TSMC Global R&D Center Opening Ceremony

• July 28, 2023: TSMC inaugurated Global R&D Center in Hsinchu, Taiwan
• Building also referred to as Fab 12 Phase 8
• Functions as TSMC's version of Bell Labs
• Purpose: experiment with processes/operations for Leading Edge nodes (N2, N1.4, etc.)
• Process: R&D fab masters recipe → rollout to major wafer fab centers in Taichung/Tainan
  • N2 big rollout: Hsinchu and Taichung
  • N1.4 planned: Longtan

Bausan Manufacturing Zone Development

• Location: Bausan township (10 villages), hilly suburb adjacent to Hsinchu
• Historical context: displaced century-old Hakka village Dachi
  • Former population: ~2,000 residents plus temple
  • TSMC land acquisition started 2019
  • Villager relocation required, protests over land prices
• Construction timeline:
  • Ground breaking: 2020
  • Opening: 2023 (3-year delay due to pandemic, construction difficulty)
• Land preparation: leveled mountains/hills, massive dirt piles visible
• Infrastructure: roads still being built, expensive houses appearing on distant hills

Planned Expansion

• 7 additional factories planned around R&D Center (all Leading Edge)
• First: N2 Fab (Fab 20)
  • Construction status July 2023: steel shell only
  • Scheduled high volume production: 2025
• Equipment installation still ongoing at R&D Center

Morris Chang's Speech Key Points

• Attendee: Morris Chang (92-year-old founder/former chairman)
  • First company event since 2018 retirement
  • Audience reaction: women on balcony shouted "Grandpa I love you"
  • Side note: completed second volume of autobiography

Speech Themes:

1. R&D Team Recognition
   • Thanked team for semiconductor industry contributions
   • Noted contributions put TSMC in military planners' thoughts
   • Questioned whether military attention deserved thanks
2. Technological Independence
   • Emphasized internal/independent technology development
   • Historical example: Early days with Philips (co-investor)
     • Philips requested TSMC adopt their CMOS technologies
     • TSMC licensed 5-10 years as patent umbrella
     • Insisted on developing own technology
     • 30 years to achieve technological leadership (marked by 7nm node)
   • Reference to early 2000s: legendary 6-man R&D team
     • Developed copper interconnect technology variant
     • First to ship working 130nm process node
3. R&D-Manufacturing Integration
   • R&D and manufacturing must work closely together
   • Innovation alone insufficient - scale matters
   • Key question: which company brings innovations to high volume production first
4. Caution Against Complacency
   • Story from Texas Instruments days about British Navy
   • 19th century: world's most powerful navy
   • 20th century: inaugurated massive Admiralty Extension building
   • Building marked Navy's historical high point before decline
   • Warning: don't be like British Navy declining after getting big building

R&D Investment Analysis

• 2022 TSMC R&D spend: $5.5 billion (7% of revenues)
• Comparison with major tech companies:
  • Amazon: $46.5 billion
  • Alphabet: $34 billion
  • Apple: $23.5 billion
  • Intel: $17.5 billion
• Patent productivity (2022):
  • TSMC: 3,024 US patents (3rd most)
  • Rankings: Samsung, IBM, then TSMC
  • Intel: 2,418 patents

Strategic Questions Raised

• R&D spend comparability between US tech companies vs TSMC
• Role of Taiwan's lower living costs in technological advantages
• Other success factors: automation, scale, fast cycle time, accumulated knowledge
• Resilience of TSMC's independent approach amid:
  • Economic competition
  • Technological competition
  • Geopolitical pressures
  • Semiconductor industry future challenges