Taiwan Enterprises: TSMC

30-Second Overview

Morris Chang, who left Texas Instruments at 54 and founded TSMC at 56, survived three major displacements and lived in six cities during his first eighteen years¹. On the fourteenth day of his return to Taiwan in 1985, he proposed a business model in the office of Li Kwo-ting that no one in the world had ever attempted: focusing solely on wafer foundry services, not designing proprietary products, and never competing with customers². Thirty-eight years later, in the first quarter of 2026, TSMC's quarterly revenue reached $35.9 billion (up 40.6% year-on-year), with a market capitalization of approximately $1.7 trillion, and a global market share of over 90% in advanced processes³⁴. On March 3, 2025, Trump announced at the White House that TSMC would increase its investment by $100 billion, bringing total investment to upwards of $165 billion, stating to C.C. Wei: "He is the most important man in this room."⁵ Yet during the same period, a Zheng family ancestral grave built in 1844 in Baoshan, Hsinchu, was being relocated to make way for a 2nm plant⁶. Over the past thirty-eight years, this company has become the heart of humanity's digital civilization—but as this heart grows larger, whether the island can bear its cost becomes increasingly uncertain.

An Idea Conceived in 14 Days

On August 21, 1985, the 54-year-old Morris Chang returned to Taiwan to take up the position of President of ITRI (Industrial Technology Research Institute). He had spent 25 years at Texas Instruments, rising from entry-level engineer to Vice President; after leaving TI in 1983, he spent two years at General Instrument. That August, he ended his life in the United States and flew back to the island he had left at age eighteen, carrying unused vacation days with him.

On September 4, the fourteenth day of his return, Executive Yuan Minister Li Kwo-ting invited him to his office and got straight to the point, asking him for a plan that "could allow Taiwan to enter the semiconductor industry."

Chang later recorded this moment in his autobiography[^13]:

"Two weeks later (September 4), Minister Li Kwo-ting wanted to see me. He brought up the matter immediately. I had already spent nearly two weeks thinking about this problem, so at that time, I proposed the concept of a 'Common Wafer Fab'."

The term "Common Wafer Fab" did not exist at the time. Semiconductor companies either designed and manufactured their own chips (like Intel or Samsung) or simply outsourced to Japan. The phrase "specialized foundry" was invented by Morris Chang while sitting at his desk on Chongqing South Road during those two weeks.

To understand why this decision came from this specific person, one must look back to before he was eighteen. Born in Ningbo in 1931, he lived in six cities—Ningbo, Nanjing, Guangzhou, Hong Kong, Chongqing, and Shanghai—attended ten different schools, and survived three major displacements before the age of eighteen¹. In 1949, he went to the United States for his studies, eventually entering Texas Instruments, where he rose from entry-level engineer to Vice President over twenty-five years.

His decision to return to Taiwan at 54 was not another flight from danger—it was an attempt to turn this 36,193 square kilometer island into something no one had ever imagined.

I Only Wanted to Survive

On February 21, 1987, TSMC was officially registered. With a capital of $145 million, the Executive Yuan Development Fund held 48.3%, Netherlands' Philips held 27.5%, and Wang Yung-ching's Taiwan Plastics held 5%². The first wafer fab was established in the Hsinchu Science Park, utilizing 6-inch (150mm) wafers and a 2-micrometer process; it was a facility derived from the second phase of the VLSI project after ITRI learned from RCA in the US, with technology transferred from ITRI and Philips⁷[^34]. Compared to today's 2nm process, 2 micrometers is a thousandfold difference.

"When I founded TSMC in 1987, the first few years were actually very difficult. How could I have had any vision for ten years later? I only wanted to survive; I only wanted the company to survive!"⁸

Chang later recalled. Regarding the government's 48.3% investment, he described them as "reluctant investors." Had it not been for Li Kwo-ting's vigorous support, this funding would never have been allocated⁸.

The greatest challenge in the early days was not technology, but trust. Morris Chang visited semiconductor companies worldwide one by one, attempting to persuade them to entrust their most core manufacturing to a small Taiwanese firm. Most found it inconceivable—entrusting one's lifeblood to a third party? But Chang insisted on two principles that later became his motto[^13]:

"'Never make easy promises to customers; once a promise is made, we will fulfill it at any cost with our full effort' became our motto. 'Not competing with customers' and 'Customers are our partners' also became the mottables of the new company."

The promise of "not having a proprietary brand and never competing with customers" later proved to be TSMC's strongest moat. Because of this wall, companies like NVIDIA, Qualcomm, and AMD dared to hand over all their design blueprints to TSMC.

📝 Curator's Note: Morris Chang did not invent a technology; he invented a division of labor. Before him, chipmakers had to build their own factories. After him, the world's smartest chip designers could focus on design, leaving manufacturing to Taiwan. This division of labor gave rise to the modern landscape of NVIDIA, Qualcomm, and AMD.

No One Realized He Was Indispensable

Aerial view of TSMC's factory cluster in Hsinchu Science Park (Tseng Cheng-Hsun, January 2, 2020). Photo: Tseng Cheng-Hsun. CC BY 2.0 via Wikimedia Commons.

The turning point occurred in the late 1990s.

TSMC's first 8-inch fab, Fab 3, ramped up mass production in 1995. By October 1997, Fab 5 in Hsinchu was completed (the company's third 8-inch fab, its first two-story design, with a 0.35-micrometer process) and began mass production in early 199,⁷[^35]. In December 1999, construction began on the first 12-inch fab, Fab 12, which entered mass production in 2002⁷. At that time, Asia had just experienced the 1997 financial crisis, and most semiconductor companies were scaling back. TSMC expanded against the trend; this decision to "be greedy when others are fearful" laid the foundation for its leadership over the next two decades.

The simultaneous explosion of personal computers and mobile phones in the 2000s caused chip demand to surge. "Fabless" companies—those willing to separate design from manufacturing (NVIDIA, Qualcomm, Broadcom)—began to rise. TSMC's business model shifted from "ununderstood" to "indispensable."

In 2005, Morris Chang retired for the first time, and C.C. Wei took over as CEO. On September 9, 2014, Apple released the iPhone 6/6 Plus; that was the first time Apple's A-series chips were manufactured exclusively by TSMC (at 20nm), officially replacing Samsung⁹. From then on, every processor in every iPhone has been produced in Taiwan.

In 2018, Morris Chang formally retired, and Liu De-yin and C.C. Wei took over under a dual-leadership system; in 2024, Liu De-yin stepped down, leaving C.C. Wei as sole Chairman and President.

These are not merely chronological entries; they are layers of the same logic: all competitors have fallen behind (IBM, TI, Samsung could not keep up, Intel stalled at 7nm), and the bottleneck for the world's advanced processes is narrowing.

Then came AI.

Those Ten Minutes in 2009

In early 2009, the global financial crisis swept the world.

The then-CEO, C.C. Wei, laid off 840 employees citing "poor performance and failing evaluations," deliberately avoiding the word "layoff." The displaced employees formed a self-help group and protested outside Morris Chang's residence in Taipei.

Morris Chang's wife, Chang Shu-fen, did not sleep all night. The next morning, she went downstairs with security to personally purchase "enough soy milk, sesame pancakes, and fried dough sticks for 30 people" to distribute to the overnight protesters. The employees later told the media[^14]:

"Everyone was deeply moved, and we decided to cancel our planned protest at Ketagalan Boulevard."

On the morning of June 11 that year, during a TSMC board meeting, the 78-year-old Morris Chang proposed the removal of C.C. Wei from the CEO position "[in less than ten minutes](¹⁰)" and returned to the role himself.

He later explained why[^14]:

"This is not something we would normally do; at most, we would allow underperforming employees to undergo a six-month improvement period... but even if they pass the probation, we do not fire people."

📝 Curator's Note: Why this cultural rule of "not firing people" became a rule is answered by those ten minutes in 2009. TSMC's rigor lies not in "elimination," but in "providing guidance even if you cannot keep up." But the cost of this promise is that the company must have the capital for rapid expansion to absorb all its employees. When a company can no't expand anymore, this promise becomes its chain.

Water Wagons Carry Water; Farmland Yields to Water

In the spring of 2021, Taiwan suffered its most severe drought in 56 years.

Reservoirs in the Hsinchu Science Park dropped to historic lows. TSMC initiated "water wagons": a 12-ton water truck was quoted at 15,000 TWD per trip¹¹.

At the same time, the government ordered rice paddies in the Taoyuan, Hsinchu, and Miaoli regions to cease irrigation. The farmers' water was yielded to the wafer fabs. The New York Times headline was blunt: "Taiwan's Drought Pits Chip Makers Against Farmers"¹².

This is the other side of the "Protector of the Nation Mountain" (護國神山). A single TSMC advanced process fab uses over 150,000 tons of water daily, and its electricity consumption accounts for over 7% of Taiwan's total usage. Between 2015 and 2019, TSMC's own water consumption grew by 70%¹³. In the environmental impact assessment for the Baoshan Phase 2 expansion, TSMC promised to use 100% reclaimed water, but simply laying the dedicated reclaimed water pipeline to the Hsinchu Science Park would cost over 10 billion TWD, and the government would have to foot the bill.

Former Hsinchu Science Park Bureau Director Li Chieh-mu told Mirror Media in 2021[^25]:

"Water wagons are like using buckets to fight a fire; it is only an emergency measure... if it does not rain again, TSMC will face production cuts."

TSMC has pledged to reach net-zero emissions by 2050 and is investing heavily in renewable energy. Paradoxically: the more robust AI demand becomes, the more advanced processes consume electricity and water. The higher the "Protector Mountain" stands, the longer its shadow grows.

📝 Curator's Note: The term "Protector of the Nation Mountain" (護國神山) is almost a matter of faith in Taiwan—but the other side of faith is the inability to question. When a company becomes so large that the distribution of an entire nation's water and power resources must yield to it, the line between "protection" and "dependency" has blurred.

The Zheng Family's 178 Years

Baoshan Township, Hsinchu County.

In 1844 (the 24th year of the Daoguang era of the Qing Dynasty), Zheng Yong-jin sent his family to build a 4,000-ping Zheng family cemetery here. One hundred and seventy-eight years later, this ancestral grave must yield land for TSMC's 2nm plant⁶.

The Hsinchu Science Park Bureau negotiated with the Zheng descendants for five years to acquire the 270,00_0-ping site (including the Zheng cemetery). During the negotiation, TSMC "unilaterally hired workers to dig in the cemetery for exploration, driving iron rods and making marks at at least three locations"⁶. Baoshan residents "protested with white banners." Hsinchu County Councilor Chiu Chen-wei stated directly: "It is like 'annihilating a village' (the Oaki village)⁶."

The relocation was completed in late May 2025.

This is just one case. TSMC has faced similar large-scale land acquisition and environmental assessment controversies in Baoshan, Hsinchu; Tongluo, Miaoli; Taichung Science Park; Jiayi; and Nanzih, Kaohsiung. Every new plant means a piece of local history must be turned over—it is just that not every piece has descendants who remember the Zheng family's name.

✦ "It is like 'annihilating a village' (the Oaki village)." (Hsinchu County Councilor Chiu Chen-wei)⁶

The Most Important Man in the East Room of the White House

Aerial view of TSMC Fab 21 construction site in Phoenix, Arizona (Hunter Trick, November 5, 2023). Photo: Hunter Trick. CC BY-SA 4.0 via Wikimedia Commons.

The afternoon of March 3, 2025, East Room of the White House, USA.

Donald Trump is on his 43rd day in office. U.S. Commerce Secretary Howard Lutnick, AI and cryptocurrency advisor David Sacks, TSMC Chairman C.C. Wei, and NVIDIA founder Jensen Huang are all in the same frame (Jensen Huang was invited by C.C. Wei "for moral support," though he did not take the stage).

Trump announced: TSTSMC will increase its investment by $100 billion; combined with the previous $65 billion, total investment in U.S. bases is expected to reach $165 billion, with plans for six wafer fabs⁵. Midway through, he turned to two secretaries and said one sentence[^7]:

"Right now, he's the most important man in the room. I'm sorry, fellas."

C.C. Wei took the stage to explain the plan; the most critical line was verbatim English[^7]:

"In Phoenix, Arizona, with 3,000 employees, we are producing the most advanced chip made on U.S. soil."

This is not an isolated event. In February 2025, Lai Ching-te had already privately visited Morris Chang, C.C. Wei, and Director Lin Chuan in preparation for this announcement¹⁴. On January 14, 2026, Trump signed Section 232 semiconductor tariffs, imposing a 25% tariff on all semiconductor imports not investing in the US; however, the same order provided an exemption clause for TSMC's US investments based on "2.5x planned capacity"¹⁵. This means: you don't just sell to the US, you produce in the US—the more you move production lines to Phoenix, the less tariffs will touch you.

This binds all advanced processes even more tightly to American soil.

Progress in Arizona is faster than expected. The second phase 3nm plant, originally planned for mass production in 2028, will now begin equipment installation in Q3 2026 and is expected to mass produce in 2027—one year ahead of schedule¹⁶. The third phase N2/A16 class has already begun construction in April 2025. In February 2025, Apple announced it would purchase "over 100 million" chips manufactured in Phoenix in 2026¹⁷.

This is the flip side of the "Silicon Shield" theory. KMT Legislator Ko Chih-en told the Taipei Times in March 2025, verbatim English[^29]:

"The more TSMC produces in the US, the lower Taiwan's geopolitical importance will be, and the less incentive the US will have to help Taiwan."

A 2025 poll by Vista Magazine showed that 64% of Taiwanese people believe investment in the US is weakening the Silicon Shield¹⁸. An August 2025 article in MIT Technology Review wrote: "Taiwan's silicon shield could be weakening"¹⁹.

The Lai administration's response was "no pressure from the United States." However, an November 2025 headline in Foreign Policy was blunt: "Lai Administration Has Rocky Relationship With Chip Giant TSMC"²⁰.

The TSMC of a Post-Globalization World

October 26, 2024, Hsinchu County Stadium, TSMC Sports Day.

Normally, this should be the most joyful occasion of the year. The 93-year-old Morris Chang (retired for 6 years) stood at the podium to deliver a speech. He did not speak of TSMC's achievements. He spoke of an open warning[^31]:

"In semiconductors, especially in the most advanced semiconductors, globalization is dead, and world free trade is also dead."

"TSMC's success has become a prize that geopolitical strategists must fight for; today, TSMC has truly become a contested battlefield."

"In an environment where globalization is dead and world trade is dead, TSMC's challenge is to continue seeking development."

The founder made such a judgment at his own company's sports day, the very occasion meant for unity. He was not analyzing geopolitics; he was issuing a public warning.

C.C. Wei said another thing during an earnings call on January 15, 2026[^11]:

"I am also very nervous... if we do not evaluate carefully and over-invest, it will be a great disaster for TSMC."

The context of this statement was the risk of an AI bubble. TSMC's 2026 capital expenditure budget is USD 52-56 billion (vs. USD 40.9 billion in 2025 / USD 28.9 billion in 2024)²¹. In other words, TSMC's annual investment in R&D and expansion exceeds Taiwan's entire national defense budget for a year.

Jensen Huang's response was another kind of warning[^32]:

"I believe that over the next 10 years, TSMC's capacity will likely increase by far more than 100%. This is a very significant investment in the next decade, a massive scale expansion; this will be the largest infrastructure investment and expansion in human history."

The Behemoth in the Numbers

NVIDIA's AI training chips, Apple's mobile processors, and AMD's server chips are all exclusively manufactured by TSMC. If TSMC's factories were to stop for one week, the global technology industry would grind to a halt.

2nm is expected to enter mass production in the second half of 2026; the dual capacity of Hsinchu Baoshan and Kaohsiung Fab 22 is already fully booked for all of 2026²³. The 1.4nm (A14) process was officially unveiled at a North American symposium in April 2025, with mass production expected in 2028; compared to 2nm, it promises a 10-15% speed increase or 25-30% power savings, and over 20% more logic density²⁶.

The investment for each generation of process exceeds the previous one: a single 2nm fab costs over $20 billion. As processes approach physical limits, every step forward becomes more expensive, and fewer competitors can keep up.

The Weight of an Island

In May 2026, TSMC's market capitalization was approximately 2.3 times Taiwan's GDP. One company is larger than the entire nation's annual output—there is no second example in the world.

Morris Chang once told The Wall Street Journal that he had "finished," describing himself like a veteran, "not dead, but gradually withering away"²⁷. But what he created far exceeds a single company. Around TSMC, Taiwan has built the world's most tightly integrated semiconductor industry cluster; from equipment to materials to packaging and testing, the entire supply chain is within a hundred-kilometer radius. This density allows TSMC to respond to customer engineering changes within 24 hours—something Samsung and Intel cannot do.

In 1987, Morris Chang said he "only wanted to survive." Thirty-eight years later, the whole world needs TS_MC to survive. What began as one man's struggle for survival has become an island's struggle for survival, and ultimately, a civilization's struggle for survival.

No one planned a transition of this magnitude. Yet, in the greatest drought in 56 years, water wagons continue into Baoshan; on construction sites in Arizona, the third fab has just begun; on the red carpet of the White House, Trump praises the man who left TI at 56 as "the most important man in this this room"—even though that 56-year-old man is no longer in this room.

Further Reading

• Taiwan Enterprises: MediaTek — The world's third-largest mobile chip designer, a local representative of the fabless model, and the complementary twin to TSMC.
• Taiwan Enterprises: ASE Group — The world's largest OSAT (Outsourced Semiconductor Assembly and Test) provider, a critical downstream node in the same supply chain as TSTSMC.
• Taiwan Stock Market and Capital Markets — TSMC's market cap accounts for approximately 35% of Taiwan's total market cap; to understand Taiwan's stocks, one must first understand TSMC.
• Taiwan Industrial Transformation — TSMC is a concrete example of Taiwan's transformation from an OEM island to a technology island.
• Shi Zhen-rong — A director at TSMC for 21 years and the Acer founder whose largest wealth was tied to TSMC stock, yet he is the author of the "U-curve" that urged Taiwan not to rely solely on OEM.
• Semiconductor Industry — The 50-year materials revolution from RCA technology transfer to GaN and quantum packaging; the entire materials science battlefield where TSMC resides.
• Ho Chun-ren — Founder of VISium/VPEC; another path on the same island: also doing wafers, once facing massive debt and delisting, only to climb back into the stock market nine years later.

Image Sources

This article uses 2 images, all cached at public/article-images/economy/ to avoid hotlinking from source servers:

• TSMC Hsinchu Fab Aerial View (hero) — Photo: Tseng Cheng-Hsun, 2020-01-02. CC BY 2.0 via Wikimedia Commons.
• TSMC Arizona Fab 21 Construction Site Aerial View — Photo: Hunter Trick, 2023-11-05. CC BY-SA 4.0 via Wikimedia Commons. ShareAlike 4.0: This work (including derivatives of this image) is licensed under the same license.

References