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Liu Deyin (Mark Liu) "announces" that retirement has nothing to do with building a factory in the United States!

Daniel Nenni

Staff member
Andy Lau announces that retirement has nothing to do with building a factory in the United States!  TSMC bids farewell to the two suns and squats before jumping in the future
Liu Deyin announced his retirement. Many analysts believe that it is related to TSMC's failure to build a factory in the United States, but TSMC denies it; foreign investment reports are optimistic about 2024, and TSMC's performance is like eating sugar cane, and it is expected to enter a new stage of development.

On December 19, 2023, TSMC announced in a short 431-word press release that Chairman Liu Deyin would retire after the 2024 shareholders’ meeting and would no longer participate in the nomination of the next director. The "Nomination, Corporate Governance and Sustainability Committee" of TSMC's board of directors announced that it recommended Vice Chairman Wei Zhejia to take over as chairman.

When Zhang Zhongmou was the chairman, TSMC would almost always hold a press conference whenever there were changes in the chairman and CEO personnel, and Zhang Zhongmou would personally answer various questions. However, this time TSMC officials did not explain it immediately. As soon as the news came out, there were rumors from all sides. Over time, many analysts have linked Liu Deyin’s decision to retire with the challenges of building a factory in the United States.

Announcement of retirement process》Liu Deyin’s own decision​

For investors, the most concerning thing should be that Liu Deyin is the first person to succeed Chang Zhongmou as chairman. What will be the prospects of TSMC when he retires in 2024?

After many days of interviews with TSMC executives, analysts and key people, the biweekly "Financial News" found that not only the reason for Liu Deyin's retirement is different from what everyone thought, but also that TSMC's operating performance in 2024 is likely to show a growth trend that first squats and then jumps.

Comparing the press release when Zhang Zhongmou announced his retirement in 2018, the outside world believed that Liu Deyin was "announced to retire by TSMC." TSMC stated that "Liu Deyin personally read and approved the press release," pointing out that "the difference is that when the founder retired, the press conference was held first before the press release, so he was quoted directly. This time it was Director Liu who announced six months later. Long retirement". The key lies in the word "prediction".

▲ TSMC Chairman Liu Deyin announced that he will retire after the 2024 shareholder meeting, which attracted great attention from the outside world.

The "Nomination, Corporate Governance and Sustainability Committee" announced in this press release was established by Andy Lau after he took office. The composition of the committee was decided by Andy Lau and TSMC's independent directors together. Wei Zhejia is not on this committee. TSMC stated that "Liu Deyin's decision to retire has been discussed for a long time, and the board of directors also discussed it in November." When Zhang Zhongmou handed over the reins to Liu Deyin and Wei Zhejia, the system design originally reserved the option for Wei Zhejia to be promoted to chairman. This announcement cannot be said to be a complete surprise.

In 2024, TSMC will re-elect directors and supervisors. TSMC stated that Liu Deyin’s term is about to expire, and he will be 70 years old. Liu Deyin does not think that the news of his retirement will be paid attention to by many people, and only requires that the news be announced half a year before his retirement, so he will hurry up in time. Before Christmas. Liu Deyin is currently on vacation in Taiwan. "He wants to keep his reasons for retirement and his feelings to himself. This is why the press release is so short."

U.S. factory construction plan will not be affected by chairman's retirement​

Some analysts also believe that TSMC has encountered challenges in building a factory in the United States, and Liu Deyin's retirement is TSMC's "protest" against the U.S. government.

It can be seen from the current division of labor at TSMC that it is now a dual-head system. TSMC also said that "Liu Deyin directly manages only the audit unit and leads the board of directors, and other units report to Wei Zhejia." If the U.S. factory construction, procurement, planning, and system design If something is not feasible, Wei Zhejia can also apply the brakes. "When the US factory held a ceremony, President Biden visited TSMC, and both of them participated at the same time." The success or failure of overseas factory construction should be the responsibility of the board of directors. The entire decision to set up factories in the United States will not be based on individual decisions just because the chairman retires.

TSMC also explained that the completion date for mass production of the new plant in Arizona, USA, is the same as that of competitor Samsung, which falls in 2025. The installed equipment and machines are on schedule, so it will have little impact on depreciation. "Just in terms of the number of employees, the U.S. There are about a thousand people in the factory and about 600 in Japan. Even if everyone’s salary is tripled, the impact will still be limited compared to TSMC’s total employees of more than 70,000.”

Outsiders questioned why TSMC did not test the water temperature on a small scale before going to the United States to reduce risks. Liu Deyin's reply was: "We are testing the water temperature now." This means that TSMC's U.S. factory is not so large that it is overloaded. A large number of facilities have been reserved near the Arizona factory. The land is for future expansion. TSMC emphasized that "the plan has not changed at this time," and plans in Germany and Japan have also not changed.

Some people also speculate that it is because TSMC founder Zhang Zhongmou has objections to building factories in the United States and hopes that Liu Deyin will retire. "Financial News" biweekly asked people close to Zhang Zhongmou for confirmation, and the answer was "After Zhang Zhongmou retired, he was not involved in TSMC's decision-making, and it has nothing to do with the retirement of Chairman Liu Deyin."

"Financial News" biweekly compiled the opinions of many TSMC interviewees and learned that the reason Liu Deyin really wants to retire is that he is responsible for international external communications and must shuttle between government customers in the United States, Japan, Germany, and China. Many of them. He must receive international dignitaries and media in person; TSMC has a professional manager system, and his mission is to strengthen the board of directors and promote TSMC's ESG system. He must review proposals, discuss with directors, and promote the system. If he is renewed in 2024, he may have to do this At 73 years old, "very tired" is the reason why he wants to retire.

Next, we will observe the key points. In fact, in the "Nomination and Corporate Governance and Sustainability Committee" held in February 2024, in addition to Liu Deyin not participating in the nomination of the next director, Zeng Fancheng may not serve as the next director. Who will take over the vacancy of the director and whether it will be filled. The actual situation will become clear only then.

Senior personnel changes》Wei Zhejia Chairman and President​

After Liu Deyin retires, it is planned that Wei Zhejia will serve as the chairman and president of TSMC. Now it is too early for outsiders to speculate on who will take Wei Zhejia's position after Wei Zhejia becomes full-time chairman. "There is no clear plan for this part," TSMC said.

For TSMC, regardless of whether it builds factories in the United States or makes profits, its performance in 2024 will be better than in 2023.

In 2023, American workers first protested against TSMC sending engineers from Taiwan to work in the United States, which affected their right to work. However, the US media "AZCENTRAL" reported that in December 2023, TSMC and the labor union had reached consensus on a number of issues.

In 2023, TSMC encountered high semiconductor chip inventories. It was rare in the world that the three major markets of the United States, China, and Europe shut down at the same time due to interest rate hikes, wars, and economic slowdown respectively. However, by the end of 2023, after the chip inventories were gradually reduced, in 2024 Annual inventory replenishment demand is expected. Liu Deyin and MediaTek Chairman Cai Mingjie have both expressed optimism that semiconductor demand in 2024 will be better than 2023.

One thing that people must realize is that Morris Chang is a unicorn. Very few people can serve effectively in their 70s and 80s, especially people who want to spend time with family, grandchildren, ect... C.C. Wei is closer to my age so plenty of ramp left. I have the same issue with politicians serving into their 70s and 80s. They are doing a disservice to the people who depend on them for life, liberty, and the pursuit of leading edge electronics.
Taiwanese business is in general very very aged. Top C-suite above 60 is a regular occurrence