Actually, the word pervasive was used by
Pat Haggerty at that time. Semiconductors is that was pervasive. I thought that was an
unfortunate choice of a word pervasive. It sounded too much like a pervert. So I, I prefer
ubiquitous, ubiquitous, anyway. Ubiquitous is a pervasive and now we Texas Instruments or any
funding couldn't possibly design or the products that or the pilot in semiconductors. Now there
will be other companies like since it's going to be pervasive than washing machines will use
them. Automobiles will use some data on computers on PC companies and so on. And they will
design and they may not be able to they may not want to have faps manufacturing and
therefore we can sell it to okay so the do you chips according to their own designs that we
should we can make them and that was just the first piece of polo, but it was premature.
Remember, design at that time was a big thing. And in the book in Chris's book, and now he
just wiped out. Failure failure, Intel failure labored almost for a whole year designing a
microprocessor. We were still waiting for the arrival of Carver Mead and Lynn Conway, me and
Conway. They were the second piece of the puzzle. Very important, second piece of problem.
And then in 76 he was only talking about I believe
1:02:02
I think it was 4k 4k dm 4000 each. Each DRM bit of course was one thing once transistor Sutaria
morning fourth are false on Genesis. I mean, it's also the simplest architecture you could have
DRM it really we're talking about logic. You don't we didn't even have 4000 transistors on the
same chip. So so Moore's Law was still in itself. If not infancy, assuming it's used the the chips
are not complex enough yet. And so the big VLSI systems didn't exist yet. So my imagined
designers when there weren't so many of them yet, and also fabs were still relatively
expensive.
1:03:10
Back then, I don't remember exactly now, but it's Fabi
1:03:16
1976, probably $20 million. Why not? Were proper timberland. Back then he's 76 as well. And it
was not such an affordable thing. For for a person that wanted to start a business. So Tom had
not arrived yet. Now. So complexity has not developed enough to design and not being
standardized. It was totally me COVID us design and the design the IP companies that I think
we're just starting I mean, the cadence, Cadence, synopsis and so on. I mean, they, they were
just starting off. Alright, then put the last piece that fell into place. The last piece of the puzzle
that fell into place. Now the last I'm sorry, that almost lost was Gordon Campbell. I don't think
he is in your book. Maybe you mentioned you didn't think Campbell's November 1984. I was the
president and CEO of General instrument in New York. Gordon Campbell, whom I did not know.
I had not met but I knew him by reputation. And he knew me by reputation also. He wanted to
see me in New York, in my office during the instrument. And so I say okay, so you came to me,
you said I want to start a company.
1:05:23
I want $50 million. I want you I want gentleman to invest $50 million. He was at that time
already. Pretty well known entrepreneur. He has started another company before that. And that
one was very successful. So I tended to me he had the credibility. So I say, Okay, God, do you
have a business plan? You know, if you want Jerry's human to invest 30 million I have to
present a business plan to the board is no, it's all in my head. But I can do it in two weeks. If
you want one. If you're interested. I will do one and I will send it to you in two weeks. So I said
okay. And he left. Two weeks, there's really no business plan. So I called him I said, Call Corbin
Cordy. Where's your business? And God he said, Maurice, I don't need you anymore. I said, How
come? And he said, because I don't need $50 million anymore. I need $5 million.
1:06:44
So I asked my second, how come? He said Well, I'm not going to believe I can subcontract the
manufacturing to an existing company. There are a few companies in Japan. And while there is
IBM in the United States that would do that. That was the last piece in my mind, almost as soon
needed. Financing and I still needed a place with competitive advantages. Taiwan happened to
be dominance. But as far as the viability of a foundry is concerned, Gordy Kimball put out
provide you the last piece and in fact, he did found a while he founded the first fabulous
company, which was chips and technology. It was Chips and Technologies. Yeah, name was his.
That was a successful company, but he was not TSMC customer with TSMC was too crude for
him. He was a successful company though he subsequently sold to Intel
1:08:33
May I sort of intrude here? A lot of people on well, on our floor actually on slideshows are asking
question about Intel and talks about Intel event since Morris just talked about it. Chris, do you
think Intel will succeed in building a foundry business that can compete with TSMC and make
us self sufficient invest chips, manufacturing and how are some of the event advantages and
disadvantages you've seen in Intel's efforts to set up its own foundry business in your
observation? What let's take a complex set
1:09:15
of of multiple questions. I'll try to take them in turn. I think first off, one of the questions
referenced self sufficiency and I think if there's one thing that I've learned about this subject or
industry is that it's impossible to be self sufficient. And if you look at the map up behind us,
industry is that it's impossible to be self sufficient. And if you look at the map up behind us,
you'll see multiple critical countries that are involved in the industry. And so I think that any
country that strives for self sufficiency is likely to find itself spending a lot of money and getting
less good technology as a result, which is why I don't think there are very many countries in the
world that are actually seeking self sufficiency. And certainly, it's hard to find any companies in
the world that would welcome that effort because companies know their suppliers and our
components come from all over the world. So I think self sufficiency is probably not the right
question to ask about any leading company or country. But in terms of Intel. I think one of the
conclusions from the comments we've just heard is the challenges to setting up a foundry
business model and we've seen a number of companies tried to do so and compete with TSMC
with with varying degrees of success, but but certainly TSMC has vast scale and advanced
technologies that make it difficult to compete with so recently and see Intel tried to build out
their foundry business over the next several years. I'm a historian rather than a someone who
can see into the future so I will refrain from confident predictions about what will what will
come next I'll leave that to smarter people in the audience. But it certainly does seem like like
building a foundry Business from Scratch is is not something that's easy when there are already
multiple successful foundry businesses in the world. I think there's a third thing to emphasize
there if I can. And I think going back to self sufficiency, we don't one of the questions asked
whether Intel would make United States self sufficient and I think what's critical to remember
not all of the firms were discussing is that they're all firms with international footprints, multiple
manufacturing facilities in different countries, with customers in in different countries. And so
although firms have national headquarters and that that dynamic matters, almost all the firms
that we might discuss today in the industry, have customers and suppliers that are in many
different countries. And so in some ways, I think the nationality of a firm's headquarters is
important, but it's also important not to overemphasize that reality because the supply chains
are so complex and international.
1:12:01
More scared to respond. Yeah, well,
1:12:05
I think as far as Intel being a foundry is concerned. I think Jensen Huang of Nvidia said it best he
said Jensen said that TSMC has learned to dance with 400 partners. We have customers TSMC
has learned to dance with 400 partners. Intel has always danced along well if it weren't for the
implications that we were a taxi dancer. I would approve Jensen some comments even more,
you know? Yeah. I think that's important. Definitely. I really
1:13:11
I really like Chris Thomas the TSMC success not by doing things on their own, but by
embedding themselves very deeply in the international supply chain by machines from twirls
from us and Aslan. And buying materials and chemicals from Japan, and Taiwan success stories
not about Taiwan doing it alone, but a story of integration of the best in the world and the best
in Taiwan and create an insight and logic in that you want to Yes, go ahead.
1:13:49
I'm sorry. Did I interrupt you? No. It's all I had. I was gonna do ask wisdom How do you see quiz
How do you see the chip world?
1:14:04
As you say, the chip supply chain
1:14:10
in five years. I think there's a basic assumption we need to make that there's no war. There's
no war in the Taiwan Strait. There's no war between the United States and China. We need to
make the assumption after making the assumption How do you see what what is the supply
chain going to be like in five years or 10 years.
1:14:46
From my perspective, it's it's clear that there will be more bifurcation in the supply chain
especially at the leading edge between China and other countries. And you see us regulations
and now Japanese and Dutch regulations. I think pushing in that direction. No more lagging
edge technologies that bifurcation will probably much less significant because there are no
regulatory barriers right now for cooperation between firms or sales of equipment at at the
locking edge. So I think that's one key shift we're already seeing and we'll continue to see. I
think the second is that in many different countries, there's much more emphasis from their
political leadership on investing in domestic capacity for a variety of reasons for economic
security concerns for economic development concerns. And you see this in all the major
companies and countries in the chip industry and even from some countries that don't have
major chip industries right now. So whether it's United States, Europe, Japan, India, trying to
become a bigger player in the chip industry, this is a global trend. And so I think we, we
certainly should expect to see and we're already seeing governments put really substantial
sums of money behind this relative to what they've previously done. So given that I think a
larger number of larger scale with Chip investment in a larger number of countries seems like
it's already underway. However, it also seems to me that a lot of the concentration in the chip
industry of memory production in Korea of advanced logic in Taiwan of tooling and the
Netherlands and Japan, that's been durable for years or some cases decades. And so that
suggests to me that the chip industry will change slowly. But even if governments are putting
fairly substantial sums of money, billions or 10s of billions into the shape of the industry, and I
would hypothesize that if we were all to reconvene in five years time and look at the global
landscape. It would look different from today, but it wouldn't look radically different.
1:16:56
Wow, no, I agree that there will be five bifurcation of the supply chain. I'm, of course more
interested in the American side of this, of the supply chain. Now. The United States I think, has
started to practice
1:17:24
and industrial policy on ships. And part of the industrial policy is to slow down China's progress.
1:17:37
And I really have no quarrel with that. In fact, I might say, I support it.
1:17:45
Although in my opinion in technology, manufacturing technology, China is at least at least five
or six years behind Taiwan. I look at the most advanced chip they are making and they are
making it with difficulty but not chip TSMC was making five or six years ago with ease. So that's
why I said that there at least five or six years, but still. I've chosen the I certainly support that
part of American industrial policy to slow down China's progress. Now another part, however, is
so called onshore French or,
1:19:02
and French or does not include Taiwan. In fact, the Commerce Secretary has said repeatedly
that Taiwan is a very dangerous place. We cannot America cannot rely on Taiwan for chips. And
that's Secretary Raimondo. She has said repeatedly and sometimes even echoed by Janet
Yellen, the Treasury secretary. Now that, of course is I think Taiwan's dilemma. And and
actually, I wonder why the United States already has this is your number. Quiz 39% of the world
Have you have you talked about everything? We talked about? Equipment, manufacturing.
Design, and intellectual property, everything. Everything the United States has already 39% I
think that's your number. And the United States has many what you call choke points. Yeah,
equipment, manufacturing equipment. Software is like a prime material and then research and
so on. will provide choke point equipment and design services like cadence and so on. Also
note and of course, the deploy large design industry
1:21:15
video call comes all the way into itself
1:21:27
so all together, the United States 39%. And
1:21:36
All right, so my question is, what's the chips and chips and size act? Right now? They have the
United States has approximately 11% of the manufacturing. So, what is the goal now and why?
United States has approximately 11% of the manufacturing. So, what is the goal now and why?
Why? What is the goal is a goal to go back to 30 40% Or is their goal just to
1:22:13
maintain the
1:22:17
supply that's essential for the security for national security. If it's just for national security? It
doesn't have to be very high you know, just national security I mean, defense, maybe only a
couple percent if that much of the total chips manufacturing. Like your thoughts on that? I think
it's a it's a, it's
1:22:49
a great and complex question. I think if you look around the world, the US and Japan, Europe,
what you find is over the past several years, there's been a greater sense of risk and looking at
geopolitics intensified by the Russia Ukraine war. There's been greater thinking about business
continuity planning about worst case scenarios. And that's coincided with more concentration in
the chip industry. More concentration of memory in Korea, more concentration of that logic in
Taiwan and, and risk planning and concentration are are two things that point in very different
directions. And so I think right now the industry is is that a? Is that a difficult balance that it
needs to strike because there are extraordinary efficiencies that come from concentration. The
economies of scale and Chip making are dramatic and we've seen the evidence of that. But
there's also concerned that if there's too much concentration and something goes wrong, the
implications for the world economy could be quite large. And there's there's many ways things
could go wrong. I think. If you step back and look at where the world has decided to put its
advanced shoemaking capabilities, it's largely in seismically active zones like Silicon Valley and
in Japan, and on on this island, so you can worry about natural disasters, but obviously the
geopolitical backdrop is is seen in most countries to be more dangerous today than it was five
years ago and so I think that's what's driving some of these concerns about having more
diversification of of the manufacturing footprint. And I agree with, I think what you were
suggesting that there's a balance to be struck between diversification and the benefits that
come from that and efficiency and the benefits that come from concentration and the scale
that concentration makes possible.
1:24:37
Well, I can see
1:24:41
you, I don't think you have told me why. What the goal is, and why the United States is so yes.
Anyway, but I can see the consequences. I think one has to realize that the pervasiveness, the
ubiquity of semiconductors is primarily due to its ever cheaper costs and back in the 50s, we
were talking about changes back then. We're not even talking about ICS just those two or $3
one transistor two or $3 one Kansas now you pointed out in your in your speech before we
started. Now, a cellphone carries maybe 10 or 20 billion because it's and the costs of integrated
circuit is maybe, I don't know 20 $30. So just let's say that it's so a transistor is it's not two or
$3. It's one nano dollar, one nano dollar. 1 billion times nano is 1,000,000,001 billion types. It's
just about the most disinflationary thing. All right. Now, you if you give up the competitive
advantages of Taiwan and move it to the United States moved. Alright. The first thing that's
going to happen and it's already happening is that the cost is going to go up. And that
estimates of the US cause was 50% higher than Taiwan cost I found out that was.
1:57:41
Right Right Right RIGHT. You China
2:13:13
Right RIGHT. You Right Right RIGHT. RIGHT. RIGHT. RIGHT. RIGHT. RIGHT. RIGHT. RIGHT.
RIGHT. Day. RIGHT. RIGHT. RIGHT. RIGHT. RIGHT. RIGHT. RIGHT.