TSMC Chairman Mark Liu Retires

A few random thoughts

I have to admit I was very surprised by the news when it came up. Mark Liu, TSMC’s chairman, is retiring. He gave a statement roughly goes something like this:

For the past thirty years, contributing my efforts at TSMC has been an extraordinary journey for me. I am especially grateful to the company's extremely talented team. Together, we have shaped the company into today's industry benchmark. It is a great honor to take over as Chairman of TSMC after the retirement of the company's legendary founder. I now hope to retire but not to rest, to give back in different ways based on my decades of semiconductor experience, to spend more time with my family, and to start a new chapter in my life. I will continue to work with the Board of Directors on corporate governance until the last day of my term, and I am fully confident that TSMC will continue to achieve excellent performance in the foreseeable future

Right now I am swamped by work so I am not able to do a whole video on the topic, but I thought it would be interesting to at least talk a bit about TSMC’s succession issues and what might be next.

Founder Morris Chang has long struggled with the issue of succession. He was already in his late 50s when he first founded the company. So famously in 2005, he appointed Rick Tsai as his successor. Tsai had served in fab operations and then as the COO for a while.

Despite this, TSMC's 40 nanometer node had troubles ramping up its yields. The Global Financial Crisis struck, hurting the industry. Worse yet, TSMC fumbled a series of layoffs. The layoffs were deemed necessary considering the economic situation. But Taiwanese business media reported that those layoffs were implemented with insufficiently rigorous criteria. Workers who supposedly left voluntarily were protesting outside of Morris Chang's house.

TSMC met the expectations of the financial community. Nevertheless, on June 2009, just four years after the CEO handover, Morris Chang removed Tsai, reassigning him to a smaller division. Tsai is now the CEO of MediaTek. He restarted the succession process all over again, and then plunged the company into a massive capital expenditure that paved the way for Apple.

Chang did not completely retire from the company again until 2017 he was 86 years, when he brought Mark Liu and CC Wei as co-CEOs. According to Nikkei, Chang delayed his retirement since he wanted the two to think more like businessmen rather than engineers.

When he promoted Liu and Wei to be co-CEOs in late 2013, Chang said he expected his successor to be more of a "good businessman," not merely a capable engineer. Back then, he said both executives were still more like engineers and that their business acuity needed time to be cultivated. He added that a CEO must be open-minded, worldly and wise enough to develop strategies for the company.

So when Chang retired as Chairman, Liu became Chairman, and Wei remained as CEO. Technically, the Chairman in an Asian company is a bit more outwards facing. He would represent the company in ceremonies and such. During that TSMC Arizona ceremony, Liu is the one popping the champagne, not Wei.

Liu was ideal for the position since he seems to be the more philosophical and thoughtful of the two. Wei is the more practical and hard-charging of the two - a bit more of a go-getter it seems.

Reading this news, I harken back to something that I read a while back. I was doing research for the Nvidia CuLitho video, which included quotes from ASML, Synopsys, and TSMC. The thing that caught my eye was that the quote supporting CuLitho was given by CC Wei, CEO, rather than Mark Liu, the chairman.

It was probably just nothing. But I remember thinking at the time that a quote like this is the such type of thing that the Chairman would be giving, rather than the CEO - who is more busy running the whole company. But it does seem like Liu has wanted to retire for a long time. Wei taking more of a step into the public spotlight - looking back at it - seems like part of that. Liu will probably return to his home in the US.

Wei is the likely successor for the Chairman, unifying the CEO and Chairman positions. It is going to be a big challenge. In the past, the TSMC chairman was about handling business and relationships, and not so much geopolitics. Wei is not known to have done this government and geopolitical stuff before. I wonder how hard it might be to run and keep a massive engineering company at the leading edge while also doing it.

TSMC has gotten to where it is on the basis of a few big bets - some technical, others business-related. The technical ones, I think can be handled by the engineering bench, which is so deep James Cameron wants to send a submarine down there. But I do wonder if there is someone who can unite everyone at the company and make those hair-raising decisions that put the whole company on the line. Like when Morris raised capex in the wake of Global Financial Crisis and recession, or when he orchestrated the cunning acquisitions of TASMC and WSMC in 2000 to boost its capacity far past its rival UMC.

Wei also needs a successor of his own. Based on what was reported back in 2017, Wei is probably around 70-71 now, actually two years older than Liu. I feel like he needs to start grooming a successor. There is a generation who deserves to rise up, but in doing of course there will always be concern about who is taking the controls in the future. TSMC is still a relatively young company with an extremely unique culture which has given it success. It will need to work hard to preserve that while also adapting to new realities.

Post note: I have been working hard for you guys. Sorry I have not been putting out so many newsletters, I suffered a bout of migraines and was stuck in bed. Next week I will have a “Year end review” for 2023.