On a chilly day in February 1974, seven men gathered over breakfast at a soy milk stall in Taipei to map out Taiwan's foray into semiconductor manufacturing.
In an anecdote that is now legendary, Pan Wen-yuan, who was then a US-based research director at Radio Corporation of America (RCA), advised Sun Yun-suan, the minister for economic affairs, to develop integrated circuits.
It would cost $10 million and four years for the technology to take root in Taiwan, Pan said.
The plan was approved, and Taiwan managed to persuade RCA, then a dominant electronics company in the US, to agree in 1976 to transfer semiconductor technology.
That April, a first batch of engineers were sent to RCA's facilities for a year of intensive on-the-job training in various functions from design, process, manufacturing to equipment.
Billionaire Tsai Ming-kai, 69, chairman of the smartphone chipmaker MediaTek, was one of the engineers who trained at RCA.
"We had a strong sense of mission and were passionate to learn as much as possible to bring the technology as pioneers for Taiwan," Tsai said in an interview with the South China Morning Post.
"The inspiration and takeaway of RCA at that time was getting to know the core spirit of a technology-based operation, that is new products, new technology."
Fast-forward 43 years to the Steve Jobs Theater in Cupertino, California this week where Apple chief executive Tim Cook stood on stage to unveil the iPhone 11, featuring the "fastest ever" A13 Bionic processor made by Taiwan Semiconductor Manufacturing Co (TSMC).
Set up in 1987, TSMC is today the world's biggest contract chip manufacturer, accounting for about half of the market share among foundries producing chips that go into everything from the iPhone 11 to bitcoin-mining rigs.
TSMC is the first foundry to provide 7-nanometer production capabilities (one nanometer is one-billionth of a meter).
Interviews with industry executives involved in the early days of Taiwan's semiconductor sector attribute its success to the interplay of top-down government planning, US technology transfer and the aggressive wooing of overseas-trained talent.
Taiwan finds itself once again at a point of reinvention as the industry approaches the physical limits of Moore's Law (which observes that the number of transistors on a microchip doubles every two years) and as a new era of brain-like computers, artificial intelligence and Internet of Things applications threatens to disrupt existing semiconductor technology.
The executives interviewed by the Post were unanimous that Taiwan would not have a semiconductor industry if not for the top-down direction by the government in the 1970s.
At that time, the local economy was suffering from the 1973 oil crisis, and the government under the leadership of Chiang Ching-kuo was seeking to make advances in science and technology to replace labor-intensive industry.
"The Taiwan government at that time fully supported the development of the semiconductor industry," said Wu Cheng-wen, a chair professor of National Tsing Hua University in Taiwan.
"It was able to push for the things that it considered important, just like the mainland Chinese government does today."
One of the key initiatives was the setting up of the Industrial Technology Research Institute (ITRI) in 1973 to undertake applied research and provide technical help to the industry.
It was the institute that signed the technology transfer deal with RCA and sent engineers to the US for training.
They returned to work on an ITRI-built wafer fab that would eventually be spun off into United Microelectronics Corp (UMC) in 1980, Taiwan's first semiconductor company.
TSMC itself was founded by Morris Chang Chung-mou, a US-trained engineer and 25-year Texas Instruments veteran.
Chang was persuaded to spearhead ITRI by then-economic affairs minister Sun, one of the original seven who gathered at the humble breakfast shop that chilly February morning in 1974.
Others who left the US to join Taiwan's fledgling chip industry include Lin Burn-jeng, an IBM veteran who joined TSMC and is credited with groundbreaking work on immersion lithography technology that allowed the semiconductor industry to extend the limits of Moore's Law.
Also, Jackson Hu, former chief executive of UMC, who returned to Taiwan in 2002 after spending nearly three decades in the US, where he earned his PhD in computer science and worked at various American companies.
Having scaled the peak of foundry manufacturing, Taiwan's semiconductor industry once again faces a challenge as it becomes increasingly difficult to cram more transistors onto smaller and smaller chips.
Another challenge is China's decision to become more self-sufficient in semiconductor production amid its trade war with the US " despite all the inherent difficulties this involves, such as decades of investment and cultivation of deep expertise over many generations.
*This is the third article in a four-part series examining China's efforts to build a stronger domestic semiconductor industry amid trade tensions. *
Read the other stories, 'How China squandered chances to build its own chip industry' and 'Should China buy semiconductors or make them?'
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