TSMC founder Morris Chang

1. 0:00 – 3:22

   Intro

   1. BGBen Gilbert0:00

      the podcast about great technology companies and the stories and playbooks.

   2. DRDavid Rosenthal0:03

      Oh, no, you said technology! [laughing] Now we definitely have a cold opening.

   3. BGBen Gilbert0:09

      All right. [chuckles] I guess, uh, I really want us to be about technology companies again.

   4. DRDavid Rosenthal0:14

      Well, this is a technology company.

   5. BGBen Gilbert0:15

      It's a sign. All right, here we go.

   6. SPSpeaker0:18

      Who got the truth? Is it you? Is it you? Is it you? Who got the truth now? Is it you? Is it you? Is it you? Sit me down, say it straight. Another story on the way. Who got the truth?

   7. BGBen Gilbert0:35

      Welcome to the Spring 2025 season of Acquired, the podcast about great companies and the stories and playbooks behind them. I'm Ben Gilbert.

   8. DRDavid Rosenthal0:43

      I'm David Rosenthal.

   9. BGBen Gilbert0:45

      And we are your hosts. Today, we have something very special to share with you. After becoming obsessed with semiconductors from our TSMC episode four years ago, David and I wound our way through the rest of the industry, studying fabless companies like NVIDIA and Qualcomm, architecture companies like Arm, and chip design software companies like Synopsys. And as we were thinking, "What's next in the world of chips on Acquired?" We threw the Hail Mary. We asked friend of the show, Jensen Huang, if he would ask Dr. Morris Chang, the ninety-three-year-old founder of TSMC, if he would be open to an interview with us.

   10. DRDavid Rosenthal1:22

       Yeah, it is, uh, kind of insane and super cool that Jensen made time to help us with this. Uh, it's, uh, it's not like he doesn't have a lot of other things going on. [chuckles]

   11. BGBen Gilbert1:30

       Yes. Well, listeners, it happened. So today's episode is a conversation that we recorded in Taipei last week at Dr. Chang's office. We flew to Taiwan for a forty-eight-hour whirlwind, where we spent some time at TSMC's headquarters in Hsinchu Science Park, uh, where many of TSMC's fabs are located.

   12. DRDavid Rosenthal1:48

       Super cool to see.

   13. BGBen Gilbert1:49

       Totally. So conveniently, Dr. Chang just published Volume Two of his autobiography a couple months ago after a twenty-six-year hiatus from Volume One. But inconveniently, it is written in traditional Chinese and not published in the Western world. We managed to get our hands on an unpublished translation of the book to prepare, and what you are about to hear focuses on a few crucial stories from TSMC's history that Dr. Chang shares in his memoir about Apple, NVIDIA, and the birth of the fabless industry.

   14. DRDavid Rosenthal2:19

       Yes, and big thank you to Karina Bao, who we were lucky to connect with after we set this up, and who has been translating Morris's memoirs with funding from Tyler Cowen and Emergent Ventures. Right now, the memoirs are not published in English, and we will let you know if and when that happens.

   15. BGBen Gilbert2:34

       Yep. All right, listeners, you can join our email list at acquired.fm/email. You'll get an email every time a new episode drops, once a month, and this is also where we announce past episode corrections, plus a fun little game where we give hints at, uh, what the next episode will be.

   16. DRDavid Rosenthal2:49

       I, uh, always have fun writing those.

   17. BGBen Gilbert2:51

       You do. That's a clear David job. This episode is presented by our partners at J.P. Morgan Payments.

   18. DRDavid Rosenthal2:57

       Yes, just like how we say every company has a story, every company's story is powered by payments, and J.P. Morgan Payments is a part of so many of their journeys, from seed to IPO and beyond.

   19. BGBen Gilbert3:06

       Yep. So with that, this show is not investment advice. David and I may have investments in the companies that we discuss, and this show is for informational and entertainment purposes only. Please enjoy this conversation with Dr. Morris Chang, with some of David and my reflections following its conclusion.

2. 3:22 – 9:50

   TSMC and Nvidia's relationship

   1. DRDavid Rosenthal3:22

      We thought as a fun way to start things off would actually be to talk about the man who introduced us. Could you tell us a little bit, in your words, about your relationship with Jensen and TSMC's special relationship with NVIDIA?

   2. MCDr. Morris Chang3:37

      Yeah. It started, uh... uh, my relationship with Jensen started, uh, with, uh, a letter that, uh, he sent to me. Uh, I think it was 1997, and the letter was sent through the post office, and I received it, uh, in Hsinchu. Uh, uh, and the letter said that, um, they were a NVIDIA, the company that, uh, Jensen was the CEO of, was a small company, but they had developed, uh, some really, uh, promising, uh, chips. But, uh, they were looking for a foundry, and, uh, they had approached, uh, TSMC's, uh, San Jose office, but, uh, they really, uh, got no answer from the San Jose office. Would I please contact Jensen? Because NVIDIA really wanted to do business with, uh, TSMC. So, uh, I was going to the US in the next week anyway, so the letter, uh, frankly, uh, raised my, uh, curiosity and, uh, also, uh, uh, irritated me a little bit because, uh, you know, I had always, uh, told our salespeople that, uh, that we should never be, um, uh, negligent in, um, talking to future customers, even if, uh, the customer seems to be a very small one.

   3. BGBen Gilbert5:40

      And at this point, NVIDIA was four years old.

   4. MCDr. Morris Chang5:43

      They were facing bankruptcy, I think. Yeah. [chuckles] And they had, uh, maybe fifty or sixty employees. So TSMC, I think at that time, only had a few thousand employees, and we, we, we had exceeded-- I remember we had exceeded, uh, one billion US dollars in revenue-... in '95, and this was '97. So we were, relatively speaking, we were a pretty big company, yeah.

   5. BGBen Gilbert6:12

      Which is very impressive. You were yourself only a 10-year-old company doing over a billion dollars in revenue.

   6. MCDr. Morris Chang6:19

      Yeah. Right. So the following week, I went to, uh, uh, California, and, uh, uh, I called him back without advance notice. I, I called Jensen. I looked up... I think there was telephone number on the stationery that he sent me the letter on. Jensen himself picked up the phone, and there was a lot of background noise, so there were, I mean, his- he, he was arguing something with, uh, uh, his people. Uh, but as soon as I introduced myself, uh, I said, "This is Morris Chang," he immediately shouted at to those people that were making noises. He said, "Quiet! Uh, Morris Chang is calling me." [chuckles] Mm. So, so, uh, I then proceeded to make an appointment with him, uh, to visit him, to visit NVIDIA, uh, uh, the next day or something like that. And, uh, uh, that was our first, uh, visit, our first meeting, and, uh, he, uh, immediately impressed me with, um, his, um, articulateness and, uh, also, uh, impressed me with his, uh, optimism. Uh, I... Well, he was also very frank. He told me that NVIDIA was in financial difficulties, but the chip that, uh, he wanted now to have founded would not only, uh, save the company, it would also, uh, make NVIDIA a major customer of TSMC. I mean, that was, you know, actually quite a bold- [chuckles]

   7. BGBen Gilbert8:27

      Yeah.

   8. MCDr. Morris Chang8:27

      -statement. You know, we were, we were over a billion dollars, uh, and, uh, to be a major, uh, customer of ours, he would have to pr- produce revenue for us of, uh, at least, uh, 50 million, uh, a year, okay?

   9. BGBen Gilbert8:43

      Was that chip the Riva 128?

   10. MCDr. Morris Chang8:46

       Uh, I forgot the number, but it was a very successful chip. Yeah. I, I don't think it was Riva anything. Uh, it was, uh, a, uh, a games chip, of course. It was successful. In fact, his prediction came true. Not only did it solve, uh, N- NVIDIA's financial, uh, problems, uh, it, uh, prevented it from being bankrupt, you know? Not only did it do that, it also started to make them a major customer of TSMC. Within two or three years, they were- they did become one of the biggest five, uh, customers-

   11. BGBen Gilbert9:29

       Wow

   12. MCDr. Morris Chang9:29

       ... of TSMC. Yeah. Very successful chip, yeah.

   13. BGBen Gilbert9:33

       So there was a, a great partnership forged there. TSMC would fab the chips, would manufacture them; NVIDIA would design them. That is true all the way to today at immense scale, but it hasn't always been easy, and it hasn't always been

3. 9:50 – 20:55

   The 40nm node development problem in 2009

   1. BGBen Gilbert9:50

      perfect. And I wanna go to this moment in 2009, on the 40 nanometer node, where development was slower than TSMC had hoped, and it was costing customers like NVIDIA time and money. Can you share the story of how this came to be and how it was resolved?

   2. MCDr. Morris Chang10:08

      Well, I, uh, decided to, um, give the CEO job, uh, to, uh, a potential successor of, of mine, while I would still retain the chairmanship. Uh, in Taiwan, uh, usually the chairman is the top man anyway, even though, uh, uh, a CEO is another person. Mm. So, uh, the problem you just mentioned, uh, happened during the period when someone else was, uh, the CEO. Apparently, uh, it was, uh, a manufacturing problem. It was also a quality problem. And, uh, it was the quality problem that, uh, the CEO, uh, first reported to me. But the CEO insisted that, uh, our people, uh, we, we had a director of quality, uh, insisted that, uh, we were not, TSMC was not at fault. And, uh, so on that basis, on the basis of our, uh, quality, uh, um, manager's arguments, he had not offered NVIDIA anything. Um, now, uh, as far as the manufacturing problem was concerned, it was a yield problem, and everybody was suffering from it. And of course, NVIDIA, at that time, was the perhaps the biggest customer of that node, the 40 nanometer node.

   3. BGBen Gilbert11:57

      And a yield problem in the context of this industry is when you are trying to make a bunch of very high-quality chips, but you just can't get the percentage that actually work up very high?

   4. MCDr. Morris Chang12:11

      ... something like that, yes. But the, um, problem, apparently, you know, just continued, and I, I, I was, even though I was not the CEO, I was getting a little impatient. Uh, and then, of course, some other problems cropped up, other problems than this 40 nanometer NVIDIA problem, other. So I decided to, uh, take the CEO po- position back. Uh, so in 2009, I, I did that, and, uh, there were several, um, priority problems that I had to deal with, uh, when I took the CEO job back. Uh, and one of them was this continuing problem, continuing argument, controversy with NVIDIA. Anyway, uh, I remember, uh, in the first few days, uh, after I took back the, uh, CEO-ship, uh, I called, uh, all the major customers, including Jensen.

   5. BGBen Gilbert13:28

      And Qualcomm was, uh, I believe another one at-

   6. MCDr. Morris Chang13:29

      Oh, yeah. Qualcomm was also, yeah. And Qualcomm, the top customers, uh, didn't change very much, uh, since then, except for maybe one, yeah.

   7. BGBen Gilbert13:42

      Apple.

   8. MCDr. Morris Chang13:42

      Apple, yeah. [chuckles] Apple came later, yeah. Mm-hmm. Uh, and, uh, in my call with Jensen, um, uh, he, uh, he was, uh, still, uh, very friendly with, with me, yeah. Uh, but, uh, he also, uh, reminded me in a very serious tone that we had the quality delivery manufacturing problem on the 40 nanometer. All right, so I said I knew that, and, uh, it w- it's one of my priority problems, but, uh, give me a couple weeks, and I will get back with you. And, um, as I said, uh, uh, I did have, uh, several problems, uh, aside from, from the, uh, 40 nanometer manufacturing problem and the, uh, problem with the argument that we were having with, uh, NVIDIA. Aside from that, uh, uh, we also had, uh, uh, the problem of, uh, uh, the pricing w- uh, was dropping faster than the cost. [chuckles] You know, I mean, you don't want to see that, you know? [chuckles] Your gross margin percentage kept dropping, you know.

   9. BGBen Gilbert15:10

      'Cause you had committed to a schedule of price drops with customers, but you weren't able to drive down your manufacturing costs at the same rate.

   10. MCDr. Morris Chang15:18

       All right, so that was, uh, one problem. Uh, a- another problem was, uh, was the immediate one that triggered me to retake the CEO-ship because, um, the previous CEO had, um, laid off, except he didn't use the term lay off, you know. He used, uh, bad performance review, the worst performance review people, and there were about six or seven hundred of them, you know. And he laid them off, um, uh, on the basis of their, uh, poor performance review. And, well, we never did that, you know? Uh, uh, I mean, we-- the worst we would do was to put them on... place them on probation for six months. And quite often, you know, at the end of the six months, everybody would go back to the, to his or his or her old job. Mm-hmm. And some of them would get, um, transferred because they were in the wrong jobs, you know? So some of them would get transferred, but we almost never y- really fired people, even after the probation period.

   11. BGBen Gilbert16:47

       So under your watch, you never did a layoff, and you never looked at performance reviews, which are meant to help coach people-

   12. MCDr. Morris Chang16:56

       Yeah

   13. BGBen Gilbert16:56

       ... as the means to determine who to lay off.

   14. MCDr. Morris Chang16:58

       That's right, that's right. Yeah, and I, I actually, you know, uh, have, uh, told the, the managers that, you know. But, uh, and, well, in, uh, 200-08, of course, there was, uh, a financial crisis, and, uh, the semiconductor business, in fact, uh, got affected, uh, and, uh, our revenue dropped. Our business dropped pretty seriously.

   15. BGBen Gilbert17:29

       Yeah.

   16. MCDr. Morris Chang17:30

       I was not a CEO, I was the chairman, but I just knew that, uh, anyone, any general manager, any CEO, general manager, uh, without very much experience, uh, what he or she would do in a situation like that. It's a kind of a knee-jerk kind of reaction, you know? "Oh," he says, "Oh, this is my test," you know? "Uh, uh, I got to save, you know, all the money possible, and, and I got to, you know, lay off people," you know?

   17. DRDavid Rosenthal18:10

       But this is the semiconductor industry, and Moore's Law means no matter what happens, you will always need people. [chuckles]

   18. MCDr. Morris Chang18:18

       ... Well, [chuckles] I know, I know, but, uh, well, semiconductor industry. But semiconductor industry people actually think the same way as I described, you know what I mean? Uh, they are lay off- they are, they, they are people, too. Now, I had a lot of experience at Texas Instruments, but at Texas Instruments, I was not a CEO. I was just one of the top managers under the CEO level. And when the company decided to have a layoff, the C- CEO conferred with the top managers, uh, who included me, and their first reaction was exactly the same, and I'm talking about, uh, the '70s, early '70s. Their first reaction on who to lay off was exactly the same as what our TSMC CEO did in 200-- late 2008, 2009, which was, you know, "Go by performance." I mean, well, now, I was the only one at Texas Instruments in the early '70s that said, "No, that would not be, uh, credible, uh, way of doing it. People will not respect us if we lay off by performance ratings."

   19. SPSpeaker19:56

       And why is that?

   20. MCDr. Morris Chang19:57

       Because it's very subjective. Performance reviews, the performance ratings are done by everyone's own supervisor. So 700 worst-performing people in the company, and who gave the 700 people the bad ratings? Seven hundred supervisors, you know. Very subjective. It's not something that, uh, people will respect. If in a year you have to hire people back, you have to hire the laid-off people back, then you shouldn't lay off, because the layoff, the separation expense is usually half a year, about half a year, and it takes at least half a year to train a person, uh-huh. So if you need the people back within a year, you shouldn't have-- you shouldn't

4. 20:55 – 26:16

   The TSMC Laid Off Employee Protest

   1. MCDr. Morris Chang20:55

      lay off.

   2. SPSpeaker20:56

      So what did you do when you came back as CEO, both about the em- employment issue and about the customer issue?

   3. MCDr. Morris Chang21:03

      You mean customer issue being, uh-

   4. SPSpeaker21:05

      Nvidia.

   5. MCDr. Morris Chang21:06

      Nvidia? Yeah.

   6. SPSpeaker21:06

      Yeah.

   7. MCDr. Morris Chang21:07

      Well, to finish the employment issue, the laid-off employees, uh, as I said, there were 700 of them, six or seven hundred of them, uh, came to my home, uh, to demonstrate and protest. Now, uh, the company, TSMC, was pre-warned that hundreds of people would appear, uh, in front of my home. So they notified, uh, the police department, uh, in my district. So the police department sent fifty, sixty police officers to, uh, try to maintain the order. Now, uh, more than a hundred protesters appeared, and, uh, the neighbors, my neighbors, you know, they had trouble getting in and out. Uh, that was only the first time. A month or so later, uh, the problem was, uh, still not, uh, solved. I was still not the CEO. So they appeared again. Some pro- protesters, about twenty-five of them, decided to spend the night, sleep over in the little park that's about a block away from my home. My wife literally didn't, didn't sleep that night, you know?

   8. SPSpeaker22:35

      I bet.

   9. MCDr. Morris Chang22:35

      She would wake up and went over to the window to take a look to see what was going on. But, uh, then very early the next morning, um, uh, my wife, six-- about six o'clock the next morning, my wife, you know, got up and, uh, uh, she took one of the, uh, bodyguards and, uh, went to a, uh, neighborhood market and got, uh, the, uh, Chinese-style breakfast. Uh, Chinese bread, you know, fried bread, you know. I don't know whether you ever had it or not. Probably not.

   10. SPSpeaker23:17

       Mm.

   11. MCDr. Morris Chang23:17

       Yeah, yeah. Been bun, buns, you know? Uh, yeah, soybean milk, yeah, and take enough of that breakfast, enough for twenty-five, thirty people, uh, and, uh, back to, to the park, to the park, and, uh, distribute them to the protesters. And, uh, they were thankful, you know?

   12. SPSpeaker23:47

       Mm.

   13. MCDr. Morris Chang23:48

       Yeah, and they actually decided to not go to the president's, uh, uh, palace, president's mansion, and they told my wife that they would not do that that day. And all this, uh, kind of precipitated my, uh, uh, taking back the CEO job. Well, uh, there's another thing: you know, uh, I told the, the previous CEO-... uh, before he, he laid off the six, seven hundred people. I said, "If you..." Because I knew, as I said, I knew that it would be his knee-jerk reaction, uh, to confront a, a crisis, uh, such as the crisis, uh, we had. It would be his knee-jerk reaction to lay off. So I said to him, "If you want to lay off, bring it to the board. I'll call a special board meeting." And I, I knew what I would ask the board to do, you know, which was not to grant [chuckles] the permission. But he decided to circumvent that, the CEO, you know, because what he did, he did not consider it to be layoff, you know?

   14. BGBen Gilbert25:23

       Mm-hmm.

   15. MCDr. Morris Chang25:23

       It was just punishment for the poor performers.

   16. BGBen Gilbert25:28

       Hmm.

   17. MCDr. Morris Chang25:29

       Well, as far as the CEO is concerned, I did keep him. Uh, I had more than one nice talks with him. I intended to, and I told him that he was still a potential, uh, successor to me. So I kept him at the same job grade; we have job grades, and the same salary and bonus, but he was now the president of new businesses.

   18. BGBen Gilbert26:15

       Hmm.

5. 26:16 – 29:08

   TSMC's Incredible Core Business vs. Expansions

   1. MCDr. Morris Chang26:16

      And back then, you know, we s- we had, uh, high hopes for the so-called new businesses, which was solar cells and LED.

   2. BGBen Gilbert26:28

      It's the great irony that your core business of manufacturing integrated circuits ended up becoming the, the largest market opportunity of all. You didn't need any new businesses.

   3. MCDr. Morris Chang26:39

      Ended up the biggest marketing, uh, biggest market opportunity. Why is it so i- ironic, huh?

   4. BGBen Gilbert26:46

      Well, it's always interesting to me when companies think, "Oh, we should look at other new businesses," when in reality, semiconductors became a $600 billion a year market, and, you know, solar is a small fraction of that, uh-

   5. MCDr. Morris Chang27:02

      Yeah

   6. BGBen Gilbert27:02

      ... LEDs are a small fraction of that. You were already in the best market.

   7. MCDr. Morris Chang27:06

      I know, a- and I, I knew that. I, I knew- I did- I did not really mean... I did not really think that solar or LED would really replace our integrated circuits business, but I knew the integrated circuits business was gonna be great, you know? But, uh, at that time, which was, uh, 2009, at that time, we also thought that, uh, solar and LED was, uh, gonna be very promising, yeah. But it didn't work out, of course. The solar business could have been pretty good. However, uh, China ruined it. They subsidized the hell out of it, and, uh, they now, uh, control that business, solar cells. The prices were extremely low.

   8. BGBen Gilbert28:04

      Hmm.

   9. MCDr. Morris Chang28:05

      Still low, still low. So it, it didn't take off. TSMC solar business didn't take off. Um, and LED did not take off either because LED, uh, it, it's not- the, the market is not as big as, uh, solar. However, it's controlled. The patents are controlled by just a few companies, and they, they wouldn't let the, the, the few companies that control the patents of LED were not let up at all. So a few years later, the, uh, CEO, uh, that was put on the new businesses, uh, decided that, uh, uh, his new assignment wasn't working out either, so he quit.

   10. BGBen Gilbert28:56

       And he's now running MediaTek. Is that correct?

   11. MCDr. Morris Chang28:59

       Uh, he is now the, uh, uh, a vice chairman, uh, and, uh, the CEO of, uh, MediaTek, yeah.

   12. BGBen Gilbert29:06

       Hmm.

6. 29:08 – 35:59

   Resolving the 2009 NVIDIA dispute

   1. BGBen Gilbert29:08

      So coming back to this moment in 2009, you rehi- you, you offered to rehire anyone who was laid off that was interested in coming back, and you're setting the new sort of vision and strategy as CEO or, in many ways, returning to the old one. How did you resolve the NVIDIA dispute?

   2. MCDr. Morris Chang29:27

      Yeah. In the first four or five weeks after I retook the CEO job, I probably spent almost half of the time on how to resolve the problem with NVIDIA. As far as yields were concerned, well, we were doing our best because, you know, we had to do it anyway, you know? I mean, NVIDIA was just one of the customers.

   3. DRDavid Rosenthal29:59

      Yeah, not just NVIDIA, but-

   4. MCDr. Morris Chang30:00

      Yeah

   5. DRDavid Rosenthal30:01

      ... Qualcomm and-

   6. MCDr. Morris Chang30:02

      Yeah, right

   7. DRDavid Rosenthal30:02

      ... Intel and-

   8. MCDr. Morris Chang30:03

      Yeah. And it was a very important node. 40 nanometer was a very important node, uh, in the progression of, uh, Moore's Law, you know. Uh, uh, only after 40 can we... If we do the 40 well, can we, can we do the, uh, uh, 28?

   9. DRDavid Rosenthal30:23

      Mm-hmm.

   10. MCDr. Morris Chang30:24

       28 was the next one.... and I called, uh, the, the, uh, salespeople that were in direct-- that had been in direct contact with Nvidia. And of course, I called, uh, everybody that was somehow involved- somewhat involved in the problem. So it was a matter of money, you know. As far as the progress on, um, the manufacturing lines, and we were already doing what we could. I mean, it was, as I just, just said, it wasn't just for Nvidia. It's for, for TSMC, you know? But Nvidia, because, um, they, they had borne the brunt of the, the, the problem, the damage. So it's a matter of money. Well, I worked out a number. I familiarized myself with all aspects of the problem, and then I worked out a number. And I, I also knew that Nvidia's customers were, were after them, you know. They had demands on Nvidia, too. So and I, I used all the intelligence I could get, and I think it was-- it turned out that it was, it was good. So about a month after I retook the CEO job, I sent an email to Jensen. I said, "I'm coming to Silicon Valley next week on this date. I will be at your home at six o'clock. Let's have just salad and pizza," [laughing]

   11. DRDavid Rosenthal32:27

       [laughing]

   12. MCDr. Morris Chang32:27

       ... which was something that we, we had had, uh, many times in the past. Now, uh, immediately, uh, he sent back, uh, an email. He said, "When do we discuss business, then?" [laughing]

   13. DRDavid Rosenthal32:45

       [laughing] Did he ask who was gonna pay for the pizza and salad?

   14. MCDr. Morris Chang32:50

       [laughing] He didn't ask that. So I, I anticipated that, so I said, "Six thirty, we'll start having pizza and salad. Eight o'clock sharp, we'll go to your office at your home, and we'll d- discuss business." So on the appointed date, uh, day, I showed up, and we followed the schedule exactly. [chuckles] You know, six thirty, I showed up. We had a very pleasant pizza and salad. Uh, the thing is that, uh, you know, uh, his wife, uh, Lori, would make the piz-- uh, the salad, and, and the pizza was delivered from outside. Or maybe, maybe they made their own pizza, too. I forgot.

   15. BGBen Gilbert33:44

       Would not surprise me.

   16. MCDr. Morris Chang33:45

       Yeah. Anyway, I had, I had, I had had it many times, uh, at his home. All right. So at eight o'clock sharp, uh, it was I who looked at the watch and said, "Jensen, why don't we go to your study?" You know. And I gave him the offer.

   17. BGBen Gilbert34:05

       It was on the order of a hundred million dollars, right?

   18. MCDr. Morris Chang34:11

       Yes, more than a hundred million, yeah. And I also said, "Our offer is effective forty-eight hours. If you do not-- there, there is not gonna be... We are not going to argue. We are not gonna bargain. If you don't accept the offer within forty-eight hours, we'll have to go to an arbitrator," which was what he had suggested to the previous CEO anyway, that we would go to the arbitrator, you know?

   19. BGBen Gilbert34:45

       Mm.

   20. DRDavid Rosenthal34:45

       Mm.

   21. MCDr. Morris Chang34:46

       But the previous CEO did not even give him a number, you know. Uh, the previous CEO [chuckles] gave him zero. [laughing]

   22. DRDavid Rosenthal34:53

       Well, you probably don't want to go to arbitration-

   23. MCDr. Morris Chang34:55

       No

   24. DRDavid Rosenthal34:55

       ... with your best customer.

   25. MCDr. Morris Chang34:56

       No, no, no, I didn't want to.

   26. DRDavid Rosenthal34:57

       Yeah.

   27. MCDr. Morris Chang34:58

       But, uh, you know, I had to say that, uh, uh, and, uh, because, and because, I mean, that number, the number we offered him, uh, was arrived at after, uh, as I said, weeks of work, uh, on my part, and I thought it was fair to both sides, you know.

   28. BGBen Gilbert35:19

       And did Jensen accept the offer?

   29. MCDr. Morris Chang35:21

       Yeah. He did, uh, in two da- within two days.

   30. BGBen Gilbert35:28

       I think it's an amazing example of a situation where you had strong partnership together for many years. You built this close personal relationship, such that you could have an hour-and-a-half family dinner and not talk business. You were able to then come up with a large sum of money, over a hundred million dollars, settle, and then since then, there have been many, many, many billions of dollars of business done together. It's a great success of working out your differences.
7. 35:59 – 43:04

   TSMC's commitment to 28nm

   1. MCDr. Morris Chang35:59

      I liked it, too. Uh, that's why I included the, the story in my autobiography, you know? [chuckles]

   2. BGBen Gilbert36:08

      Now is a great time to thank our presenting partner, J.P. Morgan Payments. You don't often hear stories of how important payments are to supply chain success, but the last few years have really shown how critical it is to the global economy. In our remastered TSMC episode, you heard how J.P. Morgan's Trade and Working Capital group helps companies manage risk and access liquidity for their global trade, and we just got a new stat from them.

   3. BGBen Gilbert36:31

      ... 18 of the top 20 largest corporates are payments clients, so they have an unparalleled view into global trade flows.

   4. DRDavid Rosenthal36:39

      So zooming in on supply chain, think about a typical manufacturer. They're trying to balance paying their suppliers quickly to keep good relationships, while also optimizing their own working capital. Meanwhile, their suppliers, especially the smaller ones, often struggle with cash flow while they wait thirty, sixty to ninety days to get paid. So this is where J.P. Morgan Payments technology and global expertise comes in. They've taken traditional supply chain financing and made it much more dynamic and technology-driven. Their solution enables businesses to provide suppliers with early payments at favorable rates based on the buyer's credit rating. Buyers can easily switch between supply chain finance and dynamic discounting as business needs change, too. It's also real-time. You get complete visibility into supply and chain finances data, so you can track invoices and optimize payment timing all in one place.

   5. BGBen Gilbert37:29

      To simplify it, here's an example: Imagine you're a lumber mill working with dozens of furniture manufacturers. The terms you've negotiated with a big furniture manufacturer mean you have to wait sixty days for payment on multi-million dollar monthly invoices. Of course, this limits your ability to maintain optimal timber inventory and process orders quickly. With J.P. Morgan's Supply Chain Finance Solutions, you could receive payment in just days, while the furniture manufacturer gets to keep their original payment terms. So now you can stock up on premium hardwoods and reduce order processing times, even through seasonal spikes in demand. This is why it's used by over two million suppliers around the world. It's really win-win. It makes the whole supply chain become more resilient. J.P. Morgan Payments is at the financial and operational aspects, really the forefront of both of supply chains, with trusted, innovative infrastructure that you can rely on. So whether you're looking to strengthen your working capital or just make sure your supply chain is more efficient, check out jpmorgan.com/acquired and see how they can help your business grow.

   6. DRDavid Rosenthal38:30

      After the 40 nanometer node, after you fixed these problems, as you said, the next node was 28 nanometers. And as we understand your story and the company's story, 28 nanometers is when TSMC really started to take the leadership role at the leading edge in the industry. How did you decide to go commit so hard to 28 nanometers after having had all the problems at 40 nanometers?

   7. MCDr. Morris Chang39:00

      Well, I had a lot of trouble at TI. My peak job at TI was, uh, the head of, uh, worldwide semiconductors. And TI, of course, had many businesses: defense business, materials and controls, so, uh... and also their origin, which was geophysical, uh, and so on. But TI's semiconductor business was their biggest, and I was the head of that worldwide semiconductor business. I wanted, uh-- At that time, when I was the head of, uh, uh, worldwide semiconductors, our R&D budget was four point eight percent of revenue, of our revenue, and I thought it was not enough. I just wanted to raise it to five point five percent of the revenue, but my request was denied all the-- every time I raised it. Now, coming back to TSMC, I wanted to set a, a number, a number, a percentage of revenue number, so we don't have to argue every year how much R&D we should spend. So at that, at about that time, about the time, 2008, 2009, uh, when I came back, I just almost like... At that time, we were running, I think, six or seven percent, uh, a year, but it was negotiated every year between the R&D director and the CEO, you know? So I wanted to stop that. I wanted to make him at ease, you know what I mean? He doesn't, doesn't have to argue, doesn't have to, to request, uh, every year. So I almost just literally picked a number out of my head. We've been running six or seven percent already. So I said, "Well, let's pick eight percent, okay? Yeah. Eight percent, regardless of, uh, whether there's a recession or not, and that's just eight percent of revenue." And that was, uh, the best news if you ask, uh, our R&D director, who was, uh, back then, I think, uh, in, in the second place of R&D. Uh, uh, he would tell you, I mean, he has told me many times in the last ten, fifteen years, that this was really the best thing that we did for R&D, you know? So they were not concerned. The R&D director was not concerned at all about having his planned budget cut back, or his planned, uh, uh, resource, uh, people, uh, allocation cut back, you know, none of that. So he has been working eight percent, and, uh, so it has been like that, you know? And, um-... That is what, you know, propelled our, uh, R&D effort.

   8. BGBen Gilbert42:47

      This period in 2010, it wasn't just ramping the R&D budget, it was also the capital expenditures. You, you had had almost a decade of two to two and a half billion spent, you know, building the fabs every year, and in 2010, you, you ramped that to almost six billion.

8. 43:04 – 52:05

   Going all-in on the 28nm node

   1. BGBen Gilbert43:04

      What was it about the competitive environment, the 28 nanometer node, that caused you to push all your chips in on that?

   2. MCDr. Morris Chang43:12

      Yeah, I think it was the kind of a mutual feeding thing, you know. As I, as I, uh, settled the, um, R&D budget at 8% of revenue, I mean, to the, uh, uh, satisfaction of, uh, the R&D people, they began to have big ideas, you know. They began to, to be telling me, "Our 28 is gonna be..." The term they, they used, and they have used it several times, uh, 20- but the first term-- the first time I heard them using it is the 28. "28 is going to be the sweet spot. It's just like tennis racket, you know?" [chuckles]

   3. BGBen Gilbert44:12

      Mm.

   4. MCDr. Morris Chang44:12

      "You hit, you hit the ball with the sweet spot of your racket."

   5. BGBen Gilbert44:18

      Yeah.

   6. MCDr. Morris Chang44:18

      Yeah. Do you play tennis?

   7. BGBen Gilbert44:20

      I have played tennis. Not well.

   8. MCDr. Morris Chang44:23

      Good. [chuckles] I was like you, you know. [chuckles]

   9. BGBen Gilbert44:27

      [chuckles]

   10. MCDr. Morris Chang44:27

       Like, 40 years ago, I was like you. I don't play anymore. But, uh, you know, I, I- so I know the feeling of hitting a ball, uh, in the sweet spot, you know? 28 nanometer is in the sweet spot. And so I said, I q- I said, "Why?" You know, and he, you know, gave me a lot of technical reasons, uh, 28 nanometer. So I decided I would, I would believe him, and, uh, he, he now had the resources, uh, to push it, to do it, uh, uh, as fast as he could. Uh, so, you know, uh, now, the capital spending, uh... Now, of course, back then, we had already built up a pretty good, um, infrastructure, uh, organizational infrastructure. We had, uh, a pretty good, uh, market forecasting group, and I had set up the business development department, which was like a marketing department, uh. You know, we always had a, a pretty strong sales effort, uh, but, uh, to me, sales effort is just, uh, uh, the tactical side, uh, uh, with the customers. Marketing is the strategic side to the outside world.

   11. BGBen Gilbert46:00

       Hmm.

   12. MCDr. Morris Chang46:00

       Yeah. Now, from all these inputs, the marketing, the business development department, which, as I said, was our strategic marketing group, um, and from the technical, from the R&D side, that, uh, 28 was gonna be sweet spot. I decided that, and I, I quoted, uh, Shakespeare in my autobiography, that, uh, "There's a tide in the affairs of man, which taken at its flood, leads on to fortune," you know. I decided that this was 28 nanometer was gonna be our, our tide. [chuckles]

   13. BGBen Gilbert46:51

       [chuckles] Yeah.

   14. MCDr. Morris Chang46:52

       Our, our next tide, anyway. There will be others. Seven nanometer was another, was the, the next sweet spot, the R&D people told me. Uh, and again, you know, uh, reminded myself of Shakespeare, you know?

   15. BGBen Gilbert47:11

       Taking it, the flood. [chuckles]

   16. MCDr. Morris Chang47:12

       [chuckles] Taking it as flood, yeah. Uh, so, I mean, that took- that, however, you know... I mean, setting the R&D at 8% of, uh, uh, did not invite, uh, any opposition from the board. But suddenly, increasing, uh, capital spending threefold, I think, did invite a lot of questions from the board. Our practice in the board meetings, uh, because back then, uh, well, even now, uh, uh, most of the directors are from, uh, overseas, uh, uh, US and, uh, England, and we would, uh, uh, email the agenda to them two weeks before a board meeting. Then the night before the board meeting, I would invite the independent directors to dinner, and, uh, that dinner, the conversation at that dinner was not on record. Uh, so, so the independent directors, actually more, uh, three-quarters of our directors are in- were independent, are independent directors.... Anyway, uh, so in the, in the, uh, night before, in the evening before the meeting, they had, uh, the opportunity to ask me questions if they had any. But on this matter of, uh, vastly increased capital spending, they didn't even wait until, uh, until they get to that- they got to that, uh, dinner.

   17. BGBen Gilbert49:14

       'Cause this was effectively betting a huge amount of the company's cash on this node, this process, this generation.

   18. MCDr. Morris Chang49:22

       Yeah, and, uh, so they, uh, they called, uh, the, uh, chief, uh, uh, the general counsel. The general counsel is also the secretary to the board. Yeah. Uh, they called, uh, him. At that time, he was, uh, an American. The general counsel was an American, and said, "We want to talk, uh, to the chairman. We don't like this, uh, idea at all." [chuckles] Anyway, so I talked to them on the phone, uh, about a week or so before the board meeting, and, uh, all right, uh, you know, this is something that w-w- of course, I told them what I have now just told you. Uh, inputs from our market forecast, inputs from our R&D, inputs from our business development, the new business development department, and of course, you know, they didn't believe it. You really can't convince anybody, uh, on something like this. So at the end, I had to say, "Well, look, uh, I heard you, but I am still the guy that's responsible for the operation of the company."

   19. BGBen Gilbert50:48

       Yeah.

   20. MCDr. Morris Chang50:48

       "So you need to let me go ahead with this one." So they were satisfied with that. [chuckles]

   21. BGBen Gilbert50:57

       And what was the result? What, what happened around this era of 28 nanometer that created so much demand?

   22. MCDr. Morris Chang51:03

       Oh, uh, I, I think you know the result. [chuckles]

   23. BGBen Gilbert51:07

       [chuckles]

   24. MCDr. Morris Chang51:07

       It was good. [chuckles]

   25. BGBen Gilbert51:08

       [chuckles]

   26. DRDavid Rosenthal51:09

       And that was the smartphone era-

   27. MCDr. Morris Chang51:11

       Yeah

   28. DRDavid Rosenthal51:12

       ... coincided with 28 nanometer.

   29. MCDr. Morris Chang51:13

       Yeah, yeah. Yeah.

   30. DRDavid Rosenthal51:15

       When the business development group was looking at this, and you were looking at this, did you see how big smartphones were gonna become, and the immense opportunity that that would unlock for you?
9. 52:05 – 1:23:09

   Meeting Apple and Jeff Williams

   1. DRDavid Rosenthal52:05

      So that takes us to Apple.

   2. BGBen Gilbert52:09

      Could you share with us how you end up meeting Apple?

   3. MCDr. Morris Chang52:14

      Yeah, but before we, before we do that, let me offer, uh, how we, uh, made, uh, CC, actually, the business development, uh, director.

   4. BGBen Gilbert52:30

      Ah, the current CEO.

   5. MCDr. Morris Chang52:32

      The current CEO. The current chairman and CEO.

   6. BGBen Gilbert52:35

      Mm-hmm.

   7. DRDavid Rosenthal52:36

      Yeah.

   8. MCDr. Morris Chang52:36

      Yeah. When, uh, Rick was, uh, the CEO between 2005 and 2009, uh, he had split operations into two groups: advanced technology and, uh, mainstream technology, and, uh, CC was, uh, the head of the mainstream. Uh, actually, really, I should say, the lesser one, okay? Yeah.

   9. BGBen Gilbert53:16

      Mm.

   10. MCDr. Morris Chang53:17

       And Mark Lu was the head of the advanced tech, and each group had a small business development section, maybe 30 or 40 people each. All right, so I came back to be the CEO, and I, I never thought the split up of two groups was a good idea anyway. In fact, uh, back in 1996, uh, the president, he was not a CEO, but he was the president. Uh, we didn't have the CEO title back in, uh, 1996, but the, the president, who was a American-

   11. BGBen Gilbert54:15

       Don Brooks?

   12. MCDr. Morris Chang54:16

       Yeah, right. He wanted to split. He got a little... I think he got a little tired of running this company. Uh, he was gonna be here for only a year at first, but, uh, he winded up- he ended up staying, spending six, seven years in Taiwan. Towards the end, he was getting a little tired of running this thing, uh, and he thought that he would do it like, uh, TI, for instance.... TI had a germanium transistor department, silicon transistor department, an integrated circuit, bipolar integrated circuit, MOS integrated circuit, you know?

   13. BGBen Gilbert55:03

       It's the divisional org structure instead of a functional org structure.

   14. MCDr. Morris Chang55:07

       Right, right, yeah. But I really did not think that the foundry business, TSMC business, uh, was suitable for the divisional, uh, structure. Because, you know, we have almost the same group of customers. You know, how, how do you- how do you divide up that group, uh, divide up the company if you want, want the so-called, uh, uh, divisional structure, yeah? Well, you know, you know, Don Brooks was gonna divide it by fab, you know. My goodness, you know. The customers move from one fab to another, the same customers, you know?

   15. BGBen Gilbert55:53

       Not to mention TSMC has 21, 22 fabs now-

   16. MCDr. Morris Chang55:57

       Yeah

   17. BGBen Gilbert55:57

       ... and so what, are you gonna have 22 divisions?

   18. MCDr. Morris Chang55:59

       Well, back then he only, of course, he only had three or four fabs, you know, back then, yeah. But, uh, but he, he was not convinced. He kept arguing, and I said, "Look, why don't we get, um, a consultant, uh?"

   19. BGBen Gilbert56:14

       McKinsey.

   20. MCDr. Morris Chang56:15

       McKinsey. "Why don't we get McKinsey?" "Okay." So we got McKinsey in, uh, and McKinsey, after a month or two, two months, actually, uh, and, uh, a couple [chuckles] million dollars, I guess- [laughing]

   21. BGBen Gilbert56:28

       [laughing]

   22. MCDr. Morris Chang56:29

       ... well, told us the same answer, you know, that functional is best, is best. And then Don Brooks said, "Well, tell me one company, one big company, that's functionalized." And, uh, McKinsey immediately answered, "Bo- Boeing," which is, which is a good answer, you know?

   23. BGBen Gilbert56:57

       Yeah.

   24. MCDr. Morris Chang56:58

       Yeah, of course.

   25. BGBen Gilbert56:58

       Except it's not true. Boeing has commercial and, and government.

   26. MCDr. Morris Chang57:04

       Uh, well, they, they probably have, have commercial and government, but they don't have a 707, 747-

   27. BGBen Gilbert57:11

       Mm, yeah

   28. MCDr. Morris Chang57:12

       ... 757. You know, they don't have- they don't divide it. Uh, and i- if we divide up, uh, by fab, it would be like dividing up 707 from 757, 737, you know, yeah. Well, anyway, Don Brooks' attempt was in 1996, and, well, by, uh, 2005, Rick Tsai, you know, decided to tread the same ground. Well, and he did. Uh, this time, you know, I didn't, I didn't stop him, uh. My idea, my principle, when I was, uh, the chairman and not the CEO, uh, was, well, sometimes you have to let- you have to let the CEO make his own mistakes and learn from them, you know?

   29. BGBen Gilbert58:10

       Mm.

   30. MCDr. Morris Chang58:12

       Uh, uh, of course, uh, not if the whole company is going down the drain. [chuckles]
10. 1:23:09 – 1:34:57

    Goldman Sachs

    1. MCDr. Morris Chang1:23:09

       Okay, yeah. [chuckles]

    2. DRDavid Rosenthal1:23:10

       So you had planted this seed with Goldman Sachs-

    3. MCDr. Morris Chang1:23:13

       Yeah

    4. DRDavid Rosenthal1:23:13

       ... for when you knew you would need them.

    5. MCDr. Morris Chang1:23:14

       Right, right. This, this was very early in our history. Now, uh, we, we need, uh, funds. I mean, this Apple thing came after we had already decided to increase, uh, capital spending, uh, and, and now, you know, Apple, uh, requires even more capital spending, and we have to figure out where the cash is gonna come from. So, you know, there were several possibilities, of course. We're paying a, a dividend, not, not a, a big dividend back then, but, uh, uh, a, a modest dividend, and we could cut the, that dividend. And, uh, then we could- we, uh, al- also could, could sell stock, you know, new stock offering, either in, in Taiwan or in the US. Uh, we have the ADRs, you know. Uh, or we can borrow money, uh, uh, corporate bonds, you know?

    6. BGBen Gilbert1:24:36

       Or you could only fill part of Apple's order.

    7. MCDr. Morris Chang1:24:39

       Right. And, uh, we- in fact, we, we did, we did that. I, you know... uh, well, we first, we first did our financial planning, and, um, we decided not to cut dividend. We decided not to sell new stock. We decided to just borrow. And, uh, I mean, this was also-... with consultation with Goldman Sachs, you know, we chose borrowing. How much? I looked at the numbers, and just as you said, I decided to take half of what Apple said, what Apple said they needed.

    8. BGBen Gilbert1:25:32

       Is this common, by the way? C- it seems like it would be in a customer's interest to come to you and say, "I need to buy zillions of chips from you. I need all your wafers," 'cause they have no skin in the game of-

    9. MCDr. Morris Chang1:25:44

       I know, I know

    10. BGBen Gilbert1:25:44

        ... you spending all the money.

    11. MCDr. Morris Chang1:25:46

        I know. I know. Well, back, uh, in the '90s, in the first, uh, let's say, 15 year- first 10, 12, 15 years of our existence, we were short of capacity almost all the time. Uh, and what you just said happened all the time, you know? And so we figure out, uh, that we will require a deposit from the customer, and, uh, we'll even confiscate the deposit if the time comes him- comes for him to, to take the wafers and he doesn't, you know?

    12. BGBen Gilbert1:26:30

        Hmm.

    13. MCDr. Morris Chang1:26:31

        And, uh, everybody delights in the word confiscate. [laughing]

    14. BGBen Gilbert1:26:37

        [laughing]

    15. MCDr. Morris Chang1:26:38

        So, uh, it was first used by me, okay? I told the salespeople in San Jose, I said, "Tell the customer that they need- we need a deposit from them," because, you know, just as you said, you know, it's our money, and it's only their words, you know? Uh, uh, they may not want the, uh, wafers when the time comes. And, uh, I told the salesman, "Tell the customer that we'll confiscate the deposit," and, ah, the salesman never heard anything like that before, you know? [laughing] And, uh, so they were, they were, they were, you know, in an uproar, uh- [laughing]

    16. BGBen Gilbert1:27:22

        [laughing]

    17. MCDr. Morris Chang1:27:23

        ... uh, in, in happiness, you know what I mean? Now, you know, they, they could, they could actually stand up and tell the customer, uh, that, uh, uh, we might even counter- confiscate your money. But of course, uh, it really... We never confiscated any money. Now, it, it, it did happen quite often, uh, particularly in the 2000s. Uh, 2000, we had, uh, I think it was called the internet, uh-

    18. BGBen Gilbert1:27:56

        Yeah

    19. MCDr. Morris Chang1:27:57

        ... recession, I think. Yeah. Because i- in, in internet was, uh, you know, people were, were starting companies, uh, uh, called Pets.com-

    20. BGBen Gilbert1:28:10

        [laughing]

    21. MCDr. Morris Chang1:28:10

        ... or something, you know? [laughing] Yeah. It, it was... [laughing] Anyway, so we had the recession, you know.

    22. BGBen Gilbert1:28:18

        Which trickled all the way back to semiconductors. TSMC's revenues, uh, it was four years after the dot-com bubble before they were back at the-

    23. MCDr. Morris Chang1:28:27

        Dot-com. Yeah, dot-com. Dot-com

    24. BGBen Gilbert1:28:28

        ... at, at those rates.

    25. MCDr. Morris Chang1:28:30

        Yeah. Yeah. Mm-hmm. Yeah. Uh, was it, was it five? It was almost four years, yeah. Uh, two, I remember it recovered only in 2003, yeah. It started in 2000, no? Started in 2001, the first quarter of 2001, and it recovered in the third quarter of 2003. So it was three years.

    26. BGBen Gilbert1:28:53

        Wow.

    27. MCDr. Morris Chang1:28:53

        Hmm, yeah.

    28. BGBen Gilbert1:28:54

        Wow.

    29. MCDr. Morris Chang1:28:55

        Three years.

    30. BGBen Gilbert1:28:55

        Hmm.
11. 1:34:57 – 1:36:01

    ServiceNow

    1. BGBen Gilbert1:34:57

       Over the next several years, they were heads down, integrating AI into the entire ServiceNow platform, which meant that when this new era of large language models arrived, ServiceNow was deeply prepared.

    2. DRDavid Rosenthal1:35:08

       Yep, so how does that show up in their product today? ServiceNow has AI agents that you can deploy across every corner of your business. They all work with each other, architected on one enterprise-grade platform and built on the same data and workflows. So whether it's your IT or HR or finance, CRM, supply chain, et cetera, you can deploy AI agents in every part of your company.

    3. BGBen Gilbert1:35:32

       David, it's funny, you hear all these Fortune five hundred CEOs talking on earnings calls about the AI agents that they're deploying to increase productivity. Behind the scenes, a huge number of those are actually doing this with ServiceNow.

    4. DRDavid Rosenthal1:35:44

       Yeah, it's incredible. So if you want to bypass the hornet's nest of complexity caused by disparate software vendors and put AI to work on one platform and in every corner of your business, go to servicenow.com/acquired, and when you get in touch, just tell them that Ben and David sent you.

12. 1:36:01 – 1:46:45

    Intel's and Apple

    1. BGBen Gilbert1:36:01

       So this really was, especially after the tw- the investment in twenty-eight nanometers that depleted your reserves, this is a bet the company move. You're, you're-

    2. MCDr. Morris Chang1:36:08

       Oh, yeah

    3. BGBen Gilbert1:36:08

       ... you're taking on a bunch of debt to go build-

    4. MCDr. Morris Chang1:36:11

       Yeah

    5. BGBen Gilbert1:36:11

       - the fabs to make this happen.

    6. MCDr. Morris Chang1:36:13

       But yeah, I know, bet the company, but I, I didn't, I didn't think I would lose, you know? [laughing]

    7. DRDavid Rosenthal1:36:19

       [laughing]

    8. BGBen Gilbert1:36:19

       You sound like Jensen.

    9. DRDavid Rosenthal1:36:20

       We sound-- That's exactly what Jensen said.

    10. MCDr. Morris Chang1:36:23

        [laughing] And so, um, all right, but I think that, uh, the financial discussion with Apple had already happened when Apple, when Jeff Williams called me in February of two oh... We're talking about two oh eleven now.

    11. DRDavid Rosenthal1:36:50

        Oh.

    12. MCDr. Morris Chang1:36:50

        And he said, uh, it was a very short conversation. Well, um, he said, "Uh, we need to, uh, pause our discussions for two months because-... the highest level of Intel has approached Tim Cook and has asked Tim Cook to consider Intel.

    13. BGBen Gilbert1:37:39

        And at this time, Intel was the major supplier for all Macs. Apple's Mac line-

    14. MCDr. Morris Chang1:37:44

        Yeah, all

    15. BGBen Gilbert1:37:44

        ... was all Intel.

    16. MCDr. Morris Chang1:37:45

        Yeah, yeah. Yeah, that wasn't an issue, of course. I mean, uh, in February, uh, of 2011, Jeff Williams was talking about the iPhone, yeah.

    17. DRDavid Rosenthal1:37:59

        But they had a, a close existing relationship.

    18. MCDr. Morris Chang1:38:02

        Yeah. Uh, yeah, I don't know what relationship they really have, you know? Well, anyway, it must be close, you know me. So that was all he said, and, uh, I wasn't all that worried. Because in 2011, um, Intel was no longer a name that you would, when you hear it, you would stand up and bow, [laughing] you know?

    19. DRDavid Rosenthal1:38:40

        [laughing]

    20. BGBen Gilbert1:38:41

        Interesting.

    21. MCDr. Morris Chang1:38:42

        And, and I, I mean, heck, you know, in, in the '90s, in the late- in the late, uh, uh, 20th century, I mean, they were a name in semiconductors that when you hear it... Of course, I'm exaggerating the situation.

    22. DRDavid Rosenthal1:39:01

        Moore's Law, I mean, it's-

    23. MCDr. Morris Chang1:39:02

        Uh, yeah

    24. DRDavid Rosenthal1:39:03

        ... they're Intel.

    25. MCDr. Morris Chang1:39:04

        Yeah, Intel, yeah. If you hear the name, if you hear that they are in competition with you, you know, my goodness, you'll be trembling with fear, you know?

    26. BGBen Gilbert1:39:14

        I mean, this is why you started TSMC as a pure-play foundry business, because you didn't wanna compete head-to-head. You, you said, "We should not be an integrated design manufacturer of the design of the chips and the manufacturing. We have to compete on a different vector, 'cause we'll never catch Intel."

    27. MCDr. Morris Chang1:39:30

        Well, I didn't quite say that we'll never catch Intel. [laughing]

    28. BGBen Gilbert1:39:33

        [laughing]

    29. DRDavid Rosenthal1:39:34

        [laughing]

    30. BGBen Gilbert1:39:34

        'Cause, uh-
13. 1:46:45 – 1:47:58

    Apple’s and the 20nm node

    1. BGBen Gilbert1:46:46

       So to, to finish the Apple story, the short answer is it worked on 20 nanometer. Were there any trade-offs where, uh, the... Did, did pursuing 20 nanometer and spending the billions of dollars cost TSMC in any way?

    2. MCDr. Morris Chang1:47:01

       Well, it might have cost, but, uh, I mean, yeah, the story certainly does not end here. All right, so I mean, there was pricing, you know. Every- everything was not easy, uh, pricing, and, and Jeff came himself, and, um, we talked about pricing, and we, of course, we had done our, um, homework also on the cost and, uh, what, p- what, what, what kind of price we would accept. But, uh, Jeff came, and, uh, he told us just a number, you know. Well, he, uh, he gave us his reasoning. He had to make, uh, his component costs, uh, meet a certain goal also, yeah.

14. 1:47:58 – 1:50:24

    Pricing

    1. MCDr. Morris Chang1:47:58

       But anyway, um, that was settled, and then Jeff said, "Ah," and when, when the pricing was settled, I said, "Let's go out to dinner." We go to a Taipei three-star, uh, restaurant, uh, for dinner, and Jeff jokingly said, "Ah, if you didn't like the pricing, we will be- we probably could be going to a McDonald's." [laughing]

    2. SPSpeaker1:48:29

       [laughing]

    3. MCDr. Morris Chang1:48:29

       Uh, which was never in my mind, but he said that.

    4. SPSpeaker1:48:34

       Could you tell us a little more about what goes into considerations around pricing? I imagine things like the yields you think you'll be able to get hugely impacts that.

    5. MCDr. Morris Chang1:48:44

       Sure. The cost, yeah. Well, the, the main, the main thing that goes into pricing, of course, is the cost, and then the second thing is, uh, of course, um, whether, uh, your desired price will be accepted by the customer, you know?

    6. BGBen Gilbert1:49:06

       One thing that has occurred to me is, uh, TSMC now gets mid-50% gross margins, call it fifty-five, fifty-seven, uh, higher than your time, but many of your customers have seventy, eighty percent gross margins.

    7. MCDr. Morris Chang1:49:20

       Yeah.

    8. BGBen Gilbert1:49:21

       TSMC is creating a lot of value. The designer is creating a lot of value. How do you sort of sort out who gets to capture the value?

    9. MCDr. Morris Chang1:49:28

       Well, I, I, I don't get the privilege of sorting it out now, you know? [chuckles] CC, CC way, I think.... has the pleasure [chuckles] and the duty of sorting that out.

    10. BGBen Gilbert1:49:40

        Yeah.

    11. MCDr. Morris Chang1:49:41

        Well, I mean, as a general principle, you know, uh, you try to find, uh, a kind of a middle ground, which is different for every CEO, you know? Uh, even though every CEO, uh, who wants to protect his reputation, every CEO says, "Ah, I worry about the long range," you know? But in truth, uh, not everyone does. So it's a very personal- uh, how to sort these things out, I think it's a very personal issue. Now, for a lot of CEOs, there's really no choice.

15. 1:50:24 – 1:55:22

    Apple and trade-offs

    1. MCDr. Morris Chang1:50:24

       You have to ex- you, you have to... As a supplier, you have to accept a certain price, if it's a commodity, particularly, you know, uh. We have not finished with Apple yet.

    2. BGBen Gilbert1:50:36

       Yeah.

    3. DRDavid Rosenthal1:50:36

       Please-

    4. BGBen Gilbert1:50:37

       Yeah.

    5. DRDavid Rosenthal1:50:37

       Let's finish Apple.

    6. MCDr. Morris Chang1:50:38

       Yeah. Now, uh, I think you were asking, uh, whether there was any, uh-

    7. BGBen Gilbert1:50:44

       Uh, trade-offs.

    8. MCDr. Morris Chang1:50:45

       Trade-offs. Well, the trade-off, uh, there was a pretty significant, serious trade-off, and that was the detour that I said. You know, we talked, uh, we- at that time, back in the, uh, 2011, 2012 time, we- our R&D was, was not strong enough to do two nodes at the same time. Now we are, but back then we weren't. So the trade-off of accepting the 20-node technology was that we delayed our 16-node development.

    9. BGBen Gilbert1:51:33

       Hmm.

    10. MCDr. Morris Chang1:51:35

        And then Samsung came up with the 16. They had lost the 20 business, you know, so they, they, they were ahead of us in the 16 nanometer development.

    11. BGBen Gilbert1:51:51

        Because they got to skip 20, so they could-

    12. MCDr. Morris Chang1:51:52

        Yeah, they got- they didn't get the 20, okay? They, they, they, they didn't need to develop 20. So I got a shock, and I mean, it was a real shock, when I heard that Apple had placed their first orders of 16 with Samsung. Now, that was a real shock. We invested so much. Even though we took only half of their original demand, it was still tens of billions of dollars, I think. And we were counting on it being at least 80, 90% of the equipment being converted, converted to 16. And now, if Apple went to Samsung for the 16, where did that leave us? Do you understand what I'm saying?

    13. BGBen Gilbert1:52:50

        Oh-

    14. DRDavid Rosenthal1:52:51

        Yes. Yeah.

    15. BGBen Gilbert1:52:51

        Sounds horrible.

    16. MCDr. Morris Chang1:52:52

        Yeah. So- [chuckles]

    17. BGBen Gilbert1:52:54

        I would feel like I got tricked. [chuckles]

    18. MCDr. Morris Chang1:52:56

        Well, uh, I wouldn't say that, okay, but I, I was, I was, I was, I was, uh, I was really shocked. Uh, that was, uh... So I emailed, uh, Jeff Williams, uh, right away, uh, and in- I said, "You know, uh, we, we invested in all this equipment, and we were counting on you to take the, uh, the six- 16 from us. Uh, but now, you know, we, we found out you were buying 16, uh, the first 16s, anyway, from Samsung." So, uh, Jeff replied immediately, "Don't worry, I'll be here. I'll be there. I'll be in Hsinchu next week and explain to you." So that, um, made me, uh... That relieved me a little, uh, uh, but, uh, c- certainly not completely, um. But, uh, next week, uh, he did show up, and, uh, he explained to us, he said, "Well, you know, as soon as you're- as soon as you're ready with your 16, we'll buy from you. We'll buy all the, the needs from you when you're ready." Now, of course, that completely relieves me, uh, because that's what we're supposed to do anyway, you know? So, uh, indeed, what he said was true. Uh, we, we developed- we had our own 16 about, uh, half a year later, and, uh, most of Apple's 16 nanometer requirements still belonged to us.

    19. BGBen Gilbert1:54:58

        Hmm.

    20. MCDr. Morris Chang1:54:59

        Yeah. Most, yeah.

    21. DRDavid Rosenthal1:55:02

        I, I can imagine, uh, the shock that you must have had. At the same time, this also, again, just illustrates the brilliance of, of TSMC and the, the pure-play foundry business model. Uh, Samsung is Apple's chief competitor. [chuckles]

    22. MCDr. Morris Chang1:55:18

        Yeah. I know, I know, it was...

16. 1:55:22 – 2:02:18

    The IBM-Qualcomm story

    1. MCDr. Morris Chang1:55:22

       Uh, and I said in the autobiography, you know, I mean, sitting in Hsinchu, being in the foundry business, uh, I actually, uh, see a lot of things before they actually happen, uh-... uh, so let me tell you the IBM-Qualcomm story.

    2. SPSpeaker1:55:47

       Yeah, please.

    3. MCDr. Morris Chang1:55:48

       Uh, now, Qualcomm, uh, we considered Qualcomm to be a, uh, prime, uh, uh, candidate, uh, to be our customer. Uh, we, we really wanted Qualcomm because we knew they were a, a technology house, uh-

    4. BGBen Gilbert1:56:12

       What year was this?

    5. MCDr. Morris Chang1:56:13

       This was, uh, way back, you know, when we started, uh, in the '90s anyway. Yeah.

    6. BGBen Gilbert1:56:19

       And they were part of that initial wave of fabless companies?

    7. MCDr. Morris Chang1:56:23

       Yes. They started, uh, Irwin Jacobs started at Qualcomm, uh, actually before, uh, I started, uh, uh, TSMC. Uh, TSMC started in '87. Qualcomm, I think, was, uh, a few years before that.

    8. BGBen Gilbert1:56:43

       Yeah.

    9. MCDr. Morris Chang1:56:45

       So we, um, in the '90s, early '90s, all the way up to '97, maybe '96, '97, all the way up to the latter part of the '90s, we wanted Qualcomm to be a customer. And, um, now, I saw their operations VP, that's what they call-- that's what our customers call their purchasing people-

    10. BGBen Gilbert1:57:22

        Mm.

    11. MCDr. Morris Chang1:57:22

        - operations VP, operations senior VP. [chuckles] And I, I saw, I saw him often, and he was always, uh, pretty polite, but he gave us very little business. And I also knew that his foundry, his main foundry, was IBM. Uh, now, sometime in the later '90s, I forgot whether it was, uh, '97 or '98, uh, suddenly, uh, he started, uh, he first he started to tell me that he would use us now. He didn't even tell me who our competitor was, who our competitor had been, but I, I kind of knew that it was IBM from other sources of intelligence. And, uh, our business with Qualcomm, the business that Qualcomm g- gave us pretty rapidly increased after that, after '97, '98 period. So I immediately knew that IBM Semiconductor was in trouble.

    12. BGBen Gilbert1:58:50

        Hmm.

    13. MCDr. Morris Chang1:58:51

        Because, I mean, they had their own fabs and so on, but their main business was really supplying to, uh, uh, Qualcomm and a few other very small companies-

    14. BGBen Gilbert1:59:13

        Hmm

    15. MCDr. Morris Chang1:59:13

        ... very small, fabless companies. So I immediately knew, uh, IBM was in trouble because they were losing Qualcomm. Uh, uh, all right, so the next step that IBM took was not a surprise to me. The next step they took was to ask us, TSMC, to co-develop the next generation of technology, which is point one three micron, hundred thirty nanometer, okay, in 1999. And since I anticipated that, it was no problem at all for us to refuse the-

    16. BGBen Gilbert2:00:08

        Hmm.

    17. MCDr. Morris Chang2:00:09

        And in fact, even, even if I didn't anticipate that, we would never, never have accepted that kind of an offer, co-develop. I mean, IBM was still, you know... They, they still consider themselves to be the senior-

    18. BGBen Gilbert2:00:26

        Yeah

    19. MCDr. Morris Chang2:00:27

        ... partner, uh, in any partnership they established, the senior partner. So we were the, the, the company that co-developed something with them would send its engineers to IBM, you know?

    20. BGBen Gilbert2:00:41

        Hmm.

    21. SPSpeaker2:00:41

        Hmm.

    22. MCDr. Morris Chang2:00:42

        And when we do that, we will lose our ability to, to develop our own process. We'll have to depend on this co-development thing, uh, and the co-development thing is going to have a lot of difficulties, you know? Oh, heck, you know, our people, you know, were being a different culture. So we declined without having to think about it at all. We declined the, the IBM offer. And IBM, in fact, was, uh, quite, uh, angry, you know? I mean, they thought, uh, we were, we were still a small Taiwan, uh, backward place, you know, Taiwan company, and they are big IBM. [chuckles]

    23. SPSpeaker2:01:34

        [chuckles]

    24. MCDr. Morris Chang2:01:35

        So they, uh, immediately went to, uh, uh, UMC, uh, and UMC accepted them.... only to regret seriously their acceptance a few years later.

    25. BGBen Gilbert2:01:53

        And UMC, at that point in time, was, uh, was it fair to call it a peer of TSMC here in Taiwan, in terms of volume and size?

    26. MCDr. Morris Chang2:02:00

        Not by 1999.

    27. BGBen Gilbert2:02:02

        They were already smaller?

    28. MCDr. Morris Chang2:02:03

        Smaller. They were smaller already, yeah. That, uh, what's what I meant when I said that, uh, sitting here as foundry, I mean, I, I, I can see some things that, uh, uh, like this IBM thing, yeah.

17. 2:02:18 – 2:10:45

    The Learning Curve

    1. BGBen Gilbert2:02:18

       This might be a, a good time to go back to the learning curve. Speaking about the importance of owning your own technology and process at the leading edge, and controlling your own destiny, you developed the learning curve.

    2. MCDr. Morris Chang2:02:33

       I really did not develop... I, I certainly did not initiate it. I'm, I, I think I had a role at TI.

    3. BGBen Gilbert2:02:40

       Yeah.

    4. MCDr. Morris Chang2:02:40

       I had a role in refining it to the point where a semiconductor company can use it effectively. That's my role-

    5. BGBen Gilbert2:02:52

       Hmm.

    6. MCDr. Morris Chang2:02:52

       Yeah.

    7. BGBen Gilbert2:02:53

       So, uh, how would you explain it to a novice?

    8. MCDr. Morris Chang2:02:57

       Well, explaining the learning curve theory is simple, uh, but one would be foolish if one just takes the simple explanation, you know, and thinks that that's all it is. [chuckles]

    9. BGBen Gilbert2:03:11

       [chuckles]

    10. MCDr. Morris Chang2:03:12

        The simple, uh, explanation of learning curve is that, uh, as you make more of one thing, uh, anything, uh-- actually, it started with refrigerators and cars, you know?

    11. BGBen Gilbert2:03:29

        Hmm.

    12. MCDr. Morris Chang2:03:30

        If a company makes more cars, then its cost per, per car, unit cost, goes down. That's why it's also called experience curve. You gain more experience, you become more efficient. That's the simple explanation. But, uh, if one, uh, just takes that simple explanation and thinks that's all it is, it is about, uh, you know, uh, then you really haven't learned anything [laughing]

    13. BGBen Gilbert2:04:04

        [laughing]

    14. MCDr. Morris Chang2:04:04

        All right. Anyway, um, uh, the learning curve. Well, Bruce Henderson, uh, who is now, uh, considered, uh, the father of, uh, uh, strategies-

    15. BGBen Gilbert2:04:27

        Founded Boston Consulting Group.

    16. MCDr. Morris Chang2:04:29

        Yeah, he wa- he, he was the founder of, uh, Boston Consulting Group. And, uh, uh, now, you know... I mean, there's a branch in, um, um, in, uh, business economics, uh, uh, that's, uh, that's called, uh, uh, competitive strategy or something. Yeah. Competitive strategy, I guess. Um, uh, and Michael Porter was, at one time, uh, considered, uh, a big figure in this competitive strategy. I mean, he wrote three or four books, you know, big books, you know, 700 pages each, you know. I, I have all of them.

    17. BGBen Gilbert2:05:16

        His original competitive strategy memo, I think it's, like, 20 pages, is still some of the bus- best business writing ever. Just-

    18. MCDr. Morris Chang2:05:23

        Whose?

    19. BGBen Gilbert2:05:24

        Michael Porter.

    20. MCDr. Morris Chang2:05:24

        Oh. Well, good-

    21. BGBen Gilbert2:05:27

        Who was a director of TSMC-

    22. MCDr. Morris Chang2:05:28

        He was

    23. BGBen Gilbert2:05:28

        ... at one point, right?

    24. MCDr. Morris Chang2:05:29

        Right. Yeah, yeah, and I had a story about, uh, him, uh, in my autobiography, too, which, uh, because of time, we probably won't go into. Not, not Michael Porter, but Bruce Henderson, uh, we will talk about him. Uh, he was, uh... He is now considered to be the father of, uh, the competitive strategy. He came to Texas Instruments one day in, I think, around 1970. Uh, or I should say, he, he first called the TI CEO, Mark Shepherd, and told him that, uh, Boston Consulting Group, he, he had founded a Boston Consult- Consulting Group, and we, we have a cons- well, BCG has, uh, a experience curve theory that would benefit semiconductor industry. And TI was, uh, the largest company in the semiconductor industry then, and, uh, "Would Mark Shepherd, uh, like a presentation, uh, of this, uh, theory?" Uh, Mark Shepherd said yes. So Bruce Henderson brought Bill Bain, uh, you probably know that name, uh, with him, and came to, uh, Dallas, and made a presentation. And Mark Shepherd invited the, the CEO, the COO, and me to attend the presentation. And it was, uh, a very, uh, eloquent, uh, presentation, uh, because, you know, Bruce Henderson was a very eloquent man. And, uh, Bill Bain was on the side, uh, apparently Bruce Henderson's protege. Uh, anyway, Mark Shepherd was, uh, impressed, and he decided that, uh, TI would, uh, work with-... uh, BCG on, um, this, uh, learning curve theory. And, uh, Bruce Henderson then, uh, assigned Bill Bain, uh, to work most of the time at TI, you know, most of my, like, three days a week. And Mark Shepherd assigned me as TI's, uh, guy. Uh, so Bill Bain and I became partners, and I assign Bill Bain a small office, uh, very close to my office, uh, at TI, in the same building, and a small office because he needed a lot of things from me. He needed permission to get our costs, our prices. We had, we had a lot of families of integrated circuits, uh, and transistors, you know. I mean, he had a lot of requests, so it was, uh, easier if he was nearby.

    25. BGBen Gilbert2:09:07

        Mm.

    26. MCDr. Morris Chang2:09:08

        And, uh, every time when he arrived at some interesting, useful conclusions, he would also discuss them with me. So we had a very pleasant association for, oh, I would think two years, maybe even more. And, uh, he would, you know, uh, fly, uh, to, uh, Dallas every Monday and, uh, go back to Boston either Wednesday night or Thursday night. And, uh, of course, every time he, uh, went back to Boston, it would be to tell, uh, Bruce Henderson, uh, what he, what he had done-

    27. BGBen Gilbert2:10:00

        Mm

    28. MCDr. Morris Chang2:10:00

        ... that week. So this happened, this went on for, I think, two years. And then finally, uh, Bill Bain came to see me one day. Uh, and it was in those two years that I absorbed, uh, a lot of, uh, learning curve stuff, which, uh, I used up to now, you know. I mean, I, I, I found it, uh, uh, highly, um, highly fruitful, uh, just as, as a thinking tool, you know?

    29. BGBen Gilbert2:10:44

        Yeah.

    30. MCDr. Morris Chang2:10:44

        Yeah.

18. 2:10:45 – 2:14:18

    The Flywheel of Returns

    1. BGBen Gilbert2:10:45

       It seems so fundamental to the industry that you wanna get through the low-volume period as fast as you can.

    2. MCDr. Morris Chang2:10:52

       Yeah.

    3. BGBen Gilbert2:10:52

       I- ideally, you spend no time-

    4. MCDr. Morris Chang2:10:54

       Yeah

    5. BGBen Gilbert2:10:54

       ... in the low-volume period.

    6. MCDr. Morris Chang2:10:55

       Yeah.

    7. BGBen Gilbert2:10:55

       And it seems like over time, all the returns in the industry, all the, the winner is the one with all the volume because they'll just have the lowest prices, and there's a flywheel, where once you have the lowest prices, you get all the business, then you can reinvest that in the next node.

    8. MCDr. Morris Chang2:11:10

       Right. Right.

    9. BGBen Gilbert2:11:10

       It's almost-

    10. MCDr. Morris Chang2:11:11

        Yeah. Yeah, right.

    11. BGBen Gilbert2:11:12

        I couldn't have told you that TSMC was gonna be the winner, but once you internalize the learning curve and globalization-

    12. MCDr. Morris Chang2:11:17

        Yeah

    13. BGBen Gilbert2:11:17

        ... you can sort of intuit-

    14. MCDr. Morris Chang2:11:19

        Yeah

    15. BGBen Gilbert2:11:20

        ... that in the future, there will be one winner-

    16. MCDr. Morris Chang2:11:22

        Yeah

    17. BGBen Gilbert2:11:23

        ... in semiconductor manufacturing.

    18. MCDr. Morris Chang2:11:25

        Uh-huh. But one day, uh, after a couple of years, uh, Bill Bain came to, to me in Dallas and said, "You are the first one I tell this to outside the Boston Consulting Group. I am leaving Boston Consulting Group to start my own consulting company." So I said, "Why?" I said, "You know, obviously, Bruce Henderson thinks very highly of you." And, uh, Bill Bain said, "Yes, uh, but there is the growth imperative." [chuckles] That's the first time I heard that term, you know, growth imperative.

    19. BGBen Gilbert2:12:15

        He meant for him personally.

    20. MCDr. Morris Chang2:12:16

        Yeah, for him personally. Well, anyway, that was that.

    21. BGBen Gilbert2:12:24

        All right, listeners, now is a great time to thank friend of the show, Fundrise. We've gotten to know Fundrise's CEO, Ben Miller, and the folks there quite well over the last several years, and they're huge Acquired listeners, just like all of you.

    22. DRDavid Rosenthal2:12:37

        And since we first worked together three years ago, Fundrise itself has gone through quite a transformation. Longtime listeners may remember that they have a growth stage venture that they actually first launched here via an Acquired sponsorship back in 2022. At the time, Fundrise was primarily known as the US's largest real estate investment platform for retail investors, and it wasn't necessarily obvious that Ben, Fundrise Ben, that is, that his kind of crazy idea to bring their model to venture capital would work.

    23. BGBen Gilbert2:13:06

        Well, fast-forward to today, and incredibly, they have demonstrated they could break into the venture industry in a big way. Ben Miller and Fundrise have invested in Databricks, Anthropic, Canva, Anduril, Ramp, and, uh, fellow friends of the show, Vanta, and also ServiceTitan, which just went public in December in a successful IPO.

    24. DRDavid Rosenthal2:13:25

        Yep. It's genuinely awesome what Fundrise has done here, which is something that many have tried over the years, but no one else has actually been able to accomplish in venture. They've taken a retail platform that any American can invest in and gotten pre-IPO access to some of the best private companies in the world. It's democratized access to all the value creation that otherwise has been locked in these private companies over the last decade-plus, as these growth companies are delaying IPOs and staying private longer.

    25. BGBen Gilbert2:13:52

        ... Yep. So when the ServiceTitan IPO happened, thanks to Fundrise, tens of thousands of regular investors got to celebrate alongside the VCs, LPs, and employees.

    26. DRDavid Rosenthal2:14:01

        Yep. We'll be talking about Fundrise all season long, and you can go check out the full portfolio that Ben and the Fundrise team are building at fundrise.com/venture. And if you're a growth stage founder looking for a great Series C or later investor, just get in touch and tell them that Ben and David sent you.

19. 2:14:18 – 2:15:57

    TSMC’s Unexpected(?) Success

    1. BGBen Gilbert2:14:18

       As our time comes toward a close, one question David and I wanted to ask you is, TSMC is essentially the only trillion-dollar company in the world not on the West Coast of the United States. It is this incredibly important thing in the world. Uh, it's this unlikely success of grand scale.

    2. MCDr. Morris Chang2:14:40

       Unlikely, in your opinion? [laughing]

    3. BGBen Gilbert2:14:42

       That- [laughing] I mean, you started it when you were 56.

    4. MCDr. Morris Chang2:14:47

       Yeah.

    5. DRDavid Rosenthal2:14:47

       Yeah.

    6. BGBen Gilbert2:14:48

       Uh, there are many things-

    7. MCDr. Morris Chang2:14:49

       Well, I'm not gonna argue with you, okay? I'm merely asking as a point of, uh, uh, curiosity. You know, I didn't realize... I didn't think it was that unlikely, you know?

    8. BGBen Gilbert2:14:59

       Mm.

    9. DRDavid Rosenthal2:15:00

       Mm.

    10. MCDr. Morris Chang2:15:00

        Yeah. Well, it, it, it did exceed my expectations. TSMC's size and importance exceeded my expectations, but not by an order of magnitude, you know?

    11. BGBen Gilbert2:15:18

        But wasn't the original plan to stop building after Fab 2?

    12. MCDr. Morris Chang2:15:22

        Yeah, that was never- That, that was only the very initial plan.

    13. BGBen Gilbert2:15:27

        Okay.

    14. MCDr. Morris Chang2:15:28

        Yeah.

    15. DRDavid Rosenthal2:15:28

        Mm.

    16. MCDr. Morris Chang2:15:29

        We were never going to stop there, you know. I mean, we were just talking about learning curve. You know that, you know? I mean, how, how could we plan to... If I didn't know anything about learning curve, I would say, "Yeah, maybe we stop after two- [laughing] ... two fabs," you know? But I, I was a serious student of learning curve, and I would never, I would never stop, uh, at just two fabs.

    17. BGBen Gilbert2:15:55

        Here's why I say, uh, unlikely

20. 2:15:57 – 2:21:10

    The early days of TSMC

    1. BGBen Gilbert2:15:57

       success: There were so many reasons why the original incarnation of TSMC was kind of a bad business. Fabless was not a thing yet, and so all of your initial customers were the integrated device manufacturers, the Intels of the world, and you were taking their worst, you know, excess... You were their second-source supplier for manufacturing on the stuff that they didn't want to make on their own. Did you see fabless coming, or was that a very lucky thing?

    2. MCDr. Morris Chang2:16:28

       No, uh, I saw it coming. Uh, and, uh, the- In fact, I just had dinner, oh, two months ago, had dinner with the first guy, Gordon Campbell, Gordy Campbell.

    3. BGBen Gilbert2:16:42

       Mm.

    4. DRDavid Rosenthal2:16:43

       Mm.

    5. MCDr. Morris Chang2:16:43

       Do you... Have you heard his name?

    6. BGBen Gilbert2:16:46

       Mm-mm.

    7. MCDr. Morris Chang2:16:46

       Anyway, Gordy Campbell came to see me in General Instrument. In my, uh, final months at General Instrument, he came to see me.

    8. BGBen Gilbert2:17:02

       Mm.

    9. MCDr. Morris Chang2:17:02

       He did not know that I was leaving. Frankly, I did not know when I saw him that I was leaving yet. But the reason he came to see me at General Instrument was that he wanted, uh, funding. He wanted investment from General Instrument. "Fifty million dollars," he said. He want to start a new company. Fifty million dollars. So I said, "Do you have a business plan?" "No, it's all in my head." So I said, "Well, I, I need at least a business plan. I mean, I have to go to the board of General Instrument." So he said, "All right, I'll send it to you within three weeks." Three weeks later, there was no business plan, and I was interested, because I knew that he had a good reputation of starting-

    10. BGBen Gilbert2:17:57

        Mm-hmm

    11. MCDr. Morris Chang2:17:58

        ... companies. So I called him, and he said, "Ah, Morris, I'm sorry I didn't send you anything, because I don't need you anymore." I said, "How come?" He said, "I don't need $50 million more- n- anymore. I need only $5 million, and $5 million I can gather up very easily." I said, "Why do you need only $5 million?" He said, "I'm not going to build a fab." See? That was the start for me-

    12. BGBen Gilbert2:18:39

        Mm.

    13. DRDavid Rosenthal2:18:39

        Mm

    14. MCDr. Morris Chang2:18:40

        ... that there will be fabless companies. Another guy, uh, came to General Instrument and said he had already started a company which was called Atmel, A-T-M-E-L, and they did not have any fabs.

    15. BGBen Gilbert2:19:04

        Mm.

    16. DRDavid Rosenthal2:19:05

        Mm.

    17. MCDr. Morris Chang2:19:05

        And this guy wanted, uh, General Instrument to make the wafers for them. And back then, General Instrument, you know, had, uh, empty fabs. Uh, so I said... I told the semiconductor manager of General Instrument, I said, "Well, go ahead and work with him."

    18. DRDavid Rosenthal2:19:26

        Don Valentine?

    19. MCDr. Morris Chang2:19:26

        Yeah.

    20. DRDavid Rosenthal2:19:27

        Who I'm sure you, you knew.

    21. MCDr. Morris Chang2:19:28

        I, I- yeah, I knew him, yeah.

    22. DRDavid Rosenthal2:19:30

        He had a great, great quote when asked about starting Sequoia, and he said, "Well, I had an advantage. I knew the future." [laughing] And it sounds like you knew the future, too.

    23. MCDr. Morris Chang2:19:41

        Well, at least I, I had a glimpse of it, you know, and yeah. Uh, so Atmel, you know, uh, and they were still-... fighting. I mean, at Mel, uh, he wanted the fab to be run his way. Now, of course, the General Instrument semiconductor manager wanted to run the fab his way, you know what I mean? And General Instrument owned the fab anyway, for heaven's sake, you know? So that was just a very early situation in which the difficulty and the advantage of running a foundry business already appeared, you know?

    24. BGBen Gilbert2:20:26

        Hmm.

    25. MCDr. Morris Chang2:20:27

        The difficulty was, you know, you, you have to satisfy a lot of customers, you know? And everyone, you know, wanted the fab to be run his way, you know. Uh, but you can only run fab one way, you know, which will satisfy more or less all the customers. And, uh, the advantage, of course, is you have a lot of customers, you know.

    26. BGBen Gilbert2:20:52

        Well, we can't thank you enough, Dr. Chang.

    27. DRDavid Rosenthal2:20:55

        Dr. Chang, thank you.

    28. MCDr. Morris Chang2:20:57

        All right, very good. It was my pleasure, even though, uh, it's the first time in a long, long time that I have talked so long. [laughing]

    29. DRDavid Rosenthal2:21:06

        [laughing] We appreciate it.

    30. BGBen Gilbert2:21:08

        Thank you for doing it with us.

21. 2:21:10 – 2:27:43

    Ben and David's Reflections

    1. BGBen Gilbert2:21:10

       All right, listeners, well, David and I are coming at you now from our home studios back in Seattle and San Francisco, and, uh, we wanted to do a little postgame on that interview, a little bit of a, a analysis, kind of our conclusions, the things that are still sitting with us a few days later after we've crossed the ocean. And, uh, uh, David, uh, this felt essential to me because it felt like we were just recording history there with Morris. I didn't wanna interrupt him to try to, like, make a business model point, or... It, it just kind of felt like, uh, we should let him talk, and then we could do our part after.

    2. DRDavid Rosenthal2:21:47

       Yeah, totally. And, uh, fortunately, we have a model for doing analysis at the end of story, uh-

    3. BGBen Gilbert2:21:52

       Uh-huh. Playbook

    4. DRDavid Rosenthal2:21:53

       ... which is our playbook. So let's do it.

    5. BGBen Gilbert2:21:55

       Okay, so the first thing that I can't shake, that just keeps sitting with me, is this idea that is genius in hindsight of not competing with your customers, being the dedicated pure-play foundry, which we actually saw in the TSMC Museum of Innovation. They have-

    6. DRDavid Rosenthal2:22:14

       Yeah

    7. BGBen Gilbert2:22:14

       ... Morris' original pitch, like, his little original slide deck.

    8. DRDavid Rosenthal2:22:17

       His original business plan that he pitched to the Taiwanese government.

    9. BGBen Gilbert2:22:21

       The government, and then to investors. There's, like, two different versions of this extremely simple pitch deck, and one of the bullet points, it's right in there, of, "Be a dedicated pure-play foundry." At the time, I get the sense it was actually much more about what can we win at versus what will be the most important and valuable semiconductor company in the world in the future.

    10. DRDavid Rosenthal2:22:46

        Right. At the time, they didn't have the capabilities, certainly not TSMC, and, and it, it didn't exist in Taiwan, to be able to design chips and products. So, like, it was impossible for them to compete with customers. This was all they could do.

    11. BGBen Gilbert2:22:59

        Right. It crossed Morris's mind for sure, "Hey, we could compete with Intel," but then it- he scrapped that, I get the sense, because the thing that they were good at was this manufacturing angle, and it's almost like an accident of history that the pure-play foundry ended up being the best way to do this. I guess, best as evaluated on market cap versus other foundries and integrated device manufacturers, such as Intel.

    12. DRDavid Rosenthal2:23:23

        Well, and best that, like, this is the path that has led them to being essentially alone, operating at the leading edge. Like, they have surpassed, technology-wise, all of the other integrated, you know, integrated and quasi-integrated, uh, chip foundries out there.

    13. BGBen Gilbert2:23:39

        Yeah, I guess that's my first thing is the, this, uh... connect- you can connect the dots looking backwards, as, as Steve Jobs said in that famous quote, "But, uh, forwards is difficult."

    14. DRDavid Rosenthal2:23:50

        This primarily, I think, was the main reason why TSMC has worked so well.

    15. BGBen Gilbert2:23:56

        Hmm, that they don't compete with customers.

    16. DRDavid Rosenthal2:23:58

        They are truly the only foundry at the leading edge that does not, in any way, compete with their customers. They don't have their own end product division. They don't design their own chips. It is truly they only serve their customers, and they do not compete at any other part of the value chain with them.

    17. BGBen Gilbert2:24:14

        Right. Okay, so if you're asking yourself, "How did the world arrange itself in this way, such that you could have a trillion-dollar company that doesn't do any design, that doesn't do any architecture, that doesn't do any, uh, EDA tools, like Cadence or Synopsys?" Um, so they're, you know, they're not Nvidia, they're not Arm, they're not Cadence Synopsys, they're not ASML. Like, they're not their own equipment vendor. So what, what enabled this? One of the things that I think is underappreciated, and I, I... We didn't talk that much about with, with Morris, but the rise of Arm. If, if you try to play forward a world where Intel and the x86 architecture had maintained its dominance, you wouldn't have had this window, this opportunity for the value chain to sort of rearrange itself. But the fact that there was an architecture, as we talked about on our ACQ2 episode with Rene, uh, from Arm, this architecture that became dominant in phones and then computers and then servers, and, you know, now is coupled on, with all these AI chips, you open the door to have a dedicated foundry for Arm chips in a way where if it had stayed x86, it's not like you could start a new foundry for all the fabless x86 companies. For the longest time, Intel was the only x86 company, and then AMD, of course, is the, the second source, and AMD is a TSMC customer. So that's sort of the one edge case. It's like, well, there is AMD that designs x86 chips that TSMC manufactures, but that's not, like, the common case of the way it would've gone for an- i- in an x86-dominated world. It would've been fully integrated Intel.

    18. DRDavid Rosenthal2:25:57

        Yep, I mean, one super straightforward and-... enormous example of this just is Apple. Like, if Arm hadn't become such a viable CPU architecture platform, and Apple hadn't standardized, you know, their Apple silicon on Arm, probably Intel would be making all of the chips that go into your iPhone, all the leading-edge chips that go into your iPhone. Like, they already had the Intel relationship. Macs were running on x86 Intel chips.

    19. BGBen Gilbert2:26:29

        Yeah, you have to keep peeling the onion, 'cause this, of course, pr- supposes that the, that Intel actually could have gotten their act together and made a chip for mobile phones that was performant. But maybe, uh, all the baggage from x86 actually prevented them from structurally doing that. It wasn't like a competency thing, it was like a, the, the, it never could have happened that x86 could run on phones.

    20. DRDavid Rosenthal2:26:52

        Yeah. I, I think all this is true, but if Arm hadn't existed, like, there would've been nowhere else for, you know, this vector of innovation to go.

    21. BGBen Gilbert2:27:00

        Right. The point that we're driving at here is this world where there's a standalone architecture company, there's a standalone b- big manufacturing company, there are standalone EDA companies, there are standalone, um, uh, designers, you know, Apple, Nvidia.

    22. DRDavid Rosenthal2:27:15

        And a large part that's due to Arm.

    23. BGBen Gilbert2:27:17

        Yes, and Arm and TSMC are sort of like coupled at the hip of history, uh, of when this, how this came to be. In fact, didn't you find that a bunch of these were started within 12 months of each other?

    24. DRDavid Rosenthal2:27:28

        Yes, totally. The mid to late '80s were, like, an absolute golden period for all these companies getting started, not only TSMC, Arm, Synopsys, Cadence, and ASML, all founded right within a couple years of each other.

22. 2:27:43 – 2:47:08

    Taiwanese Science Park

    1. DRDavid Rosenthal2:27:43

       Which brings us to Hsinchu Science Park. Going there in person... We talked about this on our original TSMC episode, that, you know, even if you wanted to, you couldn't airlift TSMC and this capability out of Taiwan and recreate it somewhere else.

    2. BGBen Gilbert2:27:59

       Yeah, we talked about that as if we knew it in sort of an abstract way. This was very different driving around the Science Park, feeling it in a physical way.

    3. DRDavid Rosenthal2:28:06

       The entire ecosystem, it's like if Silicon Valley were all in one, you know, kinda government-sponsored, you know, industrial park. Uh, which it sort of was, it was Silicon Valley, [chuckles] you know, as we talked about in our Lockheed Martin episode.

    4. BGBen Gilbert2:28:20

       Oh, the early Lockheed, yeah.

    5. DRDavid Rosenthal2:28:21

       Yeah, the early Lockheed years. But that's what it's like today. It's all right there. It's not just TSMC that's there, it's all of their partners, it's all of their customers. You know, we're driving by, and this is a Cadence building there, and that's a Synopsys building there, and that's an Arm building there.

    6. BGBen Gilbert2:28:37

       There's Qualcomm.

    7. DRDavid Rosenthal2:28:38

       There's MediaTek right there, headquartered right there. Right across the street, the craziest thing to me, we saw there are two universities that are just, like, there.

    8. BGBen Gilbert2:28:49

       In the Science Park?

    9. DRDavid Rosenthal2:28:50

       Yes, like, that are cranking out PhDs every year that are just getting absorbed right there in the ecosystem. I mean, this would be like if there were two universities on the Nvidia campus.

    10. BGBen Gilbert2:29:01

        The thing that really jumped out to me is, uh, you always hear people talk about how integrated this ecosystem is with each other, that, you know, Synopsys has to be closely, uh, uh, tied with TSMC to understand what the next node will look like, so that they can make it easy for people who are using Synopsys's, uh, tools to design chips, to, you know, actually manufacture using TSMC's process. Uh, you kinda get the sense of, "Oh, I see," because they all are walking across the street to each other and having this extremely close communication. Uh, not to mention, David, both of our flight experiences kinda felt like, "Oh, there's a- these are a bunch of chip design, uh, fabless companies that are making the pilgrimage over to, uh, Taiwan to meet with people in this ecosystem."

    11. DRDavid Rosenthal2:29:52

        My plane felt like the semiconductor version of the tech buses [chuckles] that go from-

    12. BGBen Gilbert2:29:58

        [laughing]

    13. DRDavid Rosenthal2:29:58

        ... you know, San Francisco down to Silicon Valley every day. I mean, the backpacks that I saw on the plane, like, there's a Google backpack, there's an Amazon backpack, there's an Arm backpack, there's a Marvell backpack.

    14. BGBen Gilbert2:30:07

        Yeah. Which does raise the point of this, uh, Arizona fab and the sort of outside-of-Taiwan fabs. You know, why is TSMC doing it? Because it's not their leading edge, it's not big volumes, it's not leveraging this really close geographic ecosystem that they have in... I believe there's three science parks in-

    15. DRDavid Rosenthal2:30:30

        Yes

    16. BGBen Gilbert2:30:31

        ... Taiwan. We saw the original, but there's one that's even bigger. I, I think it's the Tainan one, in the south. But it just kinda becomes clear that i- i- there are customers and government reasons to build fabs in other countries, but-

    17. DRDavid Rosenthal2:30:48

        You're not gonna be able to recreate the magic of that ecosystem, like, physically instantiated right there.

    18. BGBen Gilbert2:30:54

        Yeah. It would take decades to recreate the ecosystem that they have in the science parks.

    19. DRDavid Rosenthal2:31:00

        Which is, you know, [chuckles] funny on that front, uh, you and I were saying as we were driving around there, "This has got to be the single most successful government-funded industry initiative of all time, like, anywhere in the world."

    20. BGBen Gilbert2:31:14

        At least to spur innovation with this particular of a mandate.

    21. DRDavid Rosenthal2:31:20

        Totally. The land-grant universities here in America, but, like, this was like a, uh, like a, a rifle shot. Like, you know, "We are going to spur semiconductor industry innovation in this s- industrial park, in this location," and it worked!

    22. BGBen Gilbert2:31:35

        And there you have one of the 10 most valuable companies in the world, and the only, uh, I guess, one of two, uh, trillion-dollar companies that are not on the West Coast of the United States. I would say it worked.

    23. DRDavid Rosenthal2:31:45

        Yeah, it, it worked. [chuckles] It worked.

    24. BGBen Gilbert2:31:48

        And the scale, too. We drove by a construction site where it looked like a quarter of the building was done. This is where they're making the two-nanometer process, which presumably will be in the, the next iPhone. Um, it's not like anyone said anything about that, but it- geez, I wonder, after five nanometer and then three, uh, N3E and N3P, when they have this two nanometer process, I wonder what they're gonna make on that. Lots of [chuckles] Nvidia GPUs and lots of iPhone chips.... massive building. Phase one was open, which I think is a quarter of the building, but then there's three other phases, uh, for this, uh, two-nanometer facility that are not even, you know, ready for prime time yet. But I think they're actually doing the small production runs, getting ready to ramp in the second half of this year on the two-nanometer process.

    25. DRDavid Rosenthal2:32:36

        Like you said, the scale of the physical buildings of these fabs- [laughing] ... smacked me in the face. I felt like I was looking at a sphinx in, in Egypt. I mean, like, it's huge. It's like f- many football fields of size, like, you know, just per phase of the fab. These are enormous buildings.

    26. BGBen Gilbert2:32:56

        Yep. Okay, so back to things I've been noodling on since the, uh, conversation with Dr. Chang. I felt a little bit bad for saying, "Hey, your original business plan was kind of a bad one," that basically we're taking the excess capacity from Intel and other IDMs and giving them a place to manufacture their least critical, least leading-edge, least interesting chips. Uh, but that is true. I mean, he, he believed that fabless was gonna be a thing, but for the first, I don't know, a- at least five years, the only real business that they had was IDMs who were willing to say, "How, how cheap can you give me some of your manufacturing capacity? And it's not strategic at all, but here you go. Here's some revenue."

    27. DRDavid Rosenthal2:33:43

        This is a major difference in Intel's fab strategy versus TSMC. Intel e- is constantly taking their existing fab footprint and repurposing it and upgrading it for the leading edge, which, you know, on the one hand, is great. It's utilizing their assets, you know, for the most valuable, highest valuable products. On the other hand, though, they then lose the manufacturing capabilities for older process node generations, and it's not like demand goes away for those chips and those products.

    28. BGBen Gilbert2:34:16

        It does, it just does slowly.

    29. DRDavid Rosenthal2:34:17

        It does slowly, yeah, and I mean, like, replacement parts is a great example. Like, you know, there are technology systems and products, you know, manufacturing things, even automobiles, built 10, 20, 30 years ago that have specific chips that were made with old process technology, that when they break and they need replacing, like, you need those exact same chips. So this is the business that TSMC started in.

    30. BGBen Gilbert2:34:40

        Right. So that is the fundamental philosophical difference is... I, I think Fab- so Fab 1 belonged to ITRI, the, the government, uh, where Morris was president of that organization before taking the, the helm at TSMC. Uh, Fabs 2 and 3 were the first TSMC-specific fabs that they built, and they're still running, from the late '80s. And in addition to the old replacement parts, there are still applications for older nodes. If you're in this, this world of, you know, 40 nanometers and up and, you know, one micron, and, uh, I don't know all the names of the previous generations, but the, the less high-resolution etching on silicon, uh, CMOS sensors are great examples of that. The, the cameras that we're talking into right now that have these great Sony sensors, uh, those don't require a two-nanometer process, but they do require etching the same way that you would etch a chip, and so that's a specialty use case of TSMC's older fabs, which, by the way, on an accounting basis, are fully depreciated, so they're almost, like, free to run.
23. 2:47:08 – 2:54:55

    Carve Outs

    1. BGBen Gilbert2:47:08

       Carve-outs. All right, I have two. One is a, uh, [chuckles] kind of, kind of a hilarious... I can't believe it's 2025, and this is my recommendation. For anyone who's not a AAA member, I highly recommend it.

    2. DRDavid Rosenthal2:47:23

       Ooh!

    3. BGBen Gilbert2:47:23

       I had a spectacular AAA experience where I went to fill up the air in my tires before a road trip, [chuckles] and, uh, uh, I went to the gas station, and there was something wrong at my local gas station with their pump, and I ended up draining the air in my tires to an unsafe level. [laughing] And so the car was actually not drivable away from this gas station.

    4. DRDavid Rosenthal2:47:47

       [laughing]

    5. BGBen Gilbert2:47:47

       I was like, "Crap! I c- I can't even go get the other car to..." And I had my baby in the backseat, and my wife and I were trying to figure out what to do, and we're like, "Do we have to call a tow truck to, like, tow us to..." And so I, um, signed up for AAA while I'm just sitting there in the gas station parking lot, and within, I think an hour, hour and a half, they had a mobile tire inflator on a long weekend, like a holiday weekend, when other people aren't working, drive out and, uh, fill up my- the, the air in my tires, so we could be quickly on our way, not ruin the weekend.

    6. DRDavid Rosenthal2:48:21

       Amazing.

    7. BGBen Gilbert2:48:23

       And it was, like, a hundred bucks or something. It's really not a bad price, and you get, uh... This was, so a hundred bucks to become a member or whatever it is, a hundred and fifty, and then the service is actually free for something as trivial as this, and you get three of them a year.

    8. DRDavid Rosenthal2:48:35

       Wow!

    9. BGBen Gilbert2:48:36

       So I, I'll take it. It, it was a, it was a phenomenal experience.

    10. DRDavid Rosenthal2:48:39

        All right. AAA, here we go.

    11. BGBen Gilbert2:48:42

        My second one is a YouTube channel called Defunctland. Uh, you and I were talking about this.

    12. DRDavid Rosenthal2:48:47

        Oh, yes. This is so good. You turned me onto this.

    13. BGBen Gilbert2:48:50

        Yeah. It is an entire YouTube channel that I actually haven't watched in a while, but I only remembered it from our conversation, and now I need to go back and watch older ones, that talks about defunct theme parks. So if you like Acquired, and you wish you had something, you know, Acquired like, that's kind of visual, that's about, uh, history and intellectual property and people trying crazy stuff, some of the most crazy entrepreneurs and executives within companies decided to build theme parks. And it is very fun to see the weird, old Nickelodeon hotels or Action Park in, I think it's New Jersey, the, like, wildly unsafe park from the '60s, '70s, and '80s.

    14. DRDavid Rosenthal2:49:29

        Oh, man, those were the days.

    15. BGBen Gilbert2:49:32

        Yes. You could get lost for hours and hours and hours watching Defunctland, so I highly recommend the YouTube channel.

    16. DRDavid Rosenthal2:49:37

        I'm really glad that, uh, you and I, uh, grew up as kids in the era where, uh, [chuckles] we could still take unreasonable amounts of risk, and nobody thought that that was- there was anything wrong with that. [chuckles]

    17. BGBen Gilbert2:49:48

        Yes.

    18. DRDavid Rosenthal2:49:49

        Oh, crap. Um, my carve-out, uh, speaking of, you know, [chuckles] it being 2025, how are we talking about this? On the plane, on the way over to Taipei, um, I finally watched Everything Everywhere All at Once for the first time.

    19. BGBen Gilbert2:50:05

        So good.

    20. DRDavid Rosenthal2:50:05

        I can't believe I hadn't seen it before, but, you know, two kids under three and a half. [chuckles]

    21. BGBen Gilbert2:50:10

        [chuckles]

    22. DRDavid Rosenthal2:50:10

        Not a lot of time for movies. It's so good. It's so good. I think this was your carve-out, uh, when it came out a couple of years ago. Um, just so, so, so good. Truly enjoyed it, lived up to the hype, wor- deserves every award that it won.

    23. BGBen Gilbert2:50:23

        All right. Well, we've got some thank yous to folks who helped us prepare for this episode. So first, uh, to our sponsors, J.P. Morgan Payments, our presenting partner, ServiceNow, and Fundrise. You can click the links in the show to learn more. And then some special shout-outs to Art de Geus, the co-founder and executive chair of Synopsys, had a great conversation with us.... uh, well, first publicly with, um, Sassine Ghazi, the current CEO of Synopsys, on an ACQ2 episode a little while back. Uh, and then, uh, we chatted to prep for this episode and basically asked the question: What should we be asking Dr. Chang about? We, uh, got some similar notes from Renee Haas, who is the CEO of Arm. Great conversation with Sir Peter Bonfield, a current TSMC board member and former CEO of British Telecom. David, I know you've got a few also.

    24. DRDavid Rosenthal2:51:12

        Also to Wally Rhines, the former CEO of Mentor Graphics. Wally is a legend in the semiconductor industry, uh, almost on par with, uh, with Dr. Chang. They were contemporaries at TI back in the day. Uh, and to John Bathgate and Brinton Johns from NZS Capital, our go-to folks on anything semiconductors. They were- I think they were more excited, even more excited than we were, that we were doing this- [laughs]

    25. BGBen Gilbert2:51:38

        Yes

    26. DRDavid Rosenthal2:51:38

        ... and that we got to talk to them about it. [chuckles]

    27. BGBen Gilbert2:51:40

        Yes. Also, past Acquired guests. I think that episode h- holds up really well, where we did, uh, you know, semiconductor and complexity theory with them.

    28. DRDavid Rosenthal2:51:47

        Totally.

    29. BGBen Gilbert2:51:48

        And actually, John is the one originally who explained to me how EUV lasers work, which is still one of the most impressive accomplishments in human history. Uh, to John from the Asianometry YouTube channel. This is just an incredible channel all about semiconductors and about how all of this stuff works. I mean, I, I learned so much about CMOS sensors, about how they make the actual, um, silicon wafers themselves. That's a sophisticated process before the etching even starts. Uh, he's just got some awesome, awesome videos on the Asianometry YouTube channel, and, uh, he veryly- very kindly bought David and I dinner and hung out with us the night before the interview, which was very fun to do in Taipei.

    30. DRDavid Rosenthal2:52:30

        Very fun.

Episode duration: 2:54:55