In recent years, TSMC's legislative meetings have always featured a tacit agreement between Chairman Liu Deyin and President Wei Zhejia. However, such scenes may not be seen again in the future. On June 4th, at TSMC's 2024 shareholder meeting, Liu Deyin officially retired, and Wei Zhejia took over the position of chairman. TSMC's six-year "dual leadership system" came to an end, ushering in an era where Wei Zhejia took full control.
Since its establishment 37 years ago, TSMC has gradually become a leader in the wafer foundry industry. For many years, the company's technological and market advantages in this industry have been unmatched by other competitors. However, as the bottleneck of Moore's Law becomes more prominent, the technological gap between competitors such as Samsung and Intel and the company is becoming smaller and smaller. This will also be the biggest challenge faced by Wei Zhe's leadership in the post printing industry.
After the shareholder meeting, TSMC's stock price fell 1.6% to $152.47 per share on the same day, with a total market value of $79.08 billion. In the view of Yuan Bo, a senior communication engineer and strategic planning expert, as a global leader in chip manufacturing, TSMC should work together with other leading technology companies in chip manufacturing worldwide to break through the limitations of existing chip manufacturing processes and Moore's Law in order to have sustainable development.
The era of "dual leadership" has come to an end
This is Liu Deyin's last time presiding over a shareholder meeting during his tenure.
As early as December last year, Liu Deyin announced that he would retire and no longer participate in the next board election after the 2024 shareholder meeting. At that time, TSMC's Nomination and Corporate Governance and Sustainability Committee recommended Wei Zhejia to take over as the next chairman, but still stated that the results of the shareholder meeting held in June this year would prevail. Now all of this has been settled.
In fact, although the Wei family took over Liu Deyin, both the Wei family and Liu Deyin belong to the same generation, both in terms of age and their resumes at TSMC. They joined TSMC in the 1990s and even become 71 years old this year. The Wei family is one year older than Liu Deyin. Whenever the two appear together, the one with white hair is the Wei family.
Since the official retirement of founder Zhang Zhongmou in 2018, TSMC has been following the "dual leadership" model. Zhang Zhongmou once analyzed the leadership traits of Liu Deyin and the Wei Zhe family. Liu Deyin was thoughtful, while the Wei Zhe family made decisive decisions. The abilities and personalities of the two complement each other greatly.
In terms of division of labor, according to media reports, Liu Deyin coordinates overall strategy, communicates government relations, and is responsible to the board of directors. Wei Zhejia is responsible for specific company business execution, production operations, and order management. However, there have been reports recently that Liu Deyin is in charge of the Advanced Process Outsourcing Division, which includes the research and development of 5nm, 3nm, and smaller sized chips, as well as the investment and management of 12 inch wafer factories. Wei Zhejia is responsible for the mainstream process division, which includes the investment of 7nm and above mainstream process chips, as well as the investment and construction of 6-inch and 8-inch wafer factories.
This model is not uncommon in Taiwan, China, China. ASUS and MediaTek both adopt similar dual track governance models. But it has to be said that under the leadership of Liu Deyin and Wei Zhe's family, TSMC's performance and market value have gradually risen in the past few years, repeatedly reaching new highs. It was not until 2023 that the company ended its 13 year history of continuous revenue growth due to the impact of industry supply and demand.
These two were not the successors chosen by Zhang Zhongmou at the beginning. Cai Lixing, who now serves as Vice Chairman and CEO of MediaTek, is the one. As early as 2005, Zhang Zhongmou announced his retirement for the first time, handing over the management burden of TSMC to Tsai Li xing, who was then TSMC's CEO. However, perhaps due to the "layoff incident" that occurred later, Zhang Zhongmou had to "tear down Ma Su", remove Tsai Li xing, regain power, and cultivate a new successor.
As for whether the "dual head system" will continue to be implemented in the future, Wei Zhejia stated after this shareholder meeting that the primary task in the future will be to shift to government relations as much as possible, and the CEO's work will be transferred to partners.
After Wei Zhejia took office as chairman, the most important concern in the industry is nothing more than TSMC's future development direction. At this shareholder meeting, Wei Zhejia emphasized that advanced semiconductor technology and packaging solutions required for AI chips, as well as a strong chip design ecosystem, are the advantages and opportunities of the company. It is estimated that TSMC will grow quarter by quarter this year, and annual revenue can achieve an annual increase of 20% to 25%.
In the first quarter of this year, TSMC's performance has rebounded slightly. Data shows that in the first quarter of 2024, TSMC achieved a revenue of NT $592.64 billion, a year-on-year increase of 16.5%; The net profit was NT $225.49 billion, a year-on-year increase of 8.9%. Wei Zhejia confidently stated that TSMC is in a very advantageous position and "currently has no competitors", and believes that TSMC's situation will also be very optimistic in the coming years.
The so-called three fires when a new official takes office. Regarding whether Wei Zhe's family has announced specific new plans internally, a reporter from Huaxia Times interviewed TSMC. As of press release, the other party has not provided a response.
New officials face numerous challenges upon taking office
Thanks to the wafer foundry model pioneered by founder Zhang Zhongmou, TSMC's technological advantages and market position are evident, but there are still some hidden dangers that need to be addressed by the Wei family after taking over the "handsome seal".
At the market level, Yuan Bo pointed out to a reporter from Huaxia Times that the challenges brought by the continuous fragmentation of the global market, globalization, and the complex regional political situation have forced TSMC to reconsider its adaptation and layout to the global market, and how to build business continuity to cope with potential risks and challenges in the future.
In recent years, due to the complex geopolitical situation, the chip industry has been greatly affected, and TSMC's wafer foundry business, as one of the core links in the industry chain, is naturally in a storm. Not only has it lost its former major customer Huawei, but TSMC's overseas factory construction process is also constantly troubled. Market analysis suggests that Liu Deyin chose to retire at a relatively young age in the technology industry, perhaps because of these "troubles".
On the other hand, Yuan Bo pointed out that due to the low process chip technology and absolute maturity, TSMC's substitutability is becoming stronger. Many contract manufacturing companies are bringing huge challenges to TSMC in the low-end chip market, which will further force TSMC to adjust its industrial structure.
At the technical level, TSMC faces more core challenges. After years of technological accumulation, development, and catch-up, the gap between Samsung, Intel, and TSMC in terms of process maturity and yield has become smaller and smaller. Taking 2nm technology as an example, TSMC will enter the "year of mass production" in 2025, and Samsung and Intel have also announced that they will start mass production and put it into production in 2025. As for the more advanced 1.4nm process, according to media reports, TSMC is expected to mass produce from 2027 to 2028. Samsung originally planned to mass produce in 2027, but the latest report states that it will be advanced to 2026.
"In fact, because TSMC itself is absolutely ahead in terms of process progressiveness and technology maturity, foundry enterprises such as Samsung and Intel cannot pose a threat to TSMC in the short term." Yuan Bo said, however, due to the limitation of Moore's Law, the chip manufacturing process represented by lithography machine has reached the 2nm stage and is clearly in a bottleneck period, which also means that TSMC's competitors have more time to catch up, and the gap between high-end processes of foundry enterprises will be smaller and smaller.
Moore's Law is an empirical law proposed by Gordon Moore, one of the founders of Intel. The core idea is that when the price remains constant, the number of transistors that can be accommodated on an integrated circuit will double approximately every 18 months, and performance will also double. In the past few decades, the development speed of chip technology has sometimes far exceeded what Moore's Law states.
However, from micrometers to nanometers, from 55 nanometers to 1.4 nanometers, technological breakthroughs are approaching a bottleneck period. After the end of the nanotechnology era, chips may still enter the Emmy era, which also means that technological bottlenecks are more difficult to break through.
Nvidia CEO Huang Renxun has repeatedly stated in public that Moore's Law is dead. But this statement was refuted by Intel CEO Pat Kissinger. On June 4, Kissinger said, "Moore's Law is still valid. I think it is like the Internet 25 years ago, with huge scale and potential. We believe that this is the driving force for the semiconductor industry to reach $1 trillion by 2030."