Listening to Morris Chang, founder of TSMC

“We have to issue corporate bonds” said the founder and CEO of TSMC, explaining to Apple how he is struggling to finance the massive investment in a factory for Apple’s chips. “I think you can eliminate your dividend” was the outrageous advice from Apple!

I absolutely loved this interview with Morris Chang, the founder of the world’s largest chip-making company, Taiwan Semiconductor Manufacturing Company Limited. Some highlights

1. It’s amazing when amazing people work together. When in the USA, Chang was the head of international at Texas Instruments. The founding CEO of Boston Consulting Group asks to do a presentation to the founding CEO of TI. The presentation is about the experience curve: because price goes down with experience, and low price gets you more customers so more experience, you should price from the beginning what your price will be at the end. That way, you maximise your customers and experience. This is the heart of capital-intensive industries like chip manufacture.

The TI CEO asked Chang to attend the talk with him. The CEO loved the BCG research and agreed to let the BCG CEO expand his research with TI. The BCG CEO asks his protege – Bill Bain – to work at TI. Morris Chang gives Bill Bain an office close to his, and for 2 years, Bain works next to Chang Monday to Thursday. At the end, Bill Bain resigns to found Bain & Company. And a few years later, Chang uses what he learned from Bain to found TSMC. That’s four incredible founders learning together.

2. Certain Taiwanese families are extraordinary. The founding CEO of Nvidia, Jensen Huang, and the current CEO of AMD, Lisa Su, are second cousins originally from Taiwan. In the podcast interview, Chang mentions how he first got the meeting with Apple to get them as customers. He asked Terry Gao to arrange for a dinner in Chang’s home in Taiwan. “And who is Terry Gou for listeners?” ask the interviewers. “He is second cousin of Sophie’s, Sophie’s my wife” Chang replies. “And for our western listeners who this won’t be obvious to, Terry Gou is the founder and CEO of Foxconn.” That’s the world’s largest consumer electronics contract manufacturer.

3. The interview starts strong with Chang calling Huang when TSMC had a few thousand employees and Nvidia had 50-60 employees (and losses heading to bankruptcy). Hungs picks up the phone “and there was a lot of background noise. He was arguing something with his people. As soon as I introduced myself, said this is Morris Chang, he immediately shouted at those people that were making noises. He said, quiet. ‘Morris Chang is calling me’.” In all the stories, Chang loves talking to future customers, discovering who the future innovators will be.

He narrates modestly, I really recommend listening to Chang.