Zhang Zhongmou and his three stages

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In 1931, in Ningbo, Zhejiang, a family with a banking background welcomed a new baby. Amidst the era of war and turmoil, this family moved across various cities in China.

Over the course of 18 years, they relocated to six different cities and the child changed schools ten times. This child experienced the entirety of the 14-year-long War of Resistance against Japan and the three-year-long Liberation War.

In early 1949, the family reunited in Hong Kong. That year, the father used his last savings to send his 18-year-old child to Harvard University in the United States. Among the more than 1000 freshmen in the school that year, he was the only Chinese person.

Travel and trials can temper a person, and such a grand era has created the founder of one of the most important semiconductor companies in the world today—Morris Chang.

Morris Chang's father was a bank manager, and his mother was a descendant of the famous Qing Dynasty book collector Xu Shidong. He experienced the 14-year-long War of Resistance against Japan and the three-year-long Liberation War. The Chang family fled three times, moving between cities such as Chongqing, Shanghai, and Hong Kong. Fortunately, despite such travels, the family did not neglect the child's education. As mentioned earlier, Morris Chang entered Harvard University at the age of 18.

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In his second year at Harvard, Morris Chang transferred to the Massachusetts Institute of Technology (MIT). When evaluating the two schools, Morris Chang said that MIT gave him the "capital" to make money, hence he had "ten parts respect, five parts love" for it; while Harvard was the place that enriched his mind and wisdom.

After obtaining his master's degree in mechanical engineering, Morris Chang originally planned to pursue a Ph.D. However, after two failures, he chose to "dive into the sea" of industry. Between Ford Motor Company and an unknown transistor "startup," he chose Sylvania Electric Products due to a difference of one dollar. There, he worked as an engineer responsible for the automated production of germanium transistors. Three years later, Morris Chang left Sylvania and once again "accidentally" chose a semiconductor company with only $70 million in revenue over IBM. Years later, a retired Ford executive came to this company as a director. Upon learning that Morris Chang, who had trained him, had not chosen Ford back then, he excitedly said, "You are so lucky. If you had gone to Ford at that time, you might still be stuck in Ford's R&D department." This company was Texas Instruments.

The year Morris Chang joined the company, Jack Kilby also joined Texas Instruments. Kilby, who was eight years older than Morris Chang, had a good relationship with him. Kilby often came to Morris Chang's office with a cup of coffee to chat. Kilby was the inventor of the integrated circuit, and Morris Chang witnessed the entire process of Kilby creating the first integrated circuit. Since then, Morris Chang has always maintained his attention to new technologies and perspectives in the semiconductor industry.The First Stage: Texas Instruments

Looking back on Morris Chang's career development, Texas Instruments (TI) is definitely a significant chapter.

Texas Instruments is a young, egalitarian, open, and technology-focused company. The founder of TI, Pat Haggerty, greatly appreciated Morris Chang, and they would communicate weekly.

How much did Haggerty appreciate Chang? He made an unprecedented decision: to fund Chang to pursue a Ph.D. while retaining his full salary. In 1964, Chang obtained his Ph.D. in Electrical Engineering from Stanford University in the United States and returned to TI. In 1967, Chang also made his first trip to Taiwan to investigate the establishment of a factory for TI.

As the first Chinese employee at TI, Chang established his own management style and philosophy at the company.

At the age of 41, Chang became the Senior Vice President and General Manager of the Semiconductor Group at TI, becoming the third most important figure in the company, managing a staff of 40,000, which accounted for half of the company's workforce. Chang was not only one of the earliest Chinese to enter the management layer of American semiconductor companies, but also one of the earlier Chinese managers in large American companies.

The company culture at TI was different from the "capricious" nature of today's American tech companies. In those days, TI was also a very competitive company. For example, "it was common for people to bring a canvas bed to work in the morning, preparing to sleep in the office at night," and "within the company, 'failure' was never accepted; 'setbacks' were understood and even sympathized with. However, those who experienced setbacks must rally and try again, and if they encounter setbacks again, they must try again until they succeed" (it should be added that these descriptions come from another Chinese colleague who also worked with Chang at TI—Richard Chang).

At TI, Chang led the rise of the memory business, capturing the market with a strategy of reducing prices by 10% every quarter, turning TI into the largest memory factory in the United States. Chang recognized the development prospects of the microprocessor business and allocated substantial resources from design to manufacturing. Such preparations allowed TI to launch a single-chip microprocessor, the TMS-1000, with comparable performance but a lower price, just a few months after Intel's 8080 was born, and used it in their own pocket calculator products. TI also nearly took the microprocessor's invention patent away from Intel.

Recalling his career at TI, Chang reflected: "From the age of 33 to 52, I started with a public institution with only 3,000 employees and later grew to 40,000. My prime years were given to Texas Instruments, and I learned a great deal."02 The second stage, ITRI   In 1978, Morris Chang was transferred to the Consumer Electronics Group as general manager. However, the development direction of consumer electronics was significantly different from Morris Chang's professional knowledge and ideas. Morris Chang believed that he was well aware of the potential and prospects of semiconductor technology. Although the consumer electronics market was prosperous, in his opinion, it lacked technical depth and long-term competitiveness. Morris Chang expressed his strong desire for the semiconductor business on various occasions inside and outside the company. He believed that only by increasing investment in the semiconductor field could the company occupy a favorable position in the future technology competition. However, his view was not recognized by the then president Xia Bo. As time went on, the differences between Morris Chang and Xia Bo gradually intensified. In 1980, Hagerty, who appreciated Morris Chang, decided to leave Texas Instruments three years later to find a new stage. He joined General Instruments and served as president for a year. A year later, Morris Chang made another major decision to switch to venture capital, but it seemed that his enthusiasm was still in the semiconductor industry. Many things require the right time, right place, and right people to happen. After leaving General Instruments, Morris Chang received an olive branch from the Industrial Technology Research Institute (ITRI) of Taiwan. In 1985, Morris Chang became the president of ITRI. Morris Chang found that one of the important tasks on the handover list of the previous president was to find foundries for memory chips for several chip design companies in Taiwan, such as Huazhi and Mosel. The reason why this task was given the highest priority was that the difficulties and challenges faced by the semiconductor industry in Taiwan at that time were hidden behind it. The plans of companies such as Huazhi and Mosel to build their own factories were constantly postponed due to the impact of cheap memory chips from Japan. Although they had great ambitions, they faced multiple pressures such as funds, technology and market. This situation should have been an opportunity for the development of the local foundry UMC. However, UMC had limited production capacity. If a new production line was added, it would mean an investment of up to NT$20 billion (the output value of semiconductors in Taiwan at that time was only NT$15 billion). Moreover, even if the production capacity was increased, it would likely face the problem of insufficient use. In such a dilemma, Morris Chang saw a blue ocean. At that time, semiconductor companies around the world followed the IDM model, that is, designing chips, producing, testing and packaging by themselves. Although this model can ensure the integrity and stability of the industrial chain, it is an insurmountable threshold for chip designers who want to start their own businesses. They long for a way to allow them to focus on chip design and leave the tedious work of production and testing to professional suppliers. At that time, ITRI began to plan to build the first 6-inch wafer experimental factory in Taiwan, China. Morris Chang believed that if such a huge investment was only used for research, its utilization rate would be very low, which would undoubtedly be a huge waste. He began to think about whether it was possible to commercialize this project and create more value. However, the business community at that time was cautious about this project and worried about the uncertainty of investment returns. Faced with such a dilemma, Morris Chang began to think deeply about how to make this factory profitable. Times make heroes, and heroes also make times. The wafer foundry model was born. Many years later, we know how forward-looking this view is, and at that time Morris Chang was making a shocking bet that no one was optimistic about.03 The third stage, TSMC   Mr. Chang set the overall investment of the new factory at $200 million, benchmarking small and medium-sized wafer factories in the United States. This figure was an astronomical figure at the time, about 10 to 15 times the investment of other new wafer factories in Taiwan, China at the same time. In response, he said, "If a war requires 100,000 troops, but there are only 1,000 people now, the operator will never fight such a war. We can't let 1,000 people go to the battlefield, and then we are defeated and say it's because there are not enough people." Mr. Chang personally wrote to more than 10 semiconductor companies in the United States and Japan, and most of the companies refused. They all believed that a single wafer foundry business would not work. Sanders expressed disdain: "Only those who have wafer factories are called men." Even Moore didn't think wafer foundry was a good idea. Finally, Mr. Chang found Philips as a partner. In the 1960s, Philips established the "Philips Jianyuan Electronics Factory" in Taiwan, China. These assembly plants took over the technology and orders of their parent companies, and their business content also developed from the initial transistor assembly to the later chip packaging. In 1987, under the leadership of Morris Chang, the Taiwan authorities, Philips and Taiwanese private capital invested separately to jointly establish Taiwan Semiconductor Manufacturing Co., Ltd. (TSMC). The ITRI VLSI experimental factory, which was originally planned to be used for experiments, has transformed into a TSMC plant. The 56-year-old Morris Chang has transformed from an American executive in charge of a world-class enterprise to an entrepreneur looking for investment and orders. With no one optimistic, TSMC took five years to raise funds. In the first year of production, TSMC could only use the old 3-inch experimental line of the Electronics Institute of the Industrial Technology Research Institute, which only had two production processes of 3 microns and 2.5 microns. The annual production capacity was less than 7,000 6-inch wafers, and the entire company was operating at a loss. The rise of TSMC is inseparable from Morris Chang's experience working at Texas Instruments. Texas Instruments and Intel are both the most important semiconductor companies in the United States. As heroes appreciate heroes, Morris Chang found Grove of Intel. After Grove succeeded Moore as CEO of Intel, in order to cope with the low-price competition of chips from Japanese companies such as Toshiba and NEC, Grove wanted to transfer the production of low-end chips to Asia and concentrate on producing microprocessors. Morris Chang saw Intel's needs and asked Intel to certify TSMC's foundry production. TSMC has a good yield rate in 3-micron technology. When TSMC's chip manufacturing process was two and a half generations behind Intel, Grove gave part of the orders to TSMC. With Intel's endorsement, TSMC opened up the market. The subsequent story is being witnessed by everyone as TSMC develops. Wafer foundry, which used to be "low-tech", is becoming the most basic and important part of the semiconductor industry. In 1997, there were more than 500 chip design companies in the world, with an average of one added per week, and the wafer foundry model has become popular. This year, AMD founder Sanders admitted to Morris Chang that the saying "only those who own wafer fabs are real men" was wrong, but he still believed that microprocessors and memory must rely on IDM. But Morris Chang said that only memory is suitable for IDM, and microprocessors are also suitable for wafer foundry. As Morris Chang foresaw, 20 years later, Intel's microprocessors would also be manufactured by TSMC.TSMC has become an irreplaceable semiconductor company in the global semiconductor industry due to its exclusive focus on contract manufacturing.

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In Conclusion

 

The contributions and changes that Morris Chang has brought to the global semiconductor industry may take a long time to fully appreciate. But even now, his status is already high enough. The author of "Chip War," Miller, calls Morris Chang the most underestimated entrepreneur of the past century. He mentions that if it were not for Chang's skills in manufacturing semiconductors and his ability to pioneer new business models that made chip manufacturing cost-effective, we would not have as many technologies that we rely on today.

Looking back at Morris Chang's experience, it is about breaking the mold and facing challenges head-on. This is precisely the spirit that the tech industry needs. Looking at the present, who can become the next "Morris Chang"? Perhaps this is a more difficult question to answer than "Who can become the next TSMC?"

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