Morris Chang (Taiwan Semiconductor Manufacturing Company Co-founder) – Leadership in a Fragmenting World (Oct 2023)

Chapters

Abstract

The Evolution of Global Technology Leadership: Insights from Morris Chang and Joe Tsai

In an increasingly interconnected world, the stories of Morris Chang and Joe Tsai offer profound insights into the evolution of global technology and business leadership. Drawing upon their journeys and perspectives, this article explores key themes like the semiconductor industry, U.S.-China relations, leadership qualities, and the future of technological innovation.

Morris Chang’s Semiconductor Legacy and TSMC’s Founding

Morris Chang’s transformative journey in the semiconductor industry began at Sylvania’s semiconductor division, later leading to a pivotal role at Texas Instruments (TI). TI’s investment in Chang’s education, sponsoring his Ph.D. at Stanford, exemplifies the importance of nurturing talent. After a 25-year tenure at TI, Chang, witnessing its struggle due to diversification into consumer products and home computers, moved on to spearhead Taiwan’s semiconductor ambitions. His foresight in founding Taiwan Semiconductor Manufacturing Company (TSMC) in 1985 revolutionized the industry by introducing the pure-play foundry model. TSMC’s ascent to the world’s largest semiconductor foundry, generating an impressive $70 billion in revenue, underscores Chang’s strategic acumen.

Joe Tsai: Legal Expertise to Alibaba’s Architect

Joe Tsai, a Taiwanese-Canadian entrepreneur, traversed a diverse educational path through Lawrenceville, Yale University, and Yale Law School, equipping him with a unique skill set. His transition from legal practice and private equity to co-founding Alibaba alongside Jack Ma in 1999 marks a significant pivot in his career. Tsai’s legal expertise proved invaluable in Alibaba’s expansion, especially in managing mergers and acquisitions.

Navigating U.S.-China Decoupling and the Thucydides Trap

The decoupling between the U.S. and China, as observed by Tsai, presents a complex challenge for global businesses. Factors like trade tensions, technological rivalry, and security concerns are driving this divide, with significant implications for the semiconductor industry and global supply chains. Morris Chang’s invocation of the “Thucydides Trap” – the historical pattern of conflict when a rising power challenges an established one – adds depth to this discussion, highlighting the need for cautious diplomacy to avoid conflict.

The Race for Technological Supremacy and its Global Impact

The U.S.-China decoupling strategy, aimed at curbing China’s technological advancements, particularly in the semiconductor sector, may yield short-term gains but poses risks to global progress and innovation. This geopolitical maneuvering creates uncertainties, affecting investor confidence in Asia. However, Asia’s resilience, underscored by its industrious workforce, high education levels, and entrepreneurial spirit, suggests a potential to maintain dynamism and regain investor trust.

Educational Paradigms: Asia and the U.S.

Educational systems play a pivotal role in shaping economies. While the U.S. excels in fostering innovation through its elite university system, Asian countries like Taiwan and China benefit from robust vocational education systems that support their manufacturing-focused economies. This contrast in educational approaches reflects the diverse economic needs and cultural values of these regions.

Leadership Insights: Building Knowledge and Vision

Leadership in technology and business demands a blend of intellect, emotional intelligence (EQ), and humility. Morris Chang and Joe Tsai exemplify these qualities through their journey. The concept of the ‘Knowledge Pyramid’ – gathering information, reflecting, and gaining insights across various fields – is essential for visionary leadership. Successful leaders combine expertise in technology, business strategy, and geopolitics to navigate complex global landscapes.

Sports and Cultural Integration: Tsai’s Journey with the Brooklyn Nets

Joe Tsai’s involvement in sports, highlighted by his ownership of the Brooklyn Nets, transcends mere passion. It signifies the importance of sports in cultural integration and acceptance, especially in contexts where Asians are underrepresented in athletics.

The Future: Optimism Amidst Geopolitical Tensions

Despite concerns over rising geopolitical tensions, leaders like Morris Chang and Joe Tsai express optimism. Chang’s belief in the enduring example set by the United States and Tsai’s faith in the global desire for peace and prosperity underscore a hopeful outlook for the future. This optimism, coupled with a commitment to innovation and understanding, could pave the way for a more collaborative and stable global landscape.

Supplemental Information

Morris Chang’s Journey from Texas Instruments to TSMC

Chang’s background in semiconductors began at Sylvania and Texas Instruments. Sponsored by TI, he earned a master’s and bachelor’s degree and pursued a Ph.D. at Stanford. After witnessing TI’s decline due to diversification, he joined Taiwan’s Industrial Technology Research Institute and was tasked with starting a semiconductor company.

Taiwan’s Competitive Advantage

Recognizing Taiwan’s competitive advantages in chip manufacturing, Chang established a foundry model solely focused on wafer manufacturing. TSMC was founded in 1985, became the largest manufacturing company, and one of the top semiconductor companies globally.

Joe Tsai’s Journey to Alibaba

Tsai’s father represented TI as a lawyer in Taiwan, and his uncle worked at Intel Motorola. Chang attempted to hire Tsai’s uncle, Roger, but was unsuccessful. Tsai met Jack Ma in 1999 through a friend’s introduction and joined Alibaba.

Decoupling of US and China

The decoupling of the US and China is a major concern among CEOs worldwide, driven by multiple factors.

Global Concerns, Digital Fragmentation, and the Impact of Decoupling on Technological Innovation

Security concerns and digital sovereignty are key concerns, with Europe focusing on protecting citizens’ data privacy. Supply chain decoupling and digital fragmentation lead to challenges in the global digital landscape. Out of 18 historical examples of existing and emerging powers confronting each other, 12 resulted in war, highlighting the potential risks of the US-China decoupling. Decoupling may slow down global technological innovation and progress, ultimately harming everyone involved.

Maintaining Dynamism and Investor Confidence in Asia

Asia’s industriousness and high education levels contribute to economic growth. Focus on fostering innovation, addressing geopolitical challenges, and promoting regional cooperation is essential for maintaining dynamism and investor confidence.

The Rise of Asia’s Dynamic Economy and Education System

Joe Tsai emphasizes the industriousness and education of people in Asia, particularly in China, driving the region’s economic dynamism. China remains a manufacturing powerhouse despite a slowdown in the economy, with a large labor force including highly skilled workers. Morris Chang highlights Taiwan’s vocational school system as an advantage for manufacturing, providing specific skills for graduates to secure good jobs. In contrast, the US lacks a vocational school program, leading to a gap in the workforce. Communication and understanding differences between the US and Asia are crucial, promoting open communication, sharing viewpoints, and preventing misunderstandings.

TSMC’s Dominance in Chip Manufacturing

TSMC’s leadership in developing advanced chips in Taiwan is acknowledged. Moore’s Law’s pre-set course guides the chip industry’s progress. TSMC’s continued dominance depends on its ability to innovate and stay ahead of competitors.

Notes by: Alkaid