Morris Chang: TSMC Faces Its Most Severe Challenges Yet!

On October 26th, at TSMC’s corporate sports event, TSMC founder Morris Chang emphasized that the company’s remarkable success has made it a strategic battleground—a status that is now a stark reality. He reiterated his assertion that globalization and free trade across the globe are dead, warning that TSMC is on the cusp of facing its most severe challenges ever. In response to Chang’s warning on the same day, TSMC CEO C.C. Wei stated that the company is fully confident in strengthening its technological leadership, and reaffirmed that the construction of its new chip fab in Arizona is "progressing smoothly". Wei added that TSMC now plays an even more pivotal role in the global semiconductor industry. Bloomberg reports that Chang’s remarks come against the backdrop of TSMC facing the "most severe" growth challenges yet, as the U.S. tightens controls on the flow of advanced chips to China. Chang first put forward this view as early as 2019, noting that "free trade in semiconductors, especially the most advanced ones, has come to an end. In such an environment, our challenge is to continue driving growth." As the primary chip supplier for Apple and NVIDIA, TSMC produces 99% of the world’s AI accelerators. The company is expected to post a record-high revenue this year, buoyed by robust demand for artificial intelligence; its stock price has nearly tripled since OpenAI launched ChatGPT in late 2022. Despite this stellar performance, TSMC is barred from manufacturing the most powerful AI chips for its Chinese clients, as the U.S. collaborates with allies including Japan and the Netherlands to restrict China’s access to cutting-edge chips and semiconductor manufacturing equipment. Even so, China still accounts for more than 10% of TSMC’s total revenue. Prior to 2020, when Chinese tech giant Huawei Technologies Co., Ltd. was still a TSMC client, the Taiwanese chipmaker derived approximately 20% of its sales revenue from the Chinese market at its peak. In September 2020, the U.S. imposed a ban that prohibited any chip manufacturer using even a small amount of U.S. technology from doing business with Huawei without Washington’s approval. This forced TSMC to halt chip supplies to Huawei.