An independent board's decisions benefit all shareholders

Outlining TSMC's corporate principles during the Asian Business Dialogue on Corporate Governance in Hong Kong, Mr Chang said: “We tried not to become entangled in many of the very common Asian company practices."

According to a summary of Mr Chang's presentation in November 2001, supplied by the Asian Corporate Governance Association, the TSMC executive placed integrity at the top of his list of principles underlying the company's corporate philosophy.

He said: “Integrity is essential, because in the semiconductor foundry business you are entrusted with the design secrets of competing companies."

From the companies creation in 1987 the independence of the board of directors had made it impossible for individual shareholders to manipulate the board behind the scenes. “This means that the influence of the two major shareholders - the Taiwanese government and Philips - was limited and they enjoyed no special privileges.

“The government never got its hands into our operation and that's one reason why we were able to grow fast," Mr Chang said.

The company had to educate its directors to understand that decisions must be made to the benefit of all shareholders. “This is a continuing process, and even when dealing with some of our major shareholders, it is a challenge."

He added: “Whereas a few years ago our market capitalization was only about 50% greater than our nearest competitor, today it is close to three times as high:

“Because of the difference in our corporate governance practices, the market has rewarded us with a very high premium."

Click on corporate experience to read more about TSMC's governance experience.