Dr. Morris Chang
speaker
200 appearances
1 recordings
1 series
first heard Jan 2025
last heard Jan 2025
Dr. Morris Chang’s voice in public audio — every appearance, attributed to the second.
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Appearances
And I just thought to myself, it wouldn't be just an ordinary vice president. Yeah, so. Because, you know, there was no reason for to just bring any Apple vice president to my home. It must be something special. It must be someone special for TSMC. All right, so Jeff Williams came. He was not just a vice president. He was the chief operating officer of Apple.
And Jeff was a pretty straightforward person. He didn't spend much time in ordinary chit chats.
It wasn't, but it wasn't formal either. You know, uh, my, my wife, Sophie just added, and we, we, we have a cook, you know, we, we had a cook, uh, and, uh, pretty good cook. Uh, uh, so, uh, Sophie just told the cook to add a few dishes, uh, She's a Chinese cook. She doesn't do any Western food. And, you know, Terry obviously, she grew up on Chinese food.
And I would imagine that the apple guy that he bought would also like Chinese food. Anyway, so she just asked the cook to cook a few more dishes But, you know, it wasn't important. The food was not important. Either the quantity or the quality was not important. Because almost Jeff almost immediately started his pitch, you know. Almost as soon as he sat down to dinner.
would like you to foundry our waivers." Something like that, pretty straightforward. I mean, so I listened. That night, I think Jeff talked to Maybe 80%, and I talked 20%. If you don't count the relative-to-relative talk between Sophie and Terry, which was not very much either.
No, nothing so concrete. Okay. He just said that we would let you have 40% gross margin. And I think, I didn't say anything. I didn't answer him. I didn't respond to that. But our margin at that time was already 45%. And I was trying to put it up to 50%. It was an announced effort in the company to push the gross margin. And I had that effort for many years after I came back to be the CEO.
And I really didn't even succeed even at my retirement. Now, of course, what happened later was that there was COVID and so on. And also, we began to have leadership, technology leadership. So, our margin, you know. jumped up to over 50%. But when I retired, I was still short of 50%, slightly short of 50%. I was almost there when I retired.
I think when you said that, you were neglecting Intel. Yeah. At 28 nanometers, we were very definitely the leader among foundries. Yeah. And maybe among a few other companies, such as Texas Instruments and so on. But not Intel, okay.
No, Apple... was not actively considering Intel. That came later. But I'm quite sure we'll have time to cover that.
Yeah. He said that he would let us at 40%. And my thought was, my goodness, we're already at 45%. But I also thought that he was trying to be generous when he said that he would let us have 40%. And I also thought to myself, well, now it's not this dinner. It's not the time to go into a pricing discussion. We have a lot of other things to discuss.
Nope. What node do you want? 20, he said. Now, that was a surprise to me. And frankly, it was also a disappointment because the most slow progression after 28 was going to be 16. Now, Apple, Jeff Williams, wanted 20.
A half-step. But a half-step is a detour, you know. My thought at the dinner there was that we would have to spend effort on the 20. which of course would help us on the natural next note, which was 16. But still, it was a detour from 28, you know. From 28, if we could go directly to, if R&D would directly go to 16, it would be less time than the first do 20 and then.
No, the point is that back then, R&D did not have enough resources to do two nodes at the same time. Later, we did.
It wasn't that serious. It wasn't that serious. Because when we figured a very big market, 428, and therefore, when we planned to increase vastly our capital spending, we didn't have Apple in mind. We didn't include Apple. Apple came strictly as a present surprise. Anyway, for the company in total, but not for 28. We didn't include Apple in our 28 planning.
That's right. That is where our connection with Goldman Sachs came in. Remember, I planted a lot of seeds when I ran TSMC. I knew that one of these days we would probably need top-level investment bank advice. So we established a good relationship with Goldman Sachs very early in our existence. I was, in fact, a board director of Goldman Sachs. Did you know that? Yes. Yeah. Yeah.
We did the ADR with Goldman Sachs, which opened up a good relationship with Goldman Sachs.
Yeah, ADI is American Deposit Receipts. It's New York. It's a separate market. In fact, right now, the TSMC price, ADR price is... has a 20% premium over. Really? Oh, wow. However, you know, you need TSMC board permission to convert your shares to ADR. Otherwise, you'd be able to arbitrage? Yeah. We don't want that. So, as I said, as I was saying, the board has to approve any conversion of...
ordinary Taiwan TSMC stock to ADRs. And the board does not give such permission. Easily anyway, okay, yeah.
Right. This was very early in our history. Now, we need funds. I mean, this Apple thing came after we had already decided to increase capital spending. And now, you know, Apple requires even more capital spending. And we have to figure out where the cash is going to come from. So, you know, there were several possibilities, of course. We're paying a dividend, not a very big dividend,
back then, but a modest dividend. We could cut that dividend. And then we also could sell stock, you know, new stock offering, either in Taiwan or in the US. We have the ADRs, you know. Or we can borrow money. Corporate bonds, you know.
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