What are the key takeaways from this Acquired episode?

Key insights include: **Customer relationship management:** Chang personally visited Jensen Huang's home in 2009 with a $100+ million settlement offer for 40-nanometer yield problems, giving 48 hours to accept without negotiation. This direct approach preserved TSMC's most important partnership and led to billions in future business with NVIDIA.; **R&D budget stability:** Chang set TSMC's research and development spending at exactly 8% of revenue regardless of economic conditions, eliminating annual budget negotiations. This guaranteed resource allocation enabled the R&D team to plan long-term technology development and contributed directly to achieving leadership at 28-nanometer and subsequent nodes.; **Capital allocation timing:** TSMC invested $6 billion in 28-nanometer capacity in 2010 despite board opposition, tripling previous capital spending. Chang convinced directors by citing inputs from market forecasting, R&D predictions of a "sweet spot" node, and business development analysis, betting correctly on smartphone demand driving semiconductor growth.

What did Morris Chang discuss on Acquired?

Morris Chang, 93-year-old TSMC founder, shares firsthand accounts of building relationships with Jensen Huang and Apple, resolving the 40-nanometer crisis, committing $6 billion to 28-nanometer production, and establishing Taiwan's pure-play foundry model that created a trillion-dollar semiconductor manufacturing company. Key topics include: **Customer relationship management:** Chang personally visited Jensen Huang's home in 2009 with a $100+ million settlement offer for 40-nanometer yield problems, giving 48 hours to accept without negotiation. This direct approach preserved TSMC's most important partnership and led to billions in future business with NVIDIA.; **R&D budget stability:** Chang set TSMC's research and development spending at exactly 8% of revenue regardless of economic conditions, eliminating annual budget negotiations. This guaranteed resource allocation enabled the R&D team to plan long-term technology development and contributed directly to achieving leadership at 28-nanometer and subsequent nodes..

How long is this episode of Acquired?

This episode is 175 minutes long. SignalCast provides an AI-generated summary so you can get the key insights in about 3 minutes.

Acquired

TSMC Founder Morris Chang

January 27, 2025

175 min episode · 2 min read

Morris Chang

Episode

175 min

Read time

2 min

Topics

Career Growth, Productivity, Relationships

AI-Generated Summary

Published Dec 26, 2025

Key Takeaways

✓Customer relationship management: Chang personally visited Jensen Huang's home in 2009 with a $100+ million settlement offer for 40-nanometer yield problems, giving 48 hours to accept without negotiation. This direct approach preserved TSMC's most important partnership and led to billions in future business with NVIDIA.
✓R&D budget stability: Chang set TSMC's research and development spending at exactly 8% of revenue regardless of economic conditions, eliminating annual budget negotiations. This guaranteed resource allocation enabled the R&D team to plan long-term technology development and contributed directly to achieving leadership at 28-nanometer and subsequent nodes.
✓Capital allocation timing: TSMC invested $6 billion in 28-nanometer capacity in 2010 despite board opposition, tripling previous capital spending. Chang convinced directors by citing inputs from market forecasting, R&D predictions of a "sweet spot" node, and business development analysis, betting correctly on smartphone demand driving semiconductor growth.
✓Employment philosophy during downturns: Chang refused to conduct layoffs based on performance reviews during the 2008 financial crisis, arguing that subjective ratings from 700 different supervisors lack credibility. He maintained that semiconductor companies always need people due to Moore's Law progression, making layoffs counterproductive when rehiring costs equal separation expenses.
✓Pure-play foundry advantage: TSMC's decision to never compete with customers in chip design proved decisive when Apple chose TSMC over Intel for iPhone manufacturing. Intel's inability to act as a true foundry partner, combined with customer trust issues from their historically superior attitude, created an insurmountable competitive moat for TSMC.

What It Covers

Morris Chang, 93-year-old TSMC founder, shares firsthand accounts of building relationships with Jensen Huang and Apple, resolving the 40-nanometer crisis, committing $6 billion to 28-nanometer production, and establishing Taiwan's pure-play foundry model that created a trillion-dollar semiconductor manufacturing company.

Key Questions Answered

•Customer relationship management: Chang personally visited Jensen Huang's home in 2009 with a $100+ million settlement offer for 40-nanometer yield problems, giving 48 hours to accept without negotiation. This direct approach preserved TSMC's most important partnership and led to billions in future business with NVIDIA.
•R&D budget stability: Chang set TSMC's research and development spending at exactly 8% of revenue regardless of economic conditions, eliminating annual budget negotiations. This guaranteed resource allocation enabled the R&D team to plan long-term technology development and contributed directly to achieving leadership at 28-nanometer and subsequent nodes.
•Capital allocation timing: TSMC invested $6 billion in 28-nanometer capacity in 2010 despite board opposition, tripling previous capital spending. Chang convinced directors by citing inputs from market forecasting, R&D predictions of a "sweet spot" node, and business development analysis, betting correctly on smartphone demand driving semiconductor growth.
•Employment philosophy during downturns: Chang refused to conduct layoffs based on performance reviews during the 2008 financial crisis, arguing that subjective ratings from 700 different supervisors lack credibility. He maintained that semiconductor companies always need people due to Moore's Law progression, making layoffs counterproductive when rehiring costs equal separation expenses.
•Pure-play foundry advantage: TSMC's decision to never compete with customers in chip design proved decisive when Apple chose TSMC over Intel for iPhone manufacturing. Intel's inability to act as a true foundry partner, combined with customer trust issues from their historically superior attitude, created an insurmountable competitive moat for TSMC.

Notable Moment

When Apple requested 20-nanometer production instead of the planned 28-nanometer node, Chang faced a dilemma: invest billions in an unplanned technology detour or lose Apple as a customer. He chose to accept only half of Apple's requested capacity, requiring corporate bond issuance, which later proved prescient when Samsung temporarily won 16-nanometer business.

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Episode Transcript

The podcast about great technology companies and the stories and places No. No. You said technology. Now we definitely have a cold opening. Alright. I guess, I really want us to be about technology companies again. Well, this is a technology company. It's a sign. Alright. Here we go. 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? Sitting down, Welcome to the spring twenty twenty five season of Acquired, the podcast about great companies and the stories and playbooks behind them. I'm Ben Gilbert. I'm David Rosenthal. 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 fabulous 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 doctor Morris Chang, the 93 year old founder of TSMC, if he would be open to an interview with us. It is, kind of insane and super cool that Jensen made time to help us with this. It's, it's not like he doesn't have a lot of other things going on. Yes. Well, listeners, it happened. So today's episode is a conversation that we recorded in Taipei last week at doctor Chang's office. We flew to Taiwan for a forty eight hour whirlwind where we spent some time at TSMC's headquarters in Hinchew Science Park, where many of TSMC's fabs are located. Super cool to see. Totally. So conveniently, doctor 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 doctor Chang shares in his memoir about Apple, Nvidia, and the birth of the fabless industry. Yes. And big thank you to Karina Bau, 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 then when that happens. Yep. Alright. Listeners, you can join our email list at acquire dot f m slash 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, what the next episode will be. I, always …

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