Miscellaneous and Useless Information

One more amusing anecdote from Morris Chang. The initial funding for TSMC came mostly from the Taiwanese government (48%) and Philips. There were also a few key individual investors who put their own money into the company. But TSMC was proposing to be a silicon foundry, a brand new business model. How did the company convince those people to invest?

Dr. Chang said the government essentially coerced them to put their money in. One person was asked to take a 5% stake, and he started getting cold feet. The premier of Taiwan actually called him and said, “It is government policy to get this company started. Don’t you want to support government policy?” It turned out to be be pretty enlightened coercion.

This was back in 1987, when Taiwan was just starting to transition from an authoritarian government to a democracy. I doubt it could get away with that now.

I just got back from a Computer History Museum event: a conversation with Morris Chang (張忠謀), founder of Taiwan Semiconductor Manufacturing Company, better known as TSMC, and Jen-Hsun Huang (黃仁勳), co-founder and CEO of Nvidia, the last independent graphics chip company. Morris Chang is a pioneer in the computer industry: TSMC was the first dedicated silicon foundry, which manufactures integrated circuits for customers — it does not have any products of its own. Not surprisingly, Nvidia is one of TSMC’s most important customers. Dr. Chang made a couple of points that struck me.

TSMC is fundamentally a customer-focused company. One of the most important metrics for evaluating its fab managers is how many complaints that manager gets from its customers. Dr. Chang said this makes the culture of his company totally different from other semiconductor companies such as Intel, and this would impede their entry into the dedicated foundry business.

Dr. Chang also said Americans and Asians start companies for different reasons. Americans want to promote a new idea. Asians want to be their own boss. As an example, Dr. Chang used to go to a barber shop in Taiwan with two barbers. The younger barber decided he wanted to be his own boss, so he left and started his own barber shop, three doors down. Each of them had to work much harder than before, for the same number of customers. On top of that, the two barbers got into a price war, so they also made less money. Not surprisingly, the former partners became very bitter. The atmosphere became so unpleasant that Dr. Chang now doesn’t go to either barber. He joked, “That’s entrepreneurship, Asian style.”

Both were eloquent and humorous speakers. I’ve heard that Dr. Chang’s reputation is that of a very strict, demanding businessman, so this interview showed a more human side.

As an aside, the food at the reception for Computer History Museum members was great, too: seared tuna, crab cakes, and crostini with brie. Oh yeah…