With a total investment of US$65 billion, TSMC's Arizona plant has not produced a single chip in four years
2024-08-15
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[Global Times Special Correspondent Chen Lifei] On the 12th, Taiwan's Wind Media quoted an article from the New York Times, detailing the challenges TSMC encountered in building a factory in the United States, which once again caused heated discussions on the island. Since the first announcement of setting up a factory in the United States in May 2020, TSMC has successively planned to build three factories in Arizona, USA, with a cumulative investment of up to US$65 billion, which is the largest foreign direct investment project in the history of the United States. But four years have passed, and TSMC's Arizona factory has not produced any semiconductor products.
“The challenges we face are much greater than expected”
According to TSMC's plan, the first wafer fab in Arizona, the United States, is expected to start production in the first half of 2025 using 4-nanometer process technology; the second wafer fab will use the world's most advanced 2-nanometer process technology for next-generation nanochip transistor structures, and is expected to start production in 2028. An article recently published by the New York Times stated that TSMC has difficulty overcoming the differences in work culture between Taiwan and the United States and has been slow to start production. "What works in Taiwan cannot be adopted in Arizona. The challenges facing this giant in the chip manufacturing industry (referring to TSMC) are much greater than expected."
TSMC's Phoenix factory in Arizona, USA. (Source: US media)
According to the New York Times, Liu Qingyu, director of employee communication and relations at TSMC's Arizona plant, said, "We keep reminding ourselves that just because we do well in Taiwan, we can't guarantee that we can copy Taiwan's practices here." "In the Arizona plant, many things are actually starting from scratch." Indeed, in Taiwan, TSMC has thousands of skilled engineers and it is also convenient to maintain relationships with suppliers that have been established over many years of cooperation, but in the United States, TSMC must start from scratch. The newspaper recently interviewed more than a dozen TSMC employees, including senior executives, who all confirmed that the cultural conflict between Taiwanese executives and American employees has frustrated both sides.
TSMC is known for its rigorous work pace, and employees are often called to work in the middle of the night for emergencies. In 2021, shortly after joining TSMC, Jefferson Paz, an engineer who had just received a master's degree from the University of California, San Diego, went to Tainan for 18 months of training. "My God, everyone works so hard." Paz sighed. After returning to Arizona, employees were asked to participate in work beyond their duties due to the lagging progress of factory construction. This approach was not recognized by everyone, and "some American workers also found it difficult to stay for a long time." In order to resolve the tension between American workers and Taiwanese managers, the company conducted communication training for managers and reduced the frequency and number of participants in meetings due to employee complaints. Three Taiwanese employees in Arizona said that the company had tried to ease the tension and that their workload was not as heavy as in Taiwan. But they are not sure whether this lighter workload will continue as the factory reaches full capacity next year. It is understood that about half of the 2,200 TSMC employees currently in Arizona were transferred from Taiwan, but the proportion of Taiwanese employees will definitely decrease in the future.
Labor competition and political threats
The New York Times mentioned that TSMC's second biggest challenge in Arizona is labor competition. US chip giant Intel is expanding its chip factories in the region and recruiting skilled workers to increase production. In response, nearby universities have also strengthened teaching in fields such as electrical engineering. In order to compete for talent, TSMC cooperates with community colleges and universities through apprenticeships, internships, research projects and job fairs.
In addition, the New York Times believes that TSMC's Arizona plant may also face political threats. US officials have long been concerned about the US's dependence on TSMC. US Commerce Secretary Raimondo has repeatedly emphasized that 92% of the most advanced chips purchased by the United States come from Taiwan, so TSMC's Arizona plant is a test of the United States' efforts to reduce its dependence on overseas production of chips. In an interview not long ago, US Republican presidential candidate Trump directly pointed out that "Taiwan has taken away the US chip industry" and criticized the US government for subsidizing Taiwanese companies to produce chips in the United States.
As for other difficulties faced by TSMC, some foreign media also mentioned the "chip bill". US President Biden signed the bill in August 2022, claiming to provide more than $400 billion in tax credits, loans and subsidies, but according to the latest survey released by the Financial Times, about 40% of the investment cases responded by companies have delayed progress or been suspended. TSMC is a typical example. After four years, it has not been successfully put into production, and the mass production of the second plant in Arizona has been postponed for two years. The local supplier Changchun Group postponed the $300 million factory for two years, and KPCT Advanced Chemicals' $200 million plant construction project was also suspended.
Forced to go to the United States under heavy pressure
Under the report of the New York Times quoted by Taiwanese media, many Taiwanese netizens left messages saying, "Don't force TSMC to set up factories abroad. The conditions are completely different. Are you throwing money into the water, or will you keep losing money on subsidies in the future?" Others bluntly said, "TSMC has been harmed by the DPP" and "It was built for the Americans to see, so there is no need to pay attention to it." Public opinion on the island said that TSMC has been in trouble in building factories in the United States. In the final analysis, it is because its factory construction plan is not based on commercial interests alone, but the result of joint pressure from the United States and the DPP authorities. Taiwan's former "Minister of Economic Affairs" Yin Qiming previously wrote that TSMC's investment in the United States was entirely to cooperate with the political and economic interests of the United States. Not only did it fail to receive the assistance it deserved, but it had to be so servile to deal with the demands and tough attitudes of all parties. "I can't help but call on TSMC: Leave the United States when it's time to leave!"
In February this year, three Taiwanese technology and industry "bigwigs" - former "ITRI President" Shi Qintai, former TSMC Vice President Lin Benjian, and "Academia Sinica" and University of Chicago Economics Professor Hsieh Chang-tai - published a joint article saying that the US "chip bill" is a very bad policy that will not only weaken TSMC's strength, but also damage the semiconductor industry. The article believes that the "chip bill" will bring three major risks to TSMC: First, if TSMC no longer pays attention to innovation due to subsidies, it will lose its technological advantage and affect TSMC's leading position in the field of artificial intelligence chips; second, TSMC's investment in domestic production capacity may decrease, reducing the industry's resilience to demand shocks; third, TSMC may lose its direction and hand over its position as a leader in advanced semiconductor manufacturing.
According to an article in the UK's GlobalData, TSMC's expansion in the United States has encountered major challenges, including labor shortages and employee culture conflicts. Against the backdrop of imminent global expansion, TSMC's delays in its US business and recruitment difficulties may force it to abandon the US as an investment destination. In addition, Japan has actively invited TSMC to set up factories, with incentives including Japanese government subsidies, quality assurance of materials and production equipment, diligent and skilled labor, and lower factory costs than Europe and the United States, all of which are better choices for TSMC to set up factories overseas.
"TSMC's cross-cultural challenge", Taiwan's China Times published a commentary on the 12th with this title, saying that the cultural differences in work attitudes and lifestyles between employees of Taiwanese and American companies are mainly manifested in four aspects, namely working hours and intensity, management style, cultural intelligence, language and communication. The article believes that TSMC's success comes from the unremitting efforts and sacrifices of its employees. However, facing Americans who value quality of life, whether trying to get them to integrate into this corporate culture or changing for them is a severe challenge facing TSMC.
