00:00 This episode of the podcast is about TSMC, the Taiwan Semiconductor Company, which is the ninth largest company in the world and manufactures chips for major tech companies like Apple, NVIDIA, and Qualcomm.

08:05 Morris Chang, the subject of this episode, flees multiple times during his childhood due to wars and revolutions in China, but eventually ends up in the United States where he attends Harvard and later transfers to MIT to study mechanical engineering.

16:24 Morris Chang leaves Sylvania and moves to Silicon Valley because he realizes that Sylvania is not the right place to be in the emerging semiconductor industry.

24:12 Morris Chang joins Texas Instruments and improves the yield of transistors at the TI plant, leading to his first managerial position and the creation of a Germanium transistor development department.

32:04 Morris Chang realizes that pricing new products high in the beginning is not optimal for maximizing capacity and profitability, so he introduces the concept of learning curve pricing at TI, where prices are automatically reduced every quarter to drive volume and speed up the yield curve, leading to TI becoming the biggest and most profitable integrated circuits business in the world.

39:50 T.I. loses its position as a semiconductor powerhouse due to missed opportunities and cultural differences, leading to Morris Chang's resignation and the end of his dream to become CEO of a major US company.

47:47 Morris Chang is recruited by the Taiwanese government to run the Industrial Technology Research Institute (ITRI), which aims to lift businesses out of poverty and establish Taiwan as a technology hub.

55:19 Morris Chang is tasked by KT Lee to start a new semiconductor company in Taiwan and make it a global leader, despite the fact that the pure play foundry model was not an obvious idea and there was no existing market for it.

01:02:49 Morris Chang secures funding for TSMC from Phillips, the Dutch company, with the government and other investors contributing to a total of $220 million, while Morris himself receives no equity in the company.

01:10:36 TSMC becomes the main equipment provider for ASML, and the relationship between the two companies is strategically important for TSMC's ability to purchase more ASML equipment than anyone else, which is crucial for their chip manufacturing process.

01:18:48 TSMC's revenue growth allows them to invest in advanced machinery and technology, enabling them to manufacture better chips and expand their customer base, ultimately solidifying their position as a dominant player in the industry.

01:26:22 TSMC's extreme ultraviolet lithography process, which involves creating a plasma using molten tin and a specialized laser, is incredibly difficult and requires advanced manufacturing expertise, making it nearly impossible for competitors to replicate.

01:34:10 TSMC secured a deal with Apple in 2012 to produce their own chip architecture, starting with the A4, which marked the beginning of TSMC's dominance in the chip manufacturing industry.

01:42:06 TSMC has experienced significant growth and financial success, with compound annual revenue growth of 17.4% over 27 years, an IRR of 19.9% starting from a $4 billion base, and a current market cap of $550 billion, making it the ninth most valuable company in the world.

01:50:49 TSMC's leading position in the semiconductor industry is driven by its ability to keep up with advancements in chip manufacturing, its scale economies, and the high switching costs associated with changing foundries.

01:58:34 TSMC's power and dominance in the semiconductor industry could be threatened by a complete paradigm shift in computing or if China were to annex Taiwan, which would disrupt their manufacturing operations and potentially halt technological progress.

02:06:46 TSMC's location in Taiwan, which is of disputed claim, poses a potential risk to their operations, but the best thing that could happen is the discovery of aliens, which would unite everyone and make conflicts seem petty.

02:14:24 TSMC's position in the pantheon of great technology companies of all time is up for debate, but it certainly deserves to be ranked among the top players in the industry.

02:22:26 TSMC is considered one of the most successful B2B hardware companies and is likely to create more value in the next few years than the entire silicon industry combined leading up to this point.