In 1985, Morris Chang was recruited by the Taiwanese government to help develop the emerging semiconductor industry. In 1986, Morris joined the nonprofit research institute ITRI, based in Hsinchu, as chairman and president, and launched what would be TSMC’s first semiconductor wafer fabrication facility on the ITRI campus. Taiwan Semiconductor Manufacturing Company Ltd. was officially established in 1987 as a joint venture between the Taiwanese government (21%), Dutch multinational electronics giant Philips (28%), and other private investors. TSMC undoubtedly created the semiconductor foundry business model we know today. While at Texas Instruments, Morris Chang pioneered the then-controversial idea of pricing semiconductors ahead of the cost curve, sacrificing initial profits to gain market share and achieve production yields that would translate into higher long-term profits. This pricing model remains the cornerstone of the fabless semiconductor business model. Even by starting the company two process development steps behind competing semiconductor manufacturers (IDMs), TSMC managed to attract customers. Four to five years later, TSMC was only one process development step behind, and orders began to flow in. Within 10 years, TSMC had caught up with IDMs, and the fabless semiconductor industry blossomed, enabling a completely new era of semiconductor design and manufacturing. In the first decades of the 21st century, TSM became the undisputed leader with a reported 49% market share in 2012 (expected to rise to 65% in 2022).
