Morris Chang Pointed Out U.S. Considers Taiwan a Dangerous Place：Warning to Lai？
United Daily News, March 16, 2023
Morris Chang, founder of the Taiwan Semiconductor Manufacturing Company (TSMC), had a conversation with Chris Miller, author of Chip War: The Fight for the World’s Most Critical Technology. For the first time, Chang expressed his support for the United States to curb the development of semiconductors in China through industrial policies. However, he also released crucial messages to the government: The U.S.-China technology war has entered another stage, and Taiwan has not been included in the list of friendly outsourcing partners by the United States. Thus, the White House still strongly believes that Taiwan is a dangerous place, and Taiwan should not naively believe the United States will lend a helping hand during a crisis in the Taiwan Strait.
Vice President William Lai not only delivered a speech at the dialogue event, but he also sat through the whole dialogue. He said in his speech "peace is in the interest of all sides," and that "peace and stability in the Indo-Pacific is not only the responsibility of Taiwan but also every country in the world, especially China." Chang’s words were obviously addressed to Lai.
In his dialogue with Miller, Chang continued along the same lines that “globalization is dead,” the statement he put forward when he went to Arizona, USA to participate in the TSMC’s new U.S. plant “tool-in” ceremony. This is the interpretation summarized by those participants from the semiconductor industry.
Morris Clarified Government Role in Establishing TSMC
In his conversation with Miller, Chang politely praised him for writing a book on the importance of semiconductor chips with his keen observation as a historian, but he made a slight correction, thinking that Miller might have somewhat overemphasized the role played by the government in the establishment of TSMC.
Chang stated that when TSMC was established in 1987, the government only played the role of an investor. At that time, former Minister of Economic Affairs Lee Kuo-ting was the only person who believed in him, and the government only invested in TSMC because of Lee's support. He recalled that the government invested about NT$5.5 billion (about US$180 million), holding 48 percent of the shares, and asked him to persuade world-renowned enterprises to invest in the company so that they can attract more investors. Later, Chang was able to get Philips on board.
However, when TSMC was listed seven years after its establishment, that is, in 1994, the government was eager to sell all its shares. The same was true with Philips. The National Development Fund continued to sell TSMC shares until merely 6 percent of shareholding. It was only after Chang’s earnest persuasion did it stop selling shares. Although he thanked the government for accepting his suggestion, he actually satirized that the government only played the role of funding at the beginning. Instead, it was when the Industrial Technology Research Institute sent 150 engineers, technicians, and operators to help that truly opened a new page for TSMC.
At that time, Chang had no idea that TSMC would have attained today's achievements. It was the 10 years from 1991, when TSMC's annual compound growth rate exceeded 50 percent, that he believed the foundry business model he proposed in Texas Instruments could really be implemented in TSMC in Taiwan. His expectations have been fulfilled today, and TSMC has become the core of the global semiconductor industry.
Intel’s Threat to TSMC? Chang Quotes “Dance Floor Theory”
However, while labeled "the dialogue of the century” by the event organizer, today's dialogue between Miller, a historian who is not deeply involved in semiconductors, and Chang, a veteran who has fought in the semiconductor battlefield for more than 60 years, only showed that Miller failed to respond to many questions from attendees, including those from Chang.
The moderator raised questions on behalf of attendees. Questions included how people should view Intel's entry into the foundry business, whether it have an impact on TSMC, and if Intel's investment expansion will allow America to achieve semiconductor autonomy.
Regarding the wrestling between Intel and TSMC in the foundry business, Miller cleverly said that he is a historian and dared not predict, but his research told him that it is not easy to build a foundry from scratch.
Chang took advantage of NVIDIA CEO Jensen Huang’s "Dance Floor Theory": "Mr. Huang said that TSMC has learned to dance and cooperate with 400 partners, while Intel has always danced on the dance floor alone!" Speaking of this, Chang also laughed and said: "I fully agree with Mr. Huang’s comment, and I think this is a very important point."
In response to whether the United States can achieve self-sufficiency by expanding semiconductor manufacturing, Miller stated that based on his knowledge through visiting so many countries and people in charge of semiconductors, it is difficult to be self-sufficient. It will cost a lot of money and the technology will not be any better. At present, many countries still want to pursue self-sufficiency, which is beneficial to many companies, but the semiconductor supply chain is actually very complicated. The suppliers of many important products of the entire industry are in other countries, so self-sufficiency should not be overemphasized.
TSMC Pressured? For the First Time, Chang Expresses Support for U.S. Curbing China’s Chip Industry
The highlight of the conversation between the two was Chang asking Miller: Under the presupposition that there is no war in the Taiwan Strait, and no U.S.-China war, what will it look like in the next five to 10 years?
Miller put forward his point of view that in the future, the global semiconductor supply chain may have two different systems: China and other countries. The United States and Japan would resort to export controls. The United States, Europe, Japan and India would expand the role played by the semiconductor industry. The government would also inject huge funds into this industry. However, he believes that memory chips are now concentrated in South Korea, logic chips are concentrated in Taiwan, and some machines are concentrated in other countries, but after five years, the extent of concentrations would gradually decrease.
Chang agreed with Miller that the semiconductor supply would have a polarized development trend, and the United States has begun to introduce some policies for the chip industry, part of which aims to slow down the pace of China's chip development. He then switched the trajectory of the dialogue and said: "I have no opinions against this. I can even say that I support this direction.”
This is the first time Chang has expressed his support in public for the United States to curb the development of semiconductors in mainland China through industrial policies. He also mentioned that he has seen the most advanced chips of mainland China and thinks that it will encounter difficulties. Those were the chips that TSMC could already manufacture five or six years ago, which reflects that the semiconductor technology of mainland China is still five to six years behind Taiwan. However, he agrees with the United States’ attempt to hold back China's semiconductor development. To some extent, he seems to realize that if the United States does not take action, even TSMC will be pressured by China’s catching up in technology development.
Taiwan Regarded as Dangerous Place: Intended for Lai?
At the end of the conversation, Chang released a more important message on why the United States does not list Taiwan as a friendly outsourcing ally, and even requires Taiwan's semiconductor industry to set up factories in high-cost places for production. Although some people interpreted it as his hope that Miller would present his point of view as an American, according to people close to Chang, he is actually telling Vice President Lai, who was present at the event, that the Americans have expressed their mentality: The White House decision-making officials have always believed that Taiwan is the most dangerous place. How could it be possible for them to lend a helping hand to Taiwan at the most critical time?
As for why the United States considers Taiwan the most dangerous place, of course, it is because Taiwan’s leaders having been provoking Communist China in the past few years. Thus, in this wave of geopolitical wrestling, they have pushed Taiwan into a dangerous situation. If there is a real crisis in Taiwan, judging from the information released by Chang, the United States will not extend a helping hand.