Commentary: The arrival of post-Morris Chang era

Josephine Lien, Taipei; Steve Shen, DIGITIMES Asia

TSMC chairman Morris Chang's retirement announcement comes at a perfect timing as the foundry house is to celebrate its 30-year anniversary on October 23, 2017. While Chang is to retire next June, this year's anniversary is going to be a "farewell party" for Chang as a large number of heavyweights in the global semiconductor industry are expected to join the party and to congratulate Chang for his accomplishments over the past 30 years.

Chang's announcement comes after he has built TSMC into the world's foundry chipmaker with a market value of about NT$5.72 trillion (US$188.1 billion) currently, compared to less than US$200 million when he founded the company 30 years ago.

It is also a good timing for Chang to retire as TSMC's profits have hit record high and the business outlook for the contract chip industry is clear.

Chang also timed his retirement announcement shortly after TSMC announced in late September that it has decided to set up its first, as well as the world's first, 3nm wafer fab in the Southern Taiwan Science Park (STSP).

This decision has been widely recognized as a triple-win decision for Taiwan, TSMC, and the upstream and downstream supply chains of the country's semiconductor industry.

But the leadership change also comes at a critical time as rival companies including Samsung Electronics and Intel have been gearing up efforts to vie for contract chip orders from Apple, Qualcomm, Avago, Broadcom and Huawei, among others. Samsung, in particular, posts strong challenge as the Korea-based giant has said it plans to triple its market share in the global contract chip market.

The post-Chang leadership at TSMC will have to deal with an emerging market trend where the global PC, TV and smartphone industries - which had previously served as growth drivers for the contract chip market - have become mature and will no longer grow robustly. Foundry chipmakers globally have to look for new business opportunities emerging from new sectors such as IoT, IoV, artificial intelligence (AI) and autonomous driving.

Meanwhile, chip designers, including Apple, will be also seeking to diversify its supplier sources, which is also an emerging challenge for foundry houses.

TSMC has been dealing with its major clients such as Apple and Qualcomm for over 10-20 years, and it remains to be seen if Chang's successors - Mark Liu and CC Wei - will be able to continue to secure long-term orders from its major clients.

But this apparently is not an issue for Chang as he said he has cofidence in his two successors' ability to face new challenges.