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Acquired / Case file

TSMC

History

Inflection points

TSMC was founded in 1987 (Hsinchu, Taiwan). Every turn Acquired identified: founding, leadership changes, strategic pivots, crises, cultural moments.

11 events5 decades covered1987 founded

Events and financial outcomes

Chang steps down as chairman. Mark Liu and CC Wei take over as co-leaders; succession executed cleanly, the foundry-first culture preserved.

Event source: Acquired episode TSMC

Reported financial changes between FY2017 · 2017-12-31 and FY2019 · 2019-12-31
MeasureFY2017 · 2017-12-31FY2019 · 2019-12-31Change
RevenueNT$977.4BNT$1.07TNT$92.5B
Operating margin39.4%34.8%-4.6 pp
Net incomeNT$345.0BNT$353.9BNT$8.9B
Operating cash flowNT$585.3BNT$615.1BNT$29.8B
Capital expendituresNT$330.6BNT$460.4BNT$129.8B

Reporting periods outside the event year; changes also reflect other decisions, market conditions, and accounting.

Case question. Which revenue, cost, or capital decision could explain the outcome, and what evidence would separate its effect from changes in the market?

The story

Morris Chang spent 25 years at Texas Instruments rising to Group VP before being passed over for CEO in 1983. He left and was recruited by the Taiwanese government's Industrial Technology Research Institute (ITRI) in 1985 with the brief: build Taiwan a semiconductor industry. Chang, then 54, proposed a pure-play foundry — a structurally new business model. Backed by ~$220M of seed capital (half from the Taiwanese government, half from Philips), he founded TSMC in 1987. The model was met with skepticism — no major customer would commit at launch. The compounding came from one principle Chang refused to bend: never compete with our customers. 39 years later TSMC manufactures ~92% of the world's most-advanced (≤7nm) chips.

Inflection points · grouped by decade

1980s

  • 1985Founding

    Morris Chang recruited by Taiwanese government

    After 25 years at TI and being passed over for CEO in 1983, Chang accepts the ITRI invitation. Spends two years studying the chip industry before proposing the foundry model.

    [Acquired episode TSMC + Morris Chang interview + IEEE Spectrum biography]

    • David:Morris Chang founded TSMC at age 56, retired at 74, then came back at age 78 into the deal to make all of Apple's chips. We're going to tell the whole story here. It's wild.
      [Acquired TSMC, ch. Intro]
      Episode
    • Backup research (parallel research subagent, 2026-05-26): Morris Chang born July 10, 1931 in Ningbo, China. Founded TSMC Feb 21, 1987 at age 55 (turned 56 later that year). Stepped down as CEO 2005 at age 73-74 (handed CEO role to Rick Tsai, REMAINED chairman). Returned as CEO June 2009 at age 77-78 to navigate the financial crisis and execute the Apple deal. Full retirement as chairman June 2018, age 86. Apple A8 deal: contract signed 2013, first chips shipped 2014 (iPhone 6 / iPad Air 2) — AFTER Chang's 2009 return. The Acquired '56/74/78' chronology is correct within rounding around his July birthday; technically he was 55 at founding and 73 at the CEO step-down, but 'retired at 74' specifically refers to the CEO retirement, not full retirement.
      [Wikipedia — Morris Chang (cross-referenced to IEEE Spectrum + Chip War)]
      Source
    • IEEE Spectrum: 'Morris Chang, Foundry Father' — canonical English-language biographical treatment of Chang's TSMC arc.
      [IEEE Spectrum — Morris Chang, Foundry Father]
      Source
  • 1987Founding

    TSMC founded in Hsinchu Science Park (Feb 21, 1987)

    Founding ownership split: ~48% Taiwanese government (National Development Fund / Executive Yuan), ~28% Philips ($58M cash + production technology + IP license), ~20% private Taiwanese investors (eight companies), ~4% KMT Central Investment Co. Total paid-in capital figures vary by source — Acquired cites ~$220M seed; backing out Philips's $58M / 27.6% implies total committed capital of ~$210M (some Taiwan-centric sources cite NT$1.3B paid-in ≈ $45M at 1987 rates; the difference is paid-in vs. total committed-with-tech-transfer).

    [Acquired episode TSMC + Wikipedia TSMC + Chris Miller, Chip War]

    • David:Morris quote: 'The only possible strength in Taiwan that we had, and even that was just a potential one, not an obvious one, was semiconductor manufacturing, wafer manufacturing. And so what kind of company would you create to fit that strength and avoid all the other weaknesses? The answer was a pure-play foundry.'
      [Acquired TSMC, ch. Founding (quoting Morris Chang)]
      Episode
    • David:They say necessity is the mother of invention, and these three days are what creates the now 9th most valuable company in the world. Morris comes up with this brilliant idea to create a pure-play foundry company, to be a contract manufacturer.
      [Acquired TSMC, ch. Founding]
      Episode
    • Backup research (parallel research subagent, 2026-05-26): TSMC incorporated Feb 21, 1987. Ownership split confirmed: Taiwan government 48.3%, Philips 27.5–27.6% ($58M + tech transfer), 8 private Taiwanese companies ~20%, KMT Central Investment ~4.1%. The Acquired '$220M seed' rounds the implied total capital figure derived from Philips's $58M÷27.6%; some sources cite NT$1.3B (~$45M at 1987 rates) as the paid-in figure. Both are defensible depending on whether 'seed' means paid-in cash or total committed including tech transfer.
      [Wikipedia — TSMC (cross-referenced to Chip War by Chris Miller)]
      Source

1990s

  • 1994IPO

    TSMC IPOs on Taiwan Stock Exchange

    Public listing. Validates the foundry model commercially. Begins the capital-flywheel that funds increasingly expensive process nodes.

    [TSMC historical disclosures]

2000s

  • 2007Strategic shift

    Open Innovation Platform launches

    TSMC begins co-designing IP libraries, EDA tools, and process design kits WITH customers. The fab becomes a co-development partner, not just a manufacturer. Locks in switching costs.

    [Acquired episode TSMC]

2010s

  • 2014Strategic shift

    Apple A8 chip — co-development partnership begins

    Apple moves from Samsung to TSMC for the A8. The co-development relationship deepens annually; by the 2020s TSMC is single-source for Apple silicon.

    [Acquired episode TSMC]

  • 2018Leadership

    Morris Chang retires at 86

    Chang steps down as chairman. Mark Liu and CC Wei take over as co-leaders; succession executed cleanly, the foundry-first culture preserved.

    [Acquired episode TSMC]

2020s

  • 2020Product

    5nm node enters volume production

    TSMC ships 5nm at scale (Apple A14, Mac M1). Establishes a 1-2 generation lead over Samsung and Intel that compounds through the AI boom.

    [TSMC disclosures + Acquired episode]

  • 2022Market

    CHIPS Act + geo-political pressure peaks

    US passes the CHIPS Act ($52B subsidy for domestic fab construction). Taiwan-China tensions raise concentration risk. TSMC commits to fabs in Arizona, Japan, and Germany.

    [Acquired episode TSMC]

  • 2024-04Product

    Arizona Fab 21 opens

    First high-volume TSMC fab outside Taiwan/China. 4nm production for Apple and others. Politically significant; commercially still small share of capacity.

    [TSMC press release + Acquired episode]

  • 2024Product

    N3 (3nm) node in volume

    Apple A17 Pro, NVIDIA Blackwell, AMD next-gen — all on TSMC N3. The leading-edge monopoly hits its current peak.

    [TSMC + customer announcements]

  • 2025-01Acquired covered

    Acquired releases Morris Chang founder interview

    Chang at 93 gives the full origin story on the Acquired podcast. The pure-play philosophy crystallises in his own words.

    [https://www.acquired.fm/episodes/tsmc-founder-morris-chang]