"It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you'll do things differently." —Warren Buffett.
In times of crisis, when market confidence wavers, effective communication can make all the difference. In 2009, TSMC faced intense investor skepticism due to issues with its 40nm technology, casting doubt on its technological capabilities.
Under such pressure, Morris Chang delivered a highly creative earnings call that not only eased investor concerns but also showcased the company's exceptional crisis communication skills. This was more than just an earnings call—it was a PR masterstroke.
TSMC's 40nm technology issues garnered widespread attention due to low yield rates and quality problems. These issues not only strained key customer relationships with AMD and Nvidia but also raised investor concerns about TSMC's technological capabilities and prospects. Upon returning as CEO, Chang decided to address these challenges with a creative earnings call.
"When I returned as CEO, TSMC's 40nm production issues were already well-known among investors and analysts," Chang remarked. "There was widespread speculation about the severity of the issue and whether TSMC could weather the storm."
The unique, reassuring earnings call
Chang elected to provide a more comprehensive "status update" to investors and analysts, incorporating dramatic elements and humor to ease concerns.
Chang recalled, "At the end of July 2009, during my first earnings call after returning as CEO, the CFO presented the regular quarterly report. I then stood up and said, 'Everyone is concerned about the 40nm production issue, and we're working hard to resolve it. Now, I'd like to invite Dr. Mark Liu, our Senior VP of Operations, to give an update on the production line. However, he's too busy on the production floor, so we'll have him join us via live video feed.'"
The screen then displayed Dr. Liu, wearing a white lab coat and standing in front of the cleanroom, as he began his professional update. Chang described the scene: "I saw the astonished and moved expressions of the 100+ attendees and thought, 'This is a good omen.'"
The earnings call successfully eased investor concerns, showcasing TSMC's proactive approach to resolving the issue.
"Sure enough, a few months later, the 40nm yield issue was resolved, and everything returned to normal. My confidence in Dr. Mark Liu, Dr. Yong-pei Qin, and their production team proved to be well-placed," Chang added.
In TSMC's July 2009 earnings call, Liu was seen wearing a white lab coat on the projection screen. Credit: DIGITIMES
What's next?
After rebuilding investor confidence, Chang took decisive action. Faced with rapid market changes, he restructured TSMC by creating a new business development unit to enhance flexibility and foresight. This move redefined business development and provided new growth opportunities for senior management. Stay tuned for the next article: Inside TSMC IV: Reshaping the business development model for growth.
Article translated by Levi Li
