TSMC's Rising Road: Extraordinary Leaders Face Retirement

【Global Economics Report】 According to "Nihon Keizai Shimbun" reported on April 27th, on March 20th, Chen Liangji, head of Taiwan's science and technology department, suppressed the anxiety in his heart and expressed his desire to retain Taiwan's integrated circuit manufacturing (Taiwan Semiconductor Manufacturing Co., Ltd.). TSMC). In the morning, local Taiwan media reported that TSMC is discussing the construction of the most advanced factory in the United States. Lin Chuan, dean of the "Executive Yuan" in Taiwan, said that TSMC's move may cause problems for the entire industry, and the Taiwan authorities are all dispatched to retain them.

Since the latter half of the 1980s, investment restrictions between the two sides of the strait have been fully relaxed. Taiwanese manufacturers such as Hon Hai Precision Industry have flocked to the mainland where labor costs are lower. In contrast, TSMC became the “last bastion” to stay in Taiwan with its high competitiveness. TSMC has created a semi-conductor production model and promoted the international division of global information technology. It is a symbolic existence of economic globalization.

President Trump of the United States put forward the "U.S. First" doctrine and explicitly requested large domestic IT companies to contribute to the expansion of employment. More than 60% of TSMC's sales come from customers such as Apple. An executive from a semiconductor supplier in Taiwan stated that "If a customer requests a product made in the United States, TSMC can't ignore it," and that production in the United States is a realistic plan.

At the financial report conference held on April 13, Wei Zhejia, chief executive of Taiwan Semiconductor Manufacturing Co., Ltd., said that the location of the new factory is discussing various options, and the United States is one of them.

The investment burden on equipment such as semiconductors and other IT products is heavier, and the efficiency of centralized production is higher in one place. Not to mention the high labor costs in the United States, as well as the need for new parts procurement networks. TSMC's founder and chairman, Zhang Zhongmou, said to himself that customers want to use higher-cost American products?

The picture shows TSMC chairman Zhang Zhongmou

On the other hand, the response to the mainland is also annoying. Huawei's technology has become the third largest smartphone company in the world, and the rising momentum of mainland customers is unshakable.

TSMC plans to start a new factory in Nanjing in the fall of 2017. Although the state-of-the-art technology will not be transferred to this plant, this is the first factory using 300-mm wafers built outside Taiwan. The mainland hopes to cultivate SMIC and other domestic companies. Although production on the mainland is closer to customers, the risk of technology outflows through partners and employees will also increase.

Zhang Zhongmou is known as "a man who can foresee the future," but he is 85 years old. At the June shareholders meeting, the two co-CEOs Liu Deyin and Wei Zhejia are scheduled to serve as directors. By 2018, who can stand in the highest position, the final review will begin.

TSMC has achieved rapid growth under the favorable factors of economic globalization. However, under the current situation of an anti-globalization upsurge, TSMC’s extraordinary leaders are facing retirement.

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