Taiwan Frontlines: How TSMC built its edge by putting customers first

Throughout the world, Taiwan Semiconductor Manufacturing Co. (TSMC) is almost immediately associated with Taiwan’s semiconductor prowess. But the company’s rise was neither inevitable nor simply a story of technological superiority.

In the latest episode of Taiwan Frontlines, launched by Taiwan Current News (TCN) in partnership with the German Marshall Fund of the United States (GMF), semiconductor veteran Konrad Young (楊光磊) offers an insider’s account of how TSMC evolved from a manufacturing-focused company into the world’s leading pure-play foundry and why he believes its most important advantage has been a deeply customer-centric culture.

A career spanning Taiwan and the United States

Young graduated from National Taiwan University’s Department of Electrical Engineering before earning a Ph.D. in electrical engineering and computer science in 1986 from the University of California, Berkeley.

During his years in the United States, he worked at MIT’s Lincoln Laboratory and Hewlett-Packard before moving through several semiconductor companies, including Chartered Semiconductor, Winbond Electronics and Worldwide Semiconductor.

He joined TSMC in 1998 and served as its R&D director from 1998 to 2005, overseeing development of 0.18-micron, 0.13-micron and 65-nanometer processes.

He later led TSMC’s US R&D program and advanced-technology customer collaboration, before taking responsibility for its Basic Engineering Department and the Office of Advanced Technology Management.

Young has also been widely described in Taiwan as one of TSMC’s “Six Knights of R&D,” a group of engineers credited with helping drive the company’s technological advance during a crucial period in its history. He was a key figure in the development and integration of TSMC’s 0.13-micron logic process, a technological milestone that helped establish the company’s subsequent lead over its competitors. His role in that transition has made him an important figure in the history of TSMC’s technological development.

After retiring from TSMC, Young subsequently assumed the role of an independent director of Semiconductor Manufacturing International Corp. (SMIC) and a technical advisor to Intel. He also serves as a consultant at the Research Institute for Democracy, Society and Emerging Technology (DSET), a national think tank established by Taiwan's government in 2023.

Additionally, he teaches at leading Taiwanese institutions including National Taiwan University, National Chengchi University and National Taiwan University of Science and Technology.

That trajectory gives Young an unusually broad vantage point from which to assess Taiwan’s semiconductor industry. He has worked inside both Taiwan’s manufacturing ecosystem and the US technology sector, while also having observed China’s semiconductor ambitions.

Why TSMC started with foundry

TSMC was established in 1987. It pioneered a business model that focused exclusively on manufacturing chips designed by customers rather than competing with them through its own branded semiconductor products.

Young said that the model reflected Taiwan’s existing industrial strengths. He added that Taiwan was a relatively small market and had limited room to compete simultaneously across every part of the semiconductor value chain. Manufacturing, however, was already embedded in Taiwan’s industrial DNA.

The early TSMC was not technologically ahead of the United States. Young recalled that for roughly its first decade, much of the technology came through customers, including older-generation technologies that larger companies no longer wanted to manufacture. He argued that the turning point came when engineers with experience in US R&D returned to Taiwan and began building TSMC’s own research capabilities.

Young said he spent years helping rebuild the infrastructure required for serious R&D — a process he likened to replacing a muddy road with one capable of carrying high-speed traffic. In his account, that institutional groundwork was essential to TSMC’s eventual technological catch-up.

The company’s progress became increasingly visible around the 0.13-micron generation. TSMC announced in 2001 that its Fab 12 had achieved production-worthy yields for 0.13-micron devices on 300-millimeter wafers, a significant manufacturing milestone.

The “customer-centric innovation”

Young argued that technology alone does not explain TSMC’s durability. The more distinctive advantage was the way the company approached customers.

He described TSMC’s R&D philosophy as “customer-centric innovation,” even calling it “reactive innovation”: When a customer had a problem or requirement, engineers would work aggressively to address it.

Young contrasted this with the traditional model, in which R&D is principally organized around a company’s own products. At TSMC, he said, engineers developed an external-customer mindset.

He used his own experience to illustrate this practice. When beginning work on a technology, Young said he would travel to a customer’s site and spend at least a week understanding its requirements.

Those needs would then be brought back to TSMC’s R&D organization, with regular meetings used to track progress with the customer.

TSMC itself described its founding principle in similar terms: Since it does not compete with customers through its own semiconductor products, the company says its success depends on enabling customers to succeed.

For Young, that distinction is more than a business-model choice. It became a fundamental organizational “mentality,” one built over decades of investment in technology, infrastructure, processes and relationships.

For more in-depth coverage, tune in to Taiwan Frontlines on the NOWNEWS official YouTube channel.