Taiwan’s APEC Envoy at the Center of China-US Tech Tensions

Taiwan’s envoy to a gathering of Asia-Pacific leaders is the 91-year-old billionaire founder of a computer chip manufacturing giant that operated behind the scenes for decades before being thrown into the center of US-China tensions. for technology and security.

Morris Chang’s hybrid role highlights the clash between Taiwan’s status as one of China’s top technology providers and threats from Beijing to attack the autonomous island democracy of 22 million people, which the ruling mainland Chinese Communist Party says which is part of their territory.

Taiwan’s decision to send Chang instead of a political leader to the Asia-Pacific Economic Cooperation summit in Thailand reflects the unusual status of the island. The United States and other governments have acceded to Chinese demands not to have official relations with Taiwan or for its leaders to meet with its president.

Taiwan’s participation in APEC is made possible by linguistic finesse: APEC deliberately includes member “economies” rather than countries. Taiwan joined the group under the name “Chinese Taipei” in November 1991, along with China and Hong Kong.

Taiwan’s representative at previous APEC summits has typically been a retired politician, including former vice presidents Lien Chan and Vincent Siew. But in 2018, the Tsai administration selected Chang to attend, and he has been Taiwan’s APEC envoy every year since. Chang, who served as Taiwan Semiconductor Manufacturing Corp. (TSMC) chairman until 2018, also represented then-chairman Chen Shui-bian at the APEC meeting in 2006.

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Chang transformed the semiconductor industry when he founded TSMC in 1987 as the first foundry to produce customer-only chips without designing its own. That allowed smaller designers to compete with industry giants without spending billions of dollars to build a factory.

TSMC has become the world’s largest chip maker, supplying Apple Inc., Qualcomm Inc. and other customers and turning Taiwan into a global technology hub. Chips produced by TSMC are found in millions of high-end smartphones, cars and computers.

Despite that, TSMC ranks high on any list of the biggest companies that are unknown outside their industries.

“Taiwan’s semiconductor industry, especially TSMC, plays a critical role in the national and even global economy,” Taiwan President Tsai Ing-wen told reporters on October 20. “At this important moment, Chang is an irreplaceable candidate to serve as the representative of our country’s APEC leaders.”

Britain’s Trade Minister Greg Hands said London wants closer cooperation with Taiwan on semiconductors during a visit this month. Britain is the home of Arm, a leading chip designer.

Taiwan is in a “very challenging environment” and APEC is the “most important international conference venue for Taiwan,” Chang said at the Oct. 20 briefing with Tsai.

“Taiwan needs to build a secure and resilient supply chain with reliable partners, especially in the electronics sector,” he said.

Last year, Chang warned that support for globalization and free markets that helped TSMC thrive was eroding.

“Globalization seems to be a dirty word and ‘free market economy’ is starting to catch up,” Chang said while accepting an award from the Asia Society.

“Many companies in Asia and the Americas face challenges in how to operate in the new environment,” Chang said. “Still, I am confident that solutions will be found.”

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TSMC entered geopolitics in 2020 when then-US President Donald Trump blocked the company and other vendors from using US technology to make chips for Chinese tech giant Huawei Technologies Ltd., which makes smartphones and computers. network for telephone and Internet operators. US officials say Huawei is a security threat and could enable Chinese espionage, a charge the company denies.

Most of the world’s smartphones and other consumer electronics are assembled in Chinese factories. But they need components and technology from American, European and Asian suppliers, especially Taiwan, the biggest exporter of chips.

Huawei, China’s first global tech brand, designs chips but needs TSMC and other contractors to make them. Its smelters need American-made technology, giving Washington leverage to disrupt China’s high-tech industry.

Processor chips are China’s biggest import at $300 billion a year, ahead of oil. The ruling Communist Party sees that as a strategic weakness and is spending heavily to create its own chip makers, but they are generations behind TSMC and other world leaders.

Trump’s successor, Joe Biden, has dropped Trump’s restrictions and imposed more restrictions that extend to other Chinese companies.

TSMC, based in Hsinchu, adjacent to Taiwan’s capital Taipei, says it made 12,302 different products last year for 535 customers. The company reported a profit of $18.7 billion last year on $49.8 billion in revenue.

Chang was born in Ningbo, south of Shanghai, and moved to Hong Kong after a civil war on the mainland ended with the Communist Party’s takeover in 1949.

The mainland’s former ruling Nationalist Party fled to Taiwan. The two sides have ruled separately ever since. They have no official relations, but are linked by billions of dollars in trade and investment.

Chang studied at Harvard University and the Massachusetts Institute of Technology before receiving a Ph.D. in electrical engineering from Stanford University in 1964.

Chang spent a quarter century at Texas Instruments, rising to become vice president in charge of its semiconductor business, before being invited to Taiwan in the 1980s to head a technology research institute.

In 1988, TSMC became the first Taiwanese company to be listed on the New York Stock Exchange. Chang’s stake in the company is worth $1.6 billion.

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