Introduction
The semiconductor industry is one of the most fiercely competitive landscapes in modern business. With billions of dollars at stake and technological supremacy on the line, companies fight tooth and nail for market share. But For Morris Chang few negotiations are as high-stakes as securing Apple as a customer—one of the most valuable and secretive tech giants in the world.
Morris Chang, the 93-year-old founder of Taiwan Semiconductor Manufacturing Company (TSMC), recently shared an exclusive look into how he navigated one of the most consequential deals in the history of semiconductor manufacturing.
In an interview on the “Acquired” podcast, Chang detailed the delicate dance of negotiation that led TSMC to become Apple’s primary chip manufacturer.
Seizing the Right Moment
Chang has often spoken about the importance of timing in business. He referenced Shakespeare in his autobiography, quoting:
“There’s a tide in the affairs of men which, taken at its flood, leads on to fortune.”
For TSMC, that tide arrived with the advent of the smartphone revolution. In 2011, the company’s release of 28-nanometer chips positioned it perfectly to meet the growing demand for high-performance mobile processors.
Yet, despite TSMC’s capabilities, Apple was not an easy company to win over.
techovedas.com/nvidia-offers-free-generative-ai-courses-for-college-students-in-2025/
The Apple Approach: A Game of Patience
Apple has a well-earned reputation for being secretive and highly selective in its business dealings. Unlike other companies that may entertain offers from potential suppliers, Apple prefers to control the narrative.
“Apple is a very close-mouthed company,” Chang explained. “If you try to talk to them, if you offer your service, they will just tell you to go away. They will come to see you when they are ready.”
That moment arrived unexpectedly when Apple’s Chief Operating Officer, Jeff Williams, attended a dinner at Chang’s home. Over the course of the evening, Williams outlined a framework for a potential partnership with TSMC to manufacture iPhone chips. However, Apple had a surprising request: they wanted 20-nanometer chips.
A Strategic Compromise
Chang had initially envisioned TSMC moving directly from 28-nanometer technology to 16-nanometer chips. The idea of a 20-nanometer detour was disappointing.
“A half step is a detour,” Chang admitted.
Apple sweetened the deal with an offer of a 40% gross margin—an amount that was meant to be generous. However, TSMC was already achieving a 45% gross margin. Chang decided against discussing pricing at that particular dinner, recognizing that it was not the right moment for hard negotiations.
Instead, he proposed a strategic compromise: TSMC would produce only half of the supply Apple was requesting. This gave Apple the flexibility to explore other options while allowing TSMC to mitigate its risk.
The Intel Factor: A Key Turning Point
Following Chang’s counteroffer, Apple paused negotiations to explore an alternative supplier—Intel. At the time, Intel was producing processors for Apple’s Mac computers and was viewed as a potential contender for the iPhone chip contract.
Chang, however, remained confident. He believed TSMC had three critical advantages over Intel:
- Technology – While Intel was still a dominant force, TSMC was catching up rapidly.
- Manufacturing Capability – TSMC’s ability to scale production efficiently gave it an edge.
- Customer Trust – TSMC had a reputation for being responsive to customer needs, whereas Intel had a history of acting like an industry gatekeeper.
His instincts were validated when Apple CEO Tim Cook personally reassured him during a casual lunch in Apple’s cafeteria.
“Tim told me there’s nothing to worry about because Intel just does not know how to be a foundry,” Chang recalled.
A Billion-Dollar Gamble That Paid Off
Securing Apple’s business was no small feat, and it required a significant financial commitment. Chang made the bold decision to invest billions into 20-nanometer foundries, despite the uncertainty surrounding the deal.
“I bet the company, but I didn’t think I would lose,” he said.
His gamble paid off. The final meeting with Jeff Williams sealed the deal, marking the beginning of what would become a long and prosperous relationship between Apple and TSMC.
Reflecting on their apple successful negotiation, Morris Chang recalled a lighthearted moment:
“Jeff jokingly said, ‘If you didn’t like the pricing, we probably would be going to a McDonald’s.’”
The Lasting Impact
Fast forward to today, and Apple is TSMC’s most important customer. TSMC manufactures many of Apple’s custom-designed chips, including those powering the iPhone, Mac, and iPad.
The relationship has only deepened, with TSMC now producing Apple’s latest A16 chips at its Phoenix, Arizona factory.
The story of how Morris Chang secured Apple business is a masterclass in strategic negotiation.
It underscores the importance of patience, timing, and the ability to make calculated compromises.
In an industry where fortunes rise and fall with each technological leap, Chang’s ability to read the tides and navigate the complexities of high-stakes deals solidified TSMC’s place at the pinnacle of the semiconductor world.