Introduction:
Taiwan Semiconductor Manufacturing Co. (TSMC) founder Morris Chang (張忠謀) has credited Terry Gou (郭台銘), founder of Hon Hai Precision Industry Co., with playing a pivotal role in forging the long-lasting partnership between TSMC and tech giant Apple Inc. In his newly released autobiography, Volume 2, Chang recalls how Gou’s intervention helped TSMC secure a groundbreaking collaboration with Apple, marking a new era in the global semiconductor industry.
Terry Gou’s Strategic Role in TSMC-Apple Collaboration
In his autobiography, Chang recounted the early days of Apple’s pursuit of a semiconductor partner, revealing that TSMC’s involvement with the U.S. tech giant began after Apple outsourced chip production to Samsung Electronics. According to Chang, it was around 2007, when the first iPhone was launched, that Apple sought a chipmaker to support its growing needs. However, after Samsung became a direct competitor with its own smartphone, TSMC’s pure-play foundry model caught the attention of Apple as a promising alternative.
But the challenge of establishing a partnership with Apple was no small feat, Chang admitted. The company had no direct connections with Apple executives, which created a barrier to negotiations. This is where Terry Gou’s influence came into play. At the time, Gou’s company, Hon Hai (better known as Foxconn), was a primary contract assembler for Apple’s iPhones. Moreover, Gou was related to Chang through marriage, with his wife, Sophie Chang (張淑芬), being Gou’s cousin.
The Crucial Dinner that Led to TSMC-Apple Partnership
Chang recalls that on November 9, 2010, Sophie Chang informed her husband about a critical development. Terry Gou had arranged for Apple’s Chief Operating Officer (COO) Jeff Williams to meet with Morris Chang over dinner. During this conversation, Williams expressed Apple’s interest in working with TSMC to produce Apple-designed logic ICs, with TSMC receiving up to a 40% gross margin on the chips.
This informal meeting soon led to a series of formal discussions. The very next day, Williams held a round of high-level meetings with TSMC’s management team, which paved the way for Apple’s engineers, designers, and procurement staff to visit Taiwan for further talks.
Negotiations Culminate in Partnership Deal
The breakthrough moment came in mid-December 2010, following a two-day meeting at TSMC’s headquarters in Hsinchu. A deal was signed for TSMC to begin manufacturing chips for Apple, an agreement that would lay the foundation for the enduring partnership between the two companies.
However, the road to collaboration wasn’t without its bumps. In March 2011, Apple’s then-CEO, Tim Cook, appeared to entertain the idea of working with Intel, a direct competitor to TSMC in the semiconductor field. Chang recalled that this raised concerns about the future of Apple and TSMC’s partnership. But after a meeting between Chang and Cook in April 2011, Cook made it clear that Intel’s pure-wafer foundry business didn’t meet Apple’s needs. As a result, talks resumed, and by May 2011, Apple and TSMC were back on track for their groundbreaking collaboration.
Apple’s Continued Dependence on TSMC
Fast forward to today, and TSMC is one of Apple’s largest suppliers, responsible for approximately 25% of the chipmaker’s sales. According to Morris Chang, TSMC’s business model of offering reasonable prices while ensuring strong margins has contributed to its success with major clients like Apple.
Despite retiring from TSMC in 2018, Chang remains connected to Apple through his relationship with Jeff Williams. In February 2024, Williams paid a visit to Chang, informing him that TSMC remains one of Apple’s “few outstanding business partners.”
TSMC’s Strategic Vision: A Future of Innovation and Growth
TSMC’s partnership with Apple represents a significant chapter in the semiconductor industry, and it continues to shape the future of global tech supply chains. The collaboration, born out of strategic foresight, remains a key example of how companies from Taiwan can compete on the world stage, leveraging innovation and cutting-edge technology.
Key Information Table: TSMC-Apple Collaboration
| Event | Date | Details |
|---|---|---|
| Apple’s Initial Outsourcing | 2007 | Apple outsourced chip production to Samsung. |
| Terry Gou’s Involvement | Nov 9, 2010 | Gou arranged a dinner meeting between Jeff Williams and Morris Chang. |
| Key Partnership Meeting | Dec 2010 | TSMC and Apple sign a deal for chip production. |
| Intel Rumors | Mar-Apr 2011 | Tim Cook entertained Intel’s offer but chose TSMC. |
| Continued Partnership | 2024 | Apple remains a major client of TSMC. |
FAQs:
1. How did Terry Gou help TSMC secure a deal with Apple?
Terry Gou facilitated TSMC’s entry into the Apple ecosystem by arranging a meeting between Morris Chang and Apple COO Jeff Williams. This connection eventually led to formal negotiations, resulting in TSMC becoming a key chip supplier for Apple.
2. What was the significance of the dinner meeting in November 2010?
The dinner meeting between Morris Chang and Jeff Williams was a turning point, as it laid the foundation for TSMC and Apple to discuss potential cooperation. During this meeting, Williams expressed Apple’s interest in working with TSMC to produce custom-designed logic ICs.
3. How did Intel’s involvement affect the TSMC-Apple deal?
In March 2011, rumors emerged that Apple might work with Intel instead of TSMC. However, after a discussion with Tim Cook in April 2011, it became clear that Intel’s wafer foundry services didn’t meet Apple’s needs, which led to the resumption of TSMC-Apple talks.
4. What percentage of TSMC’s sales come from Apple?
Apple accounts for about 25% of TSMC’s total sales, making it one of the chipmaker’s largest and most important clients.
5. How does TSMC’s business model benefit its clients like Apple?
TSMC’s ability to offer reasonable pricing while maintaining strong profit margins has helped it build long-term relationships with major companies like Apple, ensuring mutual success.
