Taiwan’s“Wind Media” on the 12th, citing an article in the US“New York Times”, detailed the challenges TSMC encountered in building a factory in the US, once again aroused heated debate in the island. Since May 2020, when TSMC first announced plans to set up a plant in the United States, it has been planning to build three plants in Arizona, with a total investment of US $65 billion, is the largest foreign direct investment project in U. S. history. But four years on, TSMC’s Arizona plant has yet to produce any semiconductors.
“The challenges are much greater than anticipated.”
According to TSMC’s plan, Arizona’s first FAB 4 nanometer process technology is expected to start production in the first half of 2025; The second wafer plant will use the world’s most advanced 2-nanometer process technology for next-generation nano-chip transistor structures and is expected to begin production in the 2028. A recent article in the New York Times said that TSMC has been unable to overcome the differences between Taiwan and the United States in working culture and has been slow to start production, “Arizona can’t buy into what works in Taiwan. The chip giant [ TSMC ] is facing a much bigger challenge than expected,” he said.
TSMC is based in Phoenix, Arizona.
According to a report in the New York Times, Liu Qingyu, director of TSMC’s Arizona plant employee communication and relations, said, “We keep reminding ourselves that just because we do a good job in Taiwan doesn’t guarantee that we can do the same thing here,” he said. “At the Arizona plant, a lot of things are actually starting from scratch.”. True, TSMC has thousands of skilled engineers in Taiwan, making it easy to maintain long-established relationships with suppliers, but in the US it has to start from scratch. The paper recently interviewed more than a dozen TSMC employees, including senior executives, all of whom confirmed that the culture clash between Taiwanese executives and American employees was frustrating on both sides.
TSMC is known for its strict work schedule, with employees often called to work in the middle of the night for emergencies. In 2021, shortly after joining TSMC, engineer Jefferson Paz, who had just completed a master’s degree in University of California, San Diego, went to Tainan for 18 months of training. “God, people are working so hard,” Paz said. Back in Arizona, the factory was behind schedule and employees were asked to work outside of their responsibilities. Not everyone agrees, and”Some American workers find it hard to stay for long.”. To address tensions between American workers and Taiwanese managers, the company trained managers in communication and reduced the frequency and attendance of meetings when employees complained. Three Taiwanese employees in Arizona said the company had tried to defuse tensions and that their workload was not as heavy as in Taiwan. But they are unsure whether the lighter workloads will continue as factories reach full capacity next year. About half of TSMC’s 2,200 employees in Arizona have been transferred from Taiwan, but the proportion of Taiwanese employees is sure to fall in the future.
Labour competition and political threats
TSMC’s second biggest challenge in Arizona is labor competition, the New York Times said. US chip giant Intel is expanding its chip factories and hiring skilled workers in the region to increase production. In response, nearby universities have stepped up teaching in fields such as electrical engineering. To compete for talent, TSMC works with community colleges and universities through apprenticeships, internships, research projects and job fairs.
TSMC’s Arizona plant could also face political threats, the New York Times said. US officials have long been concerned about America’s reliance on TSMC. Remondo, the United States Department of Commerce, has repeatedly stressed that 92 per cent of the most advanced chips bought in the US come from Taiwan, so TSMC’s Arizona plant is an experiment in American efforts to reduce reliance on overseas chip production. In a recent interview, Donald Trump, the Republican Party presidential candidate, accused the US government of funding Taiwanese companies to make chips in the US, saying “Taiwan has taken over the US chip industry”.
As for other difficulties TSMC faces, some foreign media also mentioned the“Chip Bill.”. President Biden signed the bill in August 2022, claiming to provide more than $400BN in tax credits, loans and subsidies, but according to a new FT investigation, about 40 percent of the investments that companies responded to were delayed or suspended. TSMC is a case in point. Four years later, it has not been able to start production. It has also delayed the production of its second plant in Arizona by two years. Its local supplier, Changchun Group, has delayed its $300 million plant by two years, kPCT Advanced Chemicals’ $200m plant has also been halted.
Forced to go to the United States under heavy pressure
Taiwan media quoted the New York Times article as reporting that many Taiwanese netizens commented, “Don’t force TSMC to set up a factory abroad anymore. The terms are different. Do you want to throw money into the water, or do you want to continue to lose money and subsidize it in the future?” Another said bluntly that“TSMC has been harmed by the DPP” and that“It was built for the American people to see, so you don’t need to pay attention to it.”. Public opinion in the island said that TSMC’s troubles in building a plant in the United States were ultimately due to the fact that its plans were not based solely on commercial interests, but were the result of joint pressure from the United States and the DPP authorities. Yin qiming, a former“Economy minister” of Taiwan, previously wrote that TSMC’s investment in the United States was entirely in line with the political and economic interests of the United States, and not only did it not receive the assistance it deserved, instead, he had to kowtow to demands and tough treatment from all sides. “I can’t help but appeal to TSMC: leave when it’s time to leave the United States!” He said
In February this year, shi qintai, former director of the Institute of Technology and research, and Lin Benjian, former vice president of TSMC, as well as chang-tai Hsieh, a member of the Institute of Research and Professor of Economics at the University of Chicago, published a joint article, the US“Chip Bill” is a very bad policy that would weaken TSMC and hurt the semiconductor industry. According to the article, the“Chip Bill” will bring TSMC three major risks: first, if TSMC is no longer focused on innovation because of subsidies, it will lose its technological advantage, affecting TSMC’s chip dominance in the field of artificial intelligence; Second, TSMC may invest less in domestic capacity, making the industry less resilient to demand shocks. Third, TSMC may lose its way and cede its position as the leading manufacturer of advanced semiconductors.
TSMC’s expansion in the US has faced major challenges, including job shortages and cultural clashes among employees, according to the global data article. With global expansion looming, TSMC’s delays and recruitment difficulties in the US could force it to abandon the US as an investment destination. In addition, Japan has actively invited TSMC to set up a factory. The incentives include Japanese government subsidies, quality assurance of materials and production equipment, a hard-working and skilled labor force, and lower costs of setting up a factory than in Europe and the United States, is a better choice for TSMC to set up factories overseas.
“TSMC’s cross-cultural challenges,” said a commentary in Taiwan’s China Times newspaper on the 12th. “The cultural differences between Taiwanese and n employees in their work attitudes and lifestyles are mainly manifested in four aspects, work time and intensity, management style, cultural IQ, language and communication. The article argued that TSMC’s success was due to the hard work and sacrifice of its employees, but faced with quality-of-life Americans, whether trying to integrate them into the corporate culture or changing it for them, is a serious challenge for TSMC.