Welcome and Introduction:
John Doe, Dean of Engineering, warmly welcomed Dr. Morris Chang, an MIT alumnus, as a distinguished speaker. Dr. Chang is recognized as one of the most significant innovators and industry leaders of the past 50 years.

Manufacturing at MIT Distinguished Speaker Series:
The event is a collaboration between MIT and the School of Engineering, hosted by Dean Anantha Chandrakasan. It marks the fifth event in the series, featuring notable speakers like U.S. Undersecretary of Defense for Research and Engineering Heidi Shu and Intel CEO Pat Gelsinger.

Introduction of Professor Cindy Barnhart:
Professor Cindy Barnhart, Provost of MIT, took the stage to formally introduce Dr. Morris Chang. She highlighted his deep ties to MIT and his remarkable achievements as the founder and former chairman and CEO of Taiwan Semiconductor Manufacturing Company (TSMC).

MIT Academic Background:
Dr. Chang earned both bachelor’s and master’s degrees in mechanical engineering from MIT after transferring from Harvard University.

Morris Chang’s Background:
Morris Chang’s time at MIT had a profound impact on his life. Despite failing to be admitted to MIT’s PhD program, he pursued a career in industry and earned a PhD in electrical engineering from Stanford University.

Founding TSMC:
Morris Chang foresaw Asia’s potential in advanced manufacturing. He founded TSMC in 1987, just as the industry was looking to outsource manufacturing to Asia. TSMC focused purely on manufacturing, creating a foundry-like platform and investing heavily in R&D. The company quickly became one of the most profitable chip makers and today is the largest manufacturer of the world’s most advanced chips.

Impact on the Semiconductor Industry:
TSMC transformed the semiconductor industry, becoming a destination for the industry and establishing Morris Chang as a titan of semiconductors. The company produces chips for cars, iPhones, supercomputers, and other devices. TSMC’s success has made it a $500 billion business.

Morris Chang’s Role at MIT:
Morris Chang became a member of the MIT Corporation in 1999 and is now a life member emeritus. He and his wife, Sophie, generously funded the renovation of Building E52, which now houses MIT’s Department of Economics and the Sloan School. MIT researchers have benefited from access to advanced silicon fabrication technology through the TSMC University Shuttle Program.

Morris Chang’s Legacy:
Morris Chang is an extraordinary example of the lasting impact of MIT alumni on the legacy of innovation at the Institute. He is a pioneer who envisions the future and works to make transformative industrial change a reality. His experiences and insights are valuable to the MIT community and beyond.

Pervasiveness of Chips:
Chips are ubiquitous in today’s world, from national defense to daily life. Semiconductors were not widely known until 1947, when the transistor was invented. Since then, chips have become essential in electronics, computers, and communication.

Highlights in the History of Chips:
In 1947, Shockley, Bardeen, and Bertin invented the transistor. AT&T began experimental fabrication of transistors for five years. In 1952, AT&T decided to license the transistor to other companies. Fairchild Semiconductor was founded in 1957, and Intel was founded in 1968.

Foundry Business Model:
A foundry is a company that manufactures chips for other companies. The foundry model allows companies to focus on design and marketing while outsourcing manufacturing. TSMC is the world’s largest foundry, and it has played a major role in the growth of the semiconductor industry.

Taiwan’s Advantages in Chips Manufacturing:
Taiwan has a strong education system that produces highly skilled engineers. Taiwan has a government that is supportive of the semiconductor industry. Taiwan has a stable political environment and a strong rule of law. These factors have made Taiwan a global leader in chips manufacturing.

Lessons:
The importance of perseverance and resilience. The importance of lifelong learning. The importance of adaptability and flexibility. The importance of teamwork and collaboration.

Transistor Licensing and Production:
AT&T licensed transistor technology to various companies, including RCA, GE, IBM, and lesser-known firms like Texas Instruments. Multiple companies began producing transistors, expanding their availability.

Integrated Circuit (IC) Invention:
In 1958, Jack Kilby and Robert Noyce separately invented the integrated circuit at almost the same time, earning them the Nobel Prize. Jack Kilby’s acceptance speech acknowledged that Robert Noyce would have shared the Nobel Prize if he were alive.

Moore’s Law:
Gordon Moore predicted that the number of transistors in an integrated circuit would double every 1.5 to 2 years, a phenomenon known as Moore’s Law. Moore’s Law held true for 50 years, a remarkable feat in technological advancements. The IEEE Medal of Honor, considered equivalent to the Nobel Prize for electrical engineers, was awarded for this achievement.

Exponential Growth and Moore’s Law Impact:
The exponential increase in transistors on a chip and the corresponding cost reduction led to broader applications of chips. As an example, if a dollar follows Moore’s Law, it would double every 1.5 to 2 years, making a person a billionaire by age 50 and a trillionaire by age 70.

Bipolar Chip Dominance:
Up until the late 1960s, most chips were bipolar, and U.S. companies dominated their manufacturing.

The Rise of MOS Technology:
MOS technology was developed in the late 1960s, enabling smaller transistors and higher transistor density compared to bipolar technology. This advancement allowed Moore’s law to remain valid for 50 years, driving exponential growth in the number of transistors on a single chip.

Increasing Complexity and Shifting Roles:
As chips became more complex, the focus shifted from chip manufacturing to chip architecture and design. The second generation of semiconductor professionals focused on designing and architecting complex circuits, leading to the development of microprocessors and the rise of companies like Intel, Qualcomm, and Broadcom.

Japanese Onslaught and the Plaza Accord:
In the 1970s and 1980s, Japanese companies challenged the US for leadership in chip manufacturing. The Plaza Accord in 1985, which appreciated the Japanese yen against the dollar, contributed to the decline of the Japanese semiconductor industry.

Taiwan and South Korea’s Growing Role:
Since the 1990s, Taiwan and South Korea have played an increasingly significant role in chip manufacturing. Taiwan Semiconductor Manufacturing Company (TSMC), founded in 1987, became a major player with its innovative business model focused on dedicated semiconductor foundry.

US Dominance in Chip Architecture and Design:
The US maintained its dominant position in chip architecture and design, while sharing dominance in manufacturing equipment with Japan and the Netherlands.

The Changing Business Model:
TSMC’s innovative business model, which focused solely on wafer fabrication and advanced packaging, revolutionized the semiconductor industry. This model, represented by the red line in a diagram, separated wafer fabrication from other aspects of the semiconductor manufacturing process.

Key Insights:
TSMC’s success can be attributed to several factors, including a talented workforce, geographical concentration, and the learning curve theory.

TSMC’s Foundry Business:
TSMC’s foundry business model focuses on manufacturing chips for other companies, serving as the “heart” of the semiconductor industry.

Taiwan’s Advantage:
Taiwan’s advantages in chip manufacturing lie in its substantial supply of high-quality and dedicated technicians and operators.

Education in Taiwan:
TSMC’s success is partly due to the availability of well-trained technicians and operators from trade schools in Taiwan.

Japanese Operators:
In Japan, operators at Texas Instruments plants had a very low turnover rate, unlike in Texas, where the turnover rate was much higher.

Geographical Concentration:
TSMC’s facilities are concentrated in three cities in Taiwan, which are connected by high-speed trains.

Engineer Mobility:
TSMC assigns over 1,000 engineers to work in cities other than their home city, providing dormitories for their accommodation.

Learning Curve Theory:
The learning curve theory applies to TSMC’s operations, as it emphasizes the importance of a common location and shared experiences for effective learning.

Ecosystem Development:
TSMC has fostered a robust ecosystem over the last three decades, including upstream, midstream, and downstream companies.

Lessons Learned:
TSMC’s success serves as a valuable lesson in the importance of talent, geographical concentration, and the learning curve theory in the semiconductor industry.

Historical Context:
Morris Chang draws parallels between Taiwan’s current advantages in chip manufacturing and the advantages enjoyed by the United States in the 1950s and 1960s.

Future Predictions:
Chang predicts that Taiwan’s current advantages will diminish over time, potentially shifting to countries like India, Vietnam, or Indonesia in the next 20-30 years.

Economic Models:
Chang criticizes the current economic model of free market, free trade, and globalization, arguing that it is no longer suitable for the chip industry. He believes that industrial policy, subsidization, and self-shoring will make the world chip industry less efficient and less resilient.

Resilience:
Chang emphasizes the importance of resilience in the chip industry and argues that the free economy and free market are the most resilient models. He warns against deviations from this model, such as industrial policy and subsidization, which can lead to shortages and inefficiencies.

Pervasiveness of Chips:
Chang highlights the pervasiveness of chips in various industries and acknowledges that increasing chip costs could impact their widespread adoption.

National Security:
Despite his criticisms of the current economic model, Chang acknowledges the importance of national security and agrees that it overrides all other considerations. He emphasizes the need to avoid conflicts like the Cold War, which can have severe consequences.