Everything You Need to Know About the Taiwanese Semiconductor Company That's Dominating the World
The Vision and Strategy of TSMC, the Unrivaled Leader in the Semiconductor Industry
★Professor Kwon Seok-jun of Sungkyunkwan University and TSMC Vice President Jang Sang-i strongly recommend

TSMC is a Taiwanese semiconductor manufacturing company and is the world's overwhelming leader in semiconductor foundry (contract manufacturing).
It has grown into the world's leading foundry, producing the latest, most advanced semiconductor chips designed by companies such as Nvidia, Apple, and Qualcomm.
Big tech and global chip design companies are lining up to entrust manufacturing to TSMC, known for its high yields.


《TSMC, The Secret of the World's No. 1》 details the history of TSMC, from its founding to its development, crises, and overcoming them, now in its 37th year.
This book is captivating and covers the story of TSMC's struggles to rise to the top in the world, including the story of Morris Chang, a former vice president at Texas Instruments, a leading semiconductor company, returning to his home country to establish TSMC, his relationship and competitive landscape with Samsung, the fierce technological race with UMC, the biggest competitor in Taiwan, the transfer of TSMC's top engineer Liang Mengsong to Samsung and a Chinese semiconductor company, and the lawsuit against SMIC (a Chinese state-owned semiconductor company) for technology patent infringement.

Published in March 2024 under the title "TSMC's Secrets That Move the World", it garnered significant attention and detailed TSMC's success strategy, particularly its rare service spirit in the manufacturing industry and its unimaginable R&D passion.
From its early days, TSMC, where founder Maurice Chang put a lot of effort into recruiting engineers, has established an engineer-centric organizational structure.
Based on this, we focused on R&D to process customer orders with high yield and build international trust.
Based on its outstanding know-how in microprocessing, the company is solidifying its position even amid the US-China semiconductor war.
By aligning with Japan and establishing a factory in the United States, the company is minimizing the damage caused by US export sanctions on China, and its significance as a company that realizes the vision of Big Tech through manufacturing is shining.
Author Lin Hongwen is a true TSMC expert with 30 years of experience covering the tech industry, having interviewed Morris Chang in his first year as a reporter.
With Samsung Electronics facing a crisis, this book contains everything about TSMC, the world's top 10 company with a market capitalization of 1,400 trillion won and a 60% share of the foundry market, and the company the Korean semiconductor industry must strive to follow.

Another key secret to TSMC's success, as revealed in the book, is its R&D culture, which is in line with what Dr. Conrad Yang emphasized earlier. TSMC doesn't publish as many research papers in international journals as other integrated semiconductor manufacturers like Samsung Electronics or Intel.
This isn't because TSMC's researchers lack the paper-writing skills or data to compete with those at other companies, but rather because there's no need to disclose TSMC's technological know-how and data to the public. TSMC meticulously manages its extensive IP experience, solutions, and new material test data by converting them into IP, incorporating them into its portfolio of customer-specific chip designs.

--- p.15 「Recommendation.
From "TSMC, the Secret of World's No. 1": Questions for the Korean Semiconductor Industry

It is no exaggeration to say that semiconductors are synonymous with the Taiwanese economy and have become the country's most valuable asset.
Moreover, no one can deny that TSMC is at the center of semiconductors and the global economy.
TSMC, with a market capitalization of NT$12 trillion, always invests generously in facilities and R&D.
The era dominated by the three giants Samsung, Intel, and TSMC has passed, and TSMC has taken the lead in the race to miniaturization between 3nm and 2nm. TSMC has elevated Taiwan's standing on the global stage, earning it the nickname "Sacred Mountain of the Nation" (護國神山), creating a climate of "Taiwan must be protected" in the event of an emergency.

While we often discuss Taiwan, the semiconductor powerhouse, and TSMC, we actually know little about TSMC's history. The story behind TSMC's founding can only be gleaned from founder Morris Chang's autobiography or from TSMC's financial statements.
But what we need is information from someone who has personally witnessed TSMC's growth, and Lin Hongwen's book is exactly the valuable information we were looking for.
--- pp.24~25 「Recommendation.
From "The Diary of an Observer Who Silently Watched Over the Growth of Large Corporations"

How did Taiwan's semiconductor industry succeed? I believe there are several factors.
Over the past 40 years, as the global semiconductor industry has shifted from vertical integration to horizontal division of labor, Taiwan has seized the opportunity and adapted to the changes.
Moreover, most Taiwanese companies are engaged in foundry business without their own brands.
Companies that had their own brands spun off their brands and managed them independently.
Thanks to this, companies and customers were able to form a relationship of alliance rather than competition and pursue mutual growth.
--- p.30 Preface to the Korean edition.
From "TSMC Finds Greater Opportunities for Success Through Lessons from Failure"

Astute readers will have noticed that the English initials TSMC are sometimes written in lowercase as tsmc.
Why is that? Even British and American countries sometimes use lowercase letters for their own names for various reasons (such as to show respect).
But as far as I know, the reason TSMC uses lowercase letters is because the capital T has a suppressed feeling due to the long horizontal line, and the lowercase t has an image of breaking through and sticking its head out.
--- p.55 「Part 1 - Chapter 1.
From “Why my father recommended that I join TSMC”

TSMC positions itself as the "customer-satisfying contract manufacturing plant," attracting IC design companies without their own manufacturing facilities—so-called fabless companies—as clients. TSMC creates virtual factories, like homes for its customers. Customers can access TSMC-provided computer systems at any time with a password, allowing them to check the current wafer production status.
Just as FedEx customers can check the delivery status of their mail, they can check which TSMC factory the wafers they ordered are currently undergoing processing.
Additionally, TSMC's engineers actively solved customers' difficult problems as if they were employees of the customer company.
With just one phone call, a TSMC engineer would appear like a genie from Aladdin's lamp and solve the problem, which was better for the customer than building and producing the product themselves.
--- p.74 「Part 1 - Chapter 5.
“Manufacturing must be converted into a service industry to generate high profits.”

Intel manufactured all of its products in its own factories.
However, because there were not many production lines, as the old-generation process technology gradually matured, the number of products to be produced gradually decreased, making it difficult to manage the production lines of the old-generation process.
On the other hand, TSMC and UMC were able to receive orders from customers who needed older wafer processes, and since those older processes had already been depreciated, they became a great source of revenue for the companies.

TSMC has been able to improve its process technology to the highest level by dealing with the world's top customers such as Apple and Nvidia, while its older process was able to fill its production lines by finding suitable customers for automotive ICs and power ICs.
This is the high-efficiency, high-growth foundry business model.
--- pp.120~121 「Part 1 - Chapter 11.
From “Building a Winner Circle through the Grand Alliance”

A look at the three major forums TSMC hosts each year provides insight into TSMC's core competitiveness.
The first is the TSMC Technology Symposium, held every September.
This symposium, which is open to all customers and suppliers, will reveal TSMC's technology vision for the next few years, process technology mass production schedule, architecture, efficiency, power dissipation, speed, and other strengths.
These symposiums are primarily led by people in the sales, R&D, and operations departments, and recent symposiums have been attended by senior vice presidents in these fields, including Zhang Xiaoqiang, Luo Weiren, and Mi Yujie.

The second is the Open Innovation Platform (OIP) forum.
Held annually in October, this event primarily brings together companies across the IC design industry value chain, including electronic design automation, cloud computing, semiconductor design assets, and design service providers from TSMC's partner alliances, the DCA Design Center Alliance and the VCA Value Chain Alliance. The OIP Forum is hosted by TSMC's Design Technology Platform (DTP) division, founded by Cliff Hou.

The third is the Supply Chain Forum, held every year-end.
This forum invites TSMC's suppliers to select, award, and encourage suppliers who have contributed to improving TSMC's management efficiency through better services and lower prices.
The Supply Chain Forum is primarily managed by TSMC's Purchasing Department.
--- p.147 From "Part 1 - Chapter 15. The Outline of TSMC's Third Successor Revealed?"

It was only much later that TSMC learned through its customers that SMIC had allegedly copied TSMC's technology.
To secure evidence of patent infringement, TSMC first applied for an exit ban on former project manager Liu Yunchen in Taiwan, and also accused Liu Yunchen of leaking to SMIC the layout and design drawings of the 12-inch wafer factory, as well as data on the wafer manufacturing process and formulation.

Prosecutors who raided Liu Yunchen's home found on computer hard drives and email accounts that Italian-born Marco Mora, then COO of SMIC, had asked Liu Yunchen for a list of processes and equipment for TSMC's 12-inch wafer factory.
However, SMIC denied that it copied TSMC's technology.
--- p.192 From "Part 2 - Chapter 6. How TSMC Won the Patent Infringement Lawsuit Against SMIC"

At a June 2023 TSMC board meeting, when a reporter asked about some American employees' complaints about overtime and shift work, then-Chairman Mark Liu said quite frankly, "If you don't want to work overtime, you shouldn't be in this industry."
TSMC is the light of Taiwan, and will become a Taiwanese global company that possesses Taiwanese corporate culture and management style and demonstrates its competitive edge on the international stage.
In this era of shifting from "work hard" to "work smart," TSMC must embrace all criticism with the attitude of "correcting mistakes and working harder when there are none" to grow faster.
I believe Chairman Mark Liu and President Wei Zhejiang would agree with this idea if they were to lead TSMC into a golden age for the next decade.
--- p.227 「Part 2 - Chapter 11.
Long working hours, outdated software, and poor employee benefits

When discussing the success of Taiwan's semiconductor industry, there's one factor most people either don't know about or have never heard of.
This was Taiwan's super-powerful secret weapon: the employee stock dividend system.
This system was introduced to companies in the mid-1980s and was abolished in 2008, about 20 years later.
It is a system in which companies share a certain portion of the previous year's profits with their employees. Initially, some were paid in cash, but the distribution was mainly in stocks, like dividends.
As the stock market boomed and stock prices rose, this system proved to be very effective in boosting employee morale.
This system was a powerful weapon in scouting overseas talent or encouraging them to return to Korea and start their own businesses.
At the time, Taiwanese semiconductor companies could not afford to offer high salaries, making them unattractive enough for overseas talent to give up high salaries and return to Taiwan.
However, the revenue generated through this system more than compensates for the low salaries, so a large number of talented individuals return to Taiwan, providing an opportunity for the Taiwanese semiconductor industry to become globally competitive.
--- p.265 「Part 3 - Chapter 7.
Among Taiwan's unique employee stock dividend systems,

Although the R&D team was staffed with veterans such as Zhang Shangyi, Lin Benjian, Yang Guanglei, Sun Yuancheng, Liang Mengsong, and Wei Zhenhua, who were known as TSMC's "R&D Six Knights" at the time, senior management was somewhat skeptical of their decision to develop the technology on their own.
Then, their fighting spirit was further aroused, and they all went to see Chairman Morris Chang and persuaded him that they would definitely complete the mission.


This project was carried out at the Southern Science Complex wafer factory.
Jang Sang-i took overall command, and Wi Je-hwa, as the project manager, led about 20 people from the Shinju Science Complex to the Southern Science Complex.
Wei Zhen traveled between Tainan and Hsinchu every week to report progress to headquarters, and some 20 employees also left their families and stayed in Tainan for a year and a half to focus on technology development.
Wi Jeon-hwa said that he was so busy at the time that he was unable to be there for his wife when she was in a car accident, and he still feels sorry about that.
--- p.296 「Part 4 - Chapter 1.
From "A Striking Strike"

The 'Nighthawk Project' offered 400 R&D personnel the unprecedented conditions of '30% additional base pay and 50% performance bonus' and made them work 24 hours a day, 3 shifts without rest.
The workforce was divided into 'day shift', 'evening shift', and 'night shift', with each shift working in shifts of 8 hours each, focusing on developing 10 nanometer technology to shorten the learning curve.
Their goal was to completely overtake Samsung and Intel and become the world's number one company by 2016.
As we all know, TSMC's Nighthawk project was a huge success.
Apple's iPhone 6s series A9 processor chip was produced half by Samsung and half by TSMC, but after the 'chip gate' (a controversy over Samsung chips generating more heat than TSMC chips) broke out, Apple decided to order all A10 processor chips after the A9 from TSMC in 2016.
The Nighthawk Project was a complete success.

In 2022, Samsung began mass production of 3nm processes ahead of TSMC. While TSMC entered mass production later than Samsung, it surpassed Samsung in yield and lead times, and even further outpaced Intel, whose 10nm process technology development was lagging behind. TSMC has begun to gain a significant lead over its two competitors.
--- p.304 「Part 4 - Chapter 3.
From "Nighthawk Unit" that forgot to sleep in front of two gorillas

From the U.S. perspective, the Chinese government's indiscriminate cash injection into its semiconductor industry and its expansion into various industries, including weapons, IT, and military, already pose a serious threat to American hegemony.
Taiwan does not want any country to seize and wield hegemony.
But it is also in Taiwan's interest to agree to US regulations on China, as Taiwanese companies are the ones most directly affected as China gradually attempts to swallow up not only the low-end market but also the upper-tier market.
--- p.382 「Part 5 - Chapter 1.
Sanctions on China do not mean the U.S. will start producing semiconductors again.

The United States and China each seek to build resilient supply chains and achieve self-sufficiency by gathering friendly allies.
It appears that this situation of confrontation between the two powers will continue for the next 10 years or so.
Of course, the US has a much greater advantage, as there are more countries on the US side and they are all semiconductor powerhouses.
Because the United States restricts the export of advanced technologies and equipment to China, it is very difficult and time-consuming for China to develop advanced processes, forcing China to actively expand into mature process fields.
With imports of IC design software and advanced semiconductor technology equipment blocked, China is striving to achieve its goal of domestic production through its own technological development.
--- p.389 「Part 5 - Chapter 2.
Where are the semiconductors you use produced?

TSMC's investment in the United States could also have a very positive impact on the industrial chain and related effects of U.S. semiconductor production.
In fact, all industries are in a competitive cooperative relationship.
While they compete, there are bound to be areas of cooperation. TSMC has over 10,000 suppliers. TSMC's establishment of a US plant will enhance the capabilities of American manufacturing, and if TSMC's suppliers continue to enter the US market, it will play a significant role in expanding a healthy supply chain.
Additionally, all American manufacturers will benefit from the integration of Intel, Samsung, Texas Instruments, and Micron, and will benefit from a complete supply chain.
--- p.405 「Part 5 - Chapter 4.
From “Catfish Effect and Association Effect”

TSMC is currently carrying out large-scale investment projects in the United States, China, and Japan, but JASM is the only joint venture established between TSMC and a customer, making it particularly significant.
Since this plant will manufacture CMOS image sensors and automotive semiconductors for Sony and Denso on a contract basis and supply them entirely to specific customers, the Japanese company's investment is significant in that it guarantees a mutually beneficial business relationship.
--- p.421 「Part 5 - Chapter 7.
"Don't just look at the United States, the highlight is Japan"

Not only Taiwanese foundries but also Korean companies are bound to be affected by the US-China semiconductor war.
The impact on Korea will likely be no less severe than that on Taiwan, and the repercussions could be even greater and more widespread.
This is because Samsung and Hynix have actively invested in the Chinese market and received various preferential benefits from the Chinese government, and exports to China account for 40 percent of the total sales of the Korean semiconductor industry.
On the other hand, TSMC's exports to China account for less than 10 percent of its total sales, while the U.S. accounts for more than 60 percent.
South Korea, which is much more dependent on the Chinese market than Taiwan, is expected to be hit harder by these Chinese sanctions.
Moreover, tensions between North and South Korea are no less severe than those in the Taiwan Strait due to North Korea's continued missile launches near South Korea and Japan, and since most of Samsung's foundry plants are located in South Korea, there will likely be considerable pressure from the U.S. government to build a plant in the United States.

--- p.449 From "Part 5 - Chapter 11. Will TSMC Follow in the Footsteps of the Failed Toshiba?"