Morris Chang vs. Chang Hsin-cheng: From Semiconductor Tycoon to the "Eight-No Hermit" Defending Taiwan

30-Second Overview: Chang Hsin-cheng (曹興誠) is one of the pioneers of Taiwan's semiconductor industry; his company, UMC, once stood alongside TSMC as one of the "Foundry Two Titans." His life is defined by stark contrasts: in his early years, he advocated for westward expansion and promoted a unification referendum, but in his later years, he became Taiwan's most radical defender against the CCP, even donating NT$3 billion to fund civil defense. This trajectory reflects the profound spiritual pivot of a Taiwanese elite caught between geopolitical threats and commercial realities.

The Foundry Controversy: Who Was the Original?

"I was the first to think of the foundry model, but when I told Morris Chang, he ignored me."¹

This statement by UMC (United Microelectronics Corporation) founder Chang Hsin-cheng captures the most famous dispute over "foundry originality" in Taiwan's semiconductor history. In 1984, while serving as General Manager of UMC, Chang submitted a proposal via a friend to Morris Chang (張忠謀), who was then working for General Instrument in the United States, suggesting that UMC pivot to a "pure-play foundry" business model. According to Chang H's memory, Morris Chang's response was simply, "This is very difficult to do."² However, three years later, Morris Chang returned to Taiwan to found TSMC (Taiwan Semiconductor Manufacturing Company), adopting exactly this professional foundry model and expanding it with massive government support.³

Documents from Morris Chang's side suggest he already possessed the concept of professional foundry services before returning to Taiwan.⁴ This dispute over "who was the original" ignited decades of competition between the "Foundry Two Titans" in Taiwan's semiconductor industry. Chang Hsin-cheng and Morris Chang, two leaders with vastly different personalities, did not just compete on technology and markets but also presented a sharp contrast in management philosophy: Morris Chang excelled in stability, discipline, and vertical integration, while Chang Hsin-cheng was known for flexible, bold strategic thinking and the use of financial leverage.⁵ This long-standing tension only saw an "ice-breaking" moment in 2020 when the two met publicly in what was called a "handshake of the century."⁶

The Joint Venture Model: UMC's "Wolf Pack Tactics" and Its Cost

Facing TSMC, which possessed far greater resources, Chang Hsin-cheng launched a industry-shaking "joint venture model" in 1995. Rather than fighting alone, he partnered with IC design companies from the US and Canada to establish several 8-inch wafer foundries, including UMC-related entities like Liancheng, Lianrui, and Lianjia. UMC provided approximately 35% of the capital and acquired a 15% stake through technology valuation, while the remaining capital was provided by clients (IC design firms). This strategy of "using customers' money to build factories" allowed UMC to rapidly expand capacity in the short term, even briefly approaching TSMC's capacity levels.⁷ In 2000, through a "five-in-one" mega-merger, UMC consolidated four group foundry companies into one, causing its market share to leap from 10% to 35%, with capacity reaching 85% of TSMC's.⁸

However, this model also introduced structural flaws. Because clients were simultaneously shareholders and potential competitors, the client base was largely limited to small and medium-sized design houses; large clients stayed away for fear of technology leakage. Furthermore, dispersed internal resources made it difficult to focus on R&D, causing UMC to gradually fall behind TSMC in critical processes like 0.13 microns, eventually retreating from the "Two Titans" to become the world's third-largest player.⁹ Nevertheless, UMC subsequently spun off its IC design divisions, spawning the "UMC Family" of companies such as MediaTek and Novatek, which remain vital forces in Taiwan's IC design industry—another strategic legacy of the UMC model.¹⁰

The Hefei Case and Westward Failure: From "Red-Topped Merchant" to "Regretful Pioneer"

The 180-degree turn in Chang Hsin-cheng's political stance is inextricably linked to UMC's failed investments in China, specifically the "Hefei Case." In the 2000s, Chang was a staunch advocate for cross-Strait economic cooperation and was even praised by Chinese state media as a "red-topped merchant" (a businessman with pro-Beijing ties).¹¹ However, in 2001, UMC, through its subsidiary UMC-Japan, invested in Hefei Technology in Suzhou to establish an 8-inch wafer plant. This move violated the Taiwan government's then-existing ban on semiconductor investments in China, triggering years of judicial investigation.¹²

Chang Hsin-cheng viewed this case as "judicial persecution" and, in anger, took Singaporean citizenship in 2011, renouncing his Republic of China nationality.¹³ The Hefei Case finally concluded in 2010 with a settlement between UMC and prosecutors, involving a NT$500 million public donation, and the dismissal of charges against Chang Hsin-cheng and others.¹⁴ Yet, commercial reality proved more brutal than judicial rulings. UMC's investments in China generally incurred losses; the Hefei Case involved not only technology transfer disputes but also left UMC "losing money without profit in China." Chang Hsin-scale later stated publicly: "If I could do it over, I would hope we didn't set up factories in mainland China."¹⁵ Subsequent investments, such as Xiamen Lianxin, also suffered massive losses. Some analysts view these commercial failures as a primary driver for his shift from "westward expansion" to anti-CCP sentiment, rather than being solely influenced by the Hong Kong anti-extradition protests.¹⁶

From "Unification Referendum" to "Defending Taiwan": A Radical Political Shift

Prior to the Hefei Case, Chang Hsin-cheng's political stance leaned toward reconciliation with China. In 2008, he placed advertisements in major newspapers advocating for a "Cross-Strait Peaceful Coexistence Act" and promoting a "unification referendum," arguing that Taiwan should not reject unification but must decide via referendum, while criticizing "legal independence" as a trigger for war. This move was criticized by former President Chen Shui-bian (陳水扁) as a "Taiwan Surrender Law."¹⁷

However, everything changed after the 2019 Hong Kong anti-extradition movement. Chang Hsin-cheng witnessed firsthand the collapse of "One Country, Two Systems," and began publicly denouncing the CCP as a "triad" (organized crime).¹⁸

"I saw how the Communist Party treated Hong Kong; I know Taiwan cannot go down that path."¹⁸

In August 2022, during US House Speaker Nancy Pelosi's visit to Taiwan and the subsequent CCP-led military drills around the island, Chang Hsin-cheng announced a donation of NT$3 billion (approximately US$100 million) to assist Taiwan's national defense and applied to re-acquire his ROC nationality.¹⁹ Appearing before cameras wearing a bulletproof vest, he declared his intention to train 3 million "Black Bear Warriors" and 300,000 "Home Guard Sharpshooters."²⁰ His donations are primarily directed at combating the CCP's "cognitive warfare," psychological warfare, and propaganda, as well as funding civil defense organizations like the Black Bear Academy, aiming to awaken the fighting spirit of the Taiwanese people.²¹ Former President Chen Shui-bian even praised Chang Hsin-cheng as the "New Father of Taiwan Independence."²²

Controversy and Aftermath: The True Face of the "Eight-No Hermit"

Chang Hsin-cheng refers to himself as the "Eight-No Hermit" (八不居士), which includes being a businessman who is "neither too big nor too small" and a collector who is "neither too much nor too little." He is also a legend in the art auction world, having once sold a "Northern Song Dynasty Ru Kiln Sky-Blue Glazed Basin" for NT$1.1 billion, setting a record for porcelain auctions.[^2_3]

However, his controversies have never ceased. Since announcing his donation, outsiders (including some Blue Camp legislators and public figures) have repeatedly questioned the actual arrival and detailed usage of the NT$3 billion donation.²³ The Black Bear Academy, as one of the funded entities, has also faced scrutiny regarding its funding sources and operational model, with questions raised about "why public funds are still needed."²⁴ To this, Chang Hsin-cheng stated bluntly: "The donation is to fight cognitive warfare and awaken the fighting spirit of Taiwanese people; there is no need to disclose details."²¹ He also emphasized that the Black Bear Academy has not received a single cent of government budget—all funds are personally funded by him—and referred to his critics as "Communist bandits."²⁵ These controversies highlight the challenges regarding transparency in his donation execution and remain a focal point of public debate.

Today, Chang Hsin-cheng remains that same unpredictable strategist. He has transformed from a tycoon of the semiconductor battlefield into a driver of civil defense for democracy. Regardless of whether one agrees with his political views, his massive impact on Taiwanese society is undeniable: he has proven throughout his life that in an era of volatility, having the courage to overturn your past self is, in itself, a form of competitiveness.

Further Reading:

• Morris Chang — The other party in the foundry originality dispute; both had their own versions of "who thought of this model first."
• K Landis (Huang Chung-jen) — In the late 1990s, UMC intended to bring VISiCorp into its camp, which prompted his trip to seek help from Morris Chang.
• Semiconductor Industry— The entire industrial battlefield where the UMC and TSMC rivalry takes place.

References