Taiwan's Economy
Morris Chang and the TSMC Story
How Morris Chang founded TSMC in 1987 with government backing and pioneered the foundry model of making chips for other companies, becoming the world's most important chipmaker.
Morris Chang, a Chinese-born engineer who worked at Texas Instruments for decades, founded TSMC in 1987.
Government support
- Taiwan’s government invited Chang to lead the Industrial Technology Research Institute (ITRI).
- The government invested in TSMC alongside Philips.
The foundry model
- TSMC only manufactures chips designed by other companies.
- It doesn’t compete with its customers by selling its own chips.
Why it worked
- Chip design companies like Nvidia, Qualcomm and Apple could avoid building costly fabs.
- TSMC gained scale by serving many customers.
Dominance
- TSMC makes most of the world’s most advanced chips.
- It became one of the world’s most valuable companies, especially with AI chip demand.
Lesson
Specialisation in one stage of a value chain can create global leadership.
The fabless partner
Nvidia designs AI chips but doesn't own a factory; TSMC manufactures them in Taiwan.
Thinking chip companies must make their own chips
TSMC's foundry model separated design and manufacturing.
Key takeaways
- Morris Chang founded TSMC in 1987 with government backing.
- TSMC pioneered the foundry model.
- Fabless firms like Nvidia rely on TSMC.
- Specialisation created global leadership.
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