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A detailed report to summarize information got from interviews with several tsmc high level personnels
The article is in Chinese. Below are content translated by Google Translator:
Liu Deyin=Mark Liu
Wei Zhejia=CC Wei
Zhang Zhongmou=Morris Chang
Key 1: Is Liu Deyin retired? Response: We have been discussing this for a while and the decision was made by Liu Deyin himself.
Comparing the content of the press release when Zhang Zhongmou announced his retirement in 2018, the outside world believes that Liu Deyin was "announced to retire by TSMC", unlike Zhang Zhongmou who announced his retirement himself. However, when these contents were mentioned in the interview, TSMC’s reply was: “Everyone regards us as a Taiwanese family company.”
"There is almost no coverage in the foreign media about Chairman Liu's retirement, and the stock price is very stable." The chairman's main job is to lead the board of directors, and the actual operations are the responsibility of the CEO. For example, at Apple, everyone knows that the CEO is Cook, but Apple's directors With a long name, not everyone knows it. "The only units that Liu Deyin directly manages at TSMC are the audit unit and leads the board of directors. All other units report to Wei Zhejia."
"This press release was personally read and approved by Andy Lau," TSMC pointed out. The "Nomination and Corporate Governance and Sustainability Committee" announcing the retirement information in this press release was established by Andy Lau after he took office. Therefore, the composition of the spread committee was a decision made by Liu Deyin and TSMC's independent directors. Wei Zhejia was not in this committee.
"The difference is that when the founder retired, he held a press conference first and then issued a press release, so he was quoted directly. This time, it was announced that Chairman Liu would retire six months later." The key lies in the word "announcement." TSMC stated that TSMC will re-elect directors and supervisors in 2024. Liu Deyin’s term is about to expire. In addition, he is over 70 years old. Liu Deyin does not think that the news of his retirement will attract too many people. He only requires that the news be announced six months before his retirement. , so he released it before Christmas, "He will still be the chairman for the next six months."
TSMC pointed out that "His decision to retire has been discussed internally for quite some time, and was also discussed at the November board meeting." When Chang handed over the baton to Andy Lau and Wei Zhejia, the system design originally reserved the option for Wei Zhejia to be promoted to chairman, so , this announcement cannot be said to be an accident.
Therefore, after the press release was sent out, Liu Deyin temporarily left Taiwan for a vacation. "He wanted to keep the reasons and feelings for his retirement to himself. This is why the press release was so short." Liu Deyin's idea is that he still has half a year left in his term. At the legal conference in January, Liu Deyin will return to Taiwan. It is expected that he will explain the issues related to his retirement at the legal conference. Because it is a preview, he originally expected In June 2024, he will publicly talk about his retirement mood and plans.
It is understood that the real reason that makes Liu Deyin want to retire is that he is responsible for external communication in the internationalization process. He must shuttle between the governments and customers of the United States, Japan, Germany, and China at the same time. There are very few people under Liu Deyin's direct leadership. He must personally receive many international dignitaries and media. At the same time, TSMC has a professional manager system. His mission in the company is to strengthen the functions of the board of directors and promote the implementation of TSMC’s ESG system. He must review proposals, discuss with directors, and promote TSMC’s ESG system. If he is renewed next year, he may have to reach the age of 74. "Tiredness" is one of the reasons why he wants to retire. TSMC officials said that Liu Deyin will explain the reason for his retirement.
Key 2: Liu Deyin’s retirement is responsible for the failure of the US factory construction? Response: Wei Zhejia is in charge of operations and is also a member of the board of directors. The plan to build a factory in the United States remains unchanged.
TSMC is entering the beginning of a new phase of overseas factory construction. A ceremony will be held at the Japanese factory in February. In the first half of 2025, the US factory will officially mass-produce. The outside world is curious why it does not wait until the US factory is completed before retiring? Foreign investors have also questioned that the continuous construction of new factories will increase depreciation and TSMC's gross profit margin will encounter headwinds in the first quarter. Coupled with the various difficulties in building factories in the United States, people from all walks of life associate the failure of factory construction in the United States with Liu Deyin's retirement, and even think that Liu Deyin’s retirement is TSMC’s “protest” against the US government.
In this regard, TSMC pointed out, "When the handover was made, it was confirmed that Chairman Liu would be responsible for external affairs and President Wei would be responsible for operations. So, who would be responsible for building a factory in the United States?" Moreover, "The decision to build a factory in the United States is made by the board of directors. The decision was made after thorough discussion, and Wei Zhejia is also a director." In other words, if Wei Zhejia objects, the case will not be successful.
It can be seen from the current status of TSMC's division of labor that when it comes to discussions about the construction of factories in the United States, faced with issues such as rising costs and the time for production lines to come online, Wei Zhejia's team is actually responsible for executing the factory construction, procurement, and planning. In terms of system design, the chairman is the leader. In the role of supervisor, the board of directors should be responsible for the success or failure of overseas factories. "When the U.S. factory held a ceremony, Biden visited TSMC, and both of them participated at the same time." The decision-making of the entire U.S. factory will not be based on personnel because of the retirement of the chairman.
"There are currently no adjustments to the plan to build factories in the United States." TSMC also denied that Andy Lau's resignation would have any impact on plans to build factories overseas.
In addition, some outsiders believe that the cost of building a factory in the United States is too high, and TSMC should not invest large sums of money and resources so quickly. TSMC explained that currently, TSMC’s new factory in the United States will be completed and mass-produced in 2025, just like its competitor Samsung. The incoming equipment and machines are on schedule, so the impact on depreciation will be limited. “In terms of the number of employees, That’s fine. There are about 1,000 people in the US factory and about 600 in Japan. Even if everyone’s salary is tripled, compared with the total number of employees at TSMC, which is more than 70,000, the impact will still be limited.”
Previously, outsiders questioned why TSMC did not first test the water temperature on a small scale in the United States to reduce risks. Liu Deyin's reply was: "We are testing the water temperature now," which means that TSMC's U.S. factory is not so large that it is overloaded. It is expected to be near the Arizona factory. A large amount of land is left for future expansion. TSMC emphasized that "this plan has not changed yet." Related plans in Germany, Japan and other places have also not changed.
TSMC also emphasized that the U.S. government has not put pressure on TSMC to build factories in the United States. Is the U.S. government attracting TSMC to the United States from the perspective of attracting investment? The main reason for TSMC to set up factories in the United States is customer demand, because customers want TSMC to provide production capacity in the United States. Therefore, how to evaluate the construction of factories in the United States still depends on business. Whether customers will pay better prices for TSMC's diversified layout will be judged by whether TSMC can maintain good profits and growth. TSMC is currently building a large number of factories mainly to prepare for the huge demand for automotive electronics in the next few years and the high growth of the "Mega Trend" such as AI and high-performance computing chips.
For Liu Deyin, in 2023, the construction of factories in the United States was once met with protests by American labor unions. Coupled with sluggish demand for mobile phones, TSMC's situation hit rock bottom in mid-2023. However, TSMC has reached a consensus with the labor unions, indicating that TSMC does not want to use Taiwanese workers replaced American workers, just to let experienced people handle EUV installation. It is expected that under the business cycle, the recovery of mobile phones in 2024 will allow TSMC to perform better than 2023. Therefore, his idea is that when he retires in 2024, TSMC will have Get out of the most difficult valley of international layout.
Key 3: Did Liu Deyin inform Zhang Zhongmou first about his retirement? Response: Zhang Zhongmou will not be involved in TSMC’s decision-making after his retirement
The outside world is very interested in the topic "Who can make Liu Deyin retire?" Some people speculate that it is because TSMC founder Zhang Zhongmou wants Liu Deyin to retire because he has objections to the construction of factories in the United States. This magazine asked people close to Zhang Zhongmou for confirmation, and the answer they got was, "After Zhang Zhongmou retired, he was not involved in TSMC's decision-making, and it had nothing to do with Chairman Liu Deyin's decision to retire this time."
Key 4: Personnel changes, Chairman and President of Wei Zhejia? Response: It won’t be clear until early 2024
After Liu Deyin retired, the next handover plan was also hotly discussed. The next focus of observation is that in fact, at 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? Whether it will be filled up or not, the actual situation will not be clear until early 2024.
After Liu Deyin retires, the current plan is for Wei Zhejia to serve as the chairman and president of TSMC. Therefore, it is probably too early for outsiders to speculate on who will take over Wei Zhejia's position if Wei Zhejia becomes full-time chairman. "There is currently no clear plan for this part." painting," TSMC said.
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