Mark Liu's retirement unlikely to affect TSMC immediately: Analysts

Taipei, Dec. 20 (CNA) The planned retirement of Mark Liu (劉德音) as chairman of Taiwan Semiconductor Manufacturing Co. (TSMC) is not expected to have much of an affect in the near term on the operations of the world's largest contract chipmaker, analysts said Wednesday.

Speaking with CNA, J&J Investment Ltd. chief investment officer Jonah Cheng (程正樺) said Liu has been responsible for TSMC's external affairs and his departure was unlikely to affect the chipmaker's internal operations.

TSMC announced Tuesday that Liu will step down from his position and retire in 2024 following TSMC's annual general meeting in June 2024 after he decided not to seek nomination for TSMC's board membership.

TSMC said its current leadership would recommend CEO C.C. Wei (魏哲家) to succeed Liu, something that will have to be ratified by the incoming board of directors elected next June.

Cheng said Wei has always been in charge of TSMC's internal operations, and if Wei takes over as chairman it will allow the company's management to run TSMC as usual.

Echoing Cheng, Cornucopia Capital Partner Ltd. managing partner Eric Chen (陳慧明) said TSMC's American depositary receipts (ADRs) rose 0.91 percent on the Philadelphia Semiconductor Index overnight after Liu's retirement plan was announced Tuesday in Taipei.

The gains made by TSMC's ADRs, and the fact they outperformed the Philadelphia index, which rose 0.53 percent Tuesday, indicated foreign investors were widely anticipating that TSMC's operations will stay stable without Liu, Chen said.

Liu's retirement will likely trigger an important reshuffle in TSMC's management, however, and the market will closely watch to see who succeeds Wei as the company's CEO, J&J Investment's Cheng said.

He believed the chipmaker will likely choose an individual who has solid knowledge and experience in operations, research and development, and wafer fab management.

According to local media reports on Wednesday, Cliff Hou (侯永清), who serves as TSMC's senior vice president for Europe and Asia sales and corporate research, or Y.L. Wang (王英郎), who is currently TSMC's vice president of Fab Operations, could succeed Wei as TSMC's CEO.

Y.J. Mii (米玉傑), TSMC's senior vice president of research and development (R&D), has been also named by news media as a possible CEO option.

Chen said TSMC was faced with challenges resulting from uncertainties over the global economy, and it was worth watching whether artificial intelligence development will continue to push up demand and in turn boost the chipmaker's production.

At an investor conference in mid-October, TSMC's Wei expressed optimism about demand for the advanced 3 nanometer process, TSMC's most advanced technology to enter mass production.

Wei expected that growing demand for the 3nm process will continue into 2024, meaning TSMC is likely to see healthy growth momentum next year.

Cheng said TSMC is also facing challenges arising from its investment in Arizona, where it is building two fabs.

One is scheduled to mass produce chips using the 4nm process starting in 2025, a year behind schedule due to what TSMC has described as a lack of skilled workers, and the other is slated to roll out chips using the 3nm process in 2026.

The U.S. investment plan showed it was not as easy to manage American employees as Taiwanese employees, whether it was keeping to a construction schedule, training them or getting them to work overtime, Cheng said.

But Cornucopia's Chen said he remained positive about TSMC's investment in the United States as the presence will help the Taiwanese chipmaker establish closer links with its suppliers in the U.S. market.

Chen said TSMC needed to learn how to stay flexible and independent at a time when escalating geopolitical tensions have affected the global economy.

For his part, Ansforce Inc. CEO Jeffrey Chiu (區建仲) said TSMC has a large talent pool and it was not out of the ordinary for Liu to retire after working for the company for about three decades to allow younger managers to climb the career ladder.

Agreeing with Wei, Chiu said demand for AI applications are expected to give a boost to the semiconductor industry and make 2024 better than 2023.

Liu, who joined TSMC in 1993, thanked the company for the journey and promised to "oversee corporate governance with the board diligently until the last day of this term."

Liu's stint as the leader of the world-leading semiconductor manufacturer will draw to a close six years after he assumed the post in 2018 in the wake of TSMC founder Morris Chang's (張忠謀) retirement.