HSINCHU, Taiwan/TOKYO -- Now that Taiwan Semiconductor Manufacturing Co.'s charismatic founding chairman has stepped down, his successors will have to find ways for the world's biggest contract chipmaker to remain on top with new technologies and by tapping the growing mainland market.

Morris Chang ceded his posts at TSMC's annual shareholders meeting here Tuesday.

TSMC was the world's third-largest chip company by sales last year, and three of its fabless customers -- Broadcom, Qualcomm and Nvidia -- placed in the top 10. TSMC's net profit marked a record high in the three months through March.

But longer-term challenges await Chang's successors, Chairman Mark Liu and CEO C.C. Wei.

One is keeping TSMC on the cutting edge of innovation. The foundry poured billions of dollars a year into research and development under Chang, helping it become a world leader in circuit miniaturization -- a technology that has been vital to reducing power usage while improving speed in smartphones and other devices. But as miniaturization runs up against physical limitations, TSMC will need to develop other selling points to keep up its growth.

Another difficult yet crucial task is tapping into the mainland Chinese market, which now accounts for just over 10% of TSMC's sales, compared with more than 60% from American customers. Though the U.S. market probably will still be larger in five years, Chang said, "in a decade, I'm not sure."

TSMC CEO C.C. Wei, left, and Chairman Mark Liu. © Reuters

The company is taking steps to expand in mainland China, including starting up a fabrication facility in Nanjing. But it will also need to reckon with issues unique to the people's republic, including a heightened risk of technology leaks and exposure to the cross-strait political tensions faced by other Taiwanese companies.

TSMC will need to navigate this changing environment without the charismatic founder who made it such a dominant force. Originally from mainland China, Chang rose through the ranks at Texas Instruments to lead the American company's global semiconductor business before being tapped by the Taiwanese government in 1985 to build up the island's chip industry.

Two years later, Chang established TSMC, the world's first dedicated chip foundry. It was not the first company to offer fabrication services, which were also available from chipmakers such as compatriot United Microelectronics Corp. But while UMC used its manufacturing experience to hone its design know-how, Chang -- reasoning that TSMC should not compete with its own customers -- opted to focus purely on manufacturing, seeking to gain clients' trust.

"If we were not around, billions of people around the world would live differently than they do now" Morris Chang

Chang has won praise for his knack for reading markets and making bold investment moves that pay off. He decided soon after the global financial crisis of 2008 to step up investment to meet customer demand, shrugging off skepticism from analysts. And he built a close relationship with Apple when it needed large quantities of high-performance chips for its iPhone.

"If we were not around, billions of people around the world would live differently than they do now," Chang boasted. The TSMC Museum of Innovation near the company's headquarters features examples of its chips in use -- ranging from smartphones and video game consoles to refrigerators and cars.

Nvidia CEO Jensen Huang recently called Chang's departure the end of an era. His own company would not exist without TSMC, he said.

At the annual shareholders meeting, Chang looked back on his career in an emotional speech.

"The business model we chose 30 years ago was the right one," he asserted. "There's no one that can take our place. The world will surely still need TSMC in a decade."

Before the company was established in 1987, the semiconductor industry was the domain of integrated device manufacturers like American heavyweight Intel that could afford the enormous outlays needed for chip production. But TSMC "changed the rules of the game," Chang said.

By offering fabrication services, the foundry lowered the barriers to entry for chip designers then emerging in Silicon Valley and elsewhere, paving the way for the advent of fabless companies. These include Qualcomm, whose small but powerful semiconductors helped drive the rise of smartphones, and Nvidia, which has developed graphics processors that now power such applications as artificial intelligence and autonomous driving technology.

Chang called building the industrial infrastructure to support innovation his proudest achievement.