A picture of Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) chairman Morris Chang (張忠謀) leaving his seat at the end of a press conference last week while his right-hand man Rick Tsai (蔡力行) proceeded in the opposite direction has prompted many people to wonder if their partnership was over.
That may not be the case at the moment for the two TSMC heavyweights, but it has certainly raised concern about the company’s long-term succession plan, analysts said.
On Thursday evening, Chang unexpectedly announced that the board of directors had appointed him to replace Tsai as chief executive officer, while Tsai was charged with developing green energy business.
The new appointments took effect immediately. Chang retains his position as chairman.
Tsai was appointed TSMC president in 2001 and became CEO in 2005. He has been with the company for 20 years since Chang wooed him away from Hewlett-Packard Co in 1989.
Although few doubt Chang’s ability to run the biggest contract chipmaker in the world, given his past track record and the company’s well-established organizational structure, his displacement of Tsai came as a surprise to many, prompting speculation about the reasons behind the move.
At the press conference, Chang stressed that the appointment of Tsai to lead the new business division in developing solar cells and light-emitting-diode (LED) products was imperative if TSMC is to maintain growth momentum.
He rejected speculation that the management change had anything to do with employee layoffs over the past few months.
Speculation nonetheless remained rife, especially since Tsai, 58, had helped maintain TSMC’s market leadership and profitability during his stint as CEO and was the only Taiwanese on Barron’s magazine’s list of the 30 most respected CEOs this year.
TSMC has long been viewed as a company that is focused on “stability in self-dependent development and in business focus,” authors Liu Tzu-hsin (劉子歆), Chu Yee-yeen (朱詣尹) and Hung Shih-chang (洪世章) wrote in their 2004 research study “Technology entrepreneurial styles: a comparison of UMC and TSMC.”
TSMC’s arch-rival, United Microelectronics Corp (聯電), is best known for its quick responses toward “organizational networks and business diversification,” the study said.
This is arguably a direction TSMC is now moving toward.
“I think the laying off and rehiring of the same employees in a short span is one of the issues. I reckon Morris Chang briefly apologized about this issue a few weeks ago,” Pranab Kumar Sarmah, an analyst at Daiwa Institute of Research (Hong Kong) Ltd, said in an e-mail to the Taipei Times on Saturday.
Sarmah was referring to a televised speech Chang gave on May 20, in which Chang told employees that the company would welcome all of its laid-off workers back on June 1. Chang also apologized for what he said had been the company’s mishandling of its annual employee appraisals, which formed the basis of the layoffs.
In a report issued on March 23 under the title “Kings of the Jungle,” Barron’s described Tsai as “a quieter, calmer executive than Chang.”
The report also praised Tsai for helping boost TSMC’s revenue by 25 percent to US$10 billion since 2005 and, most importantly, for having reached a deal with Intel Corp in March to make the popular Atom processors.
Despite all this, Sarmah said he was surprised by Tsai’s “demotion,” adding that he believed the layoff issue had affected TSMC’s reputation in Taiwan significantly.
“TSMC might have faced pressures from various interest groups, both external and internal, which might have prompted the board to take such a quick decision without having a proper successor,” Sarmah said.
That the position of TSMC president remains vacant has raised concern about the company’s long-term succession plans, Randy Abrams, a semiconductor industry analyst with Credit Suisse, said in a client note on Friday.
“Morris Chang has a long history founding and growing TSMC into a global foundry leader and is well respected in the industry, so we anticipate few issues for TSMC managing quality, customer relationships and foundry operations,” Abrams said.
But considering that Chang is 78 years old and would not be able to run the company indefinitely, the management changes did highlight “long-term questions on the next CEO succession plan,” Abrams said.
Under Barron’s criteria for entering its annual hall of fame, a respected CEO was required to have at least three to five years of experience on as chief executive.
Interestingly, one of the criteria Barron’s used to determine whether someone is a great CEO was to see if their departure would have a significant impact on the company’s share prices.
In Tsai’s case, shares of TSMC declined 3.95 percent on Friday, under-performing a fall of 1.81 percent on the benchmark TAIEX, indicating that investors were cautious about the management transition at the company’s top level.
As it took years for Chang to select and prepare Tsai as TSMC’s second-generation leader before his appointment as CEO in 2005, it could be a time-consuming task to look for a successor, Sarmah said.
Taiwan Transport and Storage Corp (TTS, 台灣通運倉儲) yesterday unveiled its first electric tractor unit — manufactured by Volvo Trucks — in a ceremony in Taipei, and said the unit would soon be used to transport cement produced by Taiwan Cement Corp (TCC, 台灣水泥). Both TTS and TCC belong to TCC International Holdings Ltd (台泥國際集團). With the electric tractor unit, the Taipei-based cement firm would become the first in Taiwan to use electric vehicles to transport construction materials. TTS chairman Koo Kung-yi (辜公怡), Volvo Trucks vice president of sales and marketing Johan Selven, TCC president Roman Cheng (程耀輝) and Taikoo Motors Group
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
New apartments in Taiwan’s major cities are getting smaller, while old apartments are increasingly occupied by older people, many of whom live alone, government data showed. The phenomenon has to do with sharpening unaffordable property prices and an aging population, property brokers said. Apartments with one bedroom that are two years old or older have gained a noticeable presence in the nation’s six special municipalities as well as Hsinchu county and city in the past five years, Evertrust Rehouse Co (永慶房產集團) found, citing data from the government’s real-price transaction platform. In Taipei, apartments with one bedroom accounted for 19 percent of deals last
RECORD-BREAKING: TSMC’s net profit last quarter beat market expectations by expanding 8.9% and it was the best first-quarter profit in the chipmaker’s history Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), which counts Nvidia Corp as a key customer, yesterday said that artificial intelligence (AI) server chip revenue is set to more than double this year from last year amid rising demand. The chipmaker expects the growth momentum to continue in the next five years with an annual compound growth rate of 50 percent, TSMC chief executive officer C.C. Wei (魏哲家) told investors yesterday. By 2028, AI chips’ contribution to revenue would climb to about 20 percent from a percentage in the low teens, Wei said. “Almost all the AI innovators are working with TSMC to address the