[Chip Talk] What’s Happening in Arizona?… 'Union-Free Management' TSMC Faces Direct Confrontation with Unions in the US

TSMC Dispatches Skilled Taiwanese Workers... Factory Operation Delayed Due to Labor Shortage
Local US Union Protests... "Factory Delays Caused by On-Site Management Issues"
Concerns Over 53 Trillion Investment Disruption... State Government and Senators Mediate Efforts

Taiwan's TSMC, the world's largest foundry (semiconductor contract manufacturer), is attracting international attention as it clashes head-on with local construction labor unions during the construction of its factory in Arizona, USA. TSMC is reportedly considering dispatching skilled personnel from Taiwan to the US for semiconductor factory construction, but local US unions are opposing this, leading to ongoing discord.

In particular, since TSMC has maintained a non-union management policy since its establishment, it is struggling to conceal its bewilderment over the new 'union risk.' There are concerns that this could cause significant disruptions to TSMC's large-scale investment in the US, which exceeds 53 trillion won.

[Image source=Reuters Yonhap News]

According to the Wall Street Journal (WSJ) on the 27th (local time), TSMC recently began discussions with the US government regarding visas to deploy skilled Taiwanese personnel to the Arizona factory construction site. Citing sources, WSJ reported that TSMC has applied for visas for about 500 temporary workers. The US State Department stated, "As many companies are building and operating complex semiconductor manufacturing facilities in the US, skilled workers are needed, and we aim to ensure that they have the opportunity to apply for US visas quickly and efficiently," adding that discussions with TSMC are ongoing.

The reason TSMC is dispatching Taiwanese personnel to the US is clear. At the Q2 earnings announcement last month, TSMC Chairman Liu Deyin said, "The shortage of skilled workers is causing difficulties in constructing the Arizona factory," adding, "There are not enough personnel locally to install advanced equipment according to the original schedule." He further explained, "We are dispatching professional engineers from Taiwan to train local workers and help accelerate the installation of advanced equipment." Due to the labor shortage, TSMC decided to postpone the Arizona factory's operation from the original 2024 to 2025 by one year.

However, TSMC faced a major challenge after this measure. Following Chairman Liu's remarks, the union 'Arizona Pipe Trades 469,' which has about 4,000 members, and the Arizona Construction Industry Association representing 14 construction-related unions in Arizona began to take action. They sent letters to US Congress members urging them to reject TSMC's visa requests for Taiwanese workers. They pointed out that it is unreasonable for the US government to bring Taiwanese workers to the US instead of creating local jobs, especially when massive subsidies funded by US taxpayers are expected for TSMC's Arizona factory construction.

Local construction workers also criticized TSMC, saying that the delay in the factory's operation was not due to a lack of skilled workers but poor site management, accusing TSMC of blaming labor shortages unnecessarily. American employees working on the construction site told the US economic media Business Insider that TSMC does not sufficiently share information related to factory construction, pressures workers to speed up work despite material shortages, and that violations of building codes frequently occur at the TSMC construction site, unlike at Intel's factory construction sites where some employees have also worked.

This situation is expected to pose a difficult challenge for TSMC, which has upheld a non-union management principle for over 35 years since its founding. The fact that the Biden administration in the US is pro-union and that President Biden is strengthening ties with unions ahead of the US presidential election in November next year adds to the pressure.

For now, TSMC is trying to appease the unions. TSMC explained that the dispatch of Taiwanese employees is "not to lay off Arizona workers but to send a small group of experienced experts from Taiwan to transfer know-how locally in the US, aiming to achieve the larger goal of localizing the US supply chain." It is interpreted that, due to the severe shortage of skilled personnel in the US semiconductor industry and the time required for training, TSMC intends to receive help from Taiwanese experts during this period. According to the Semiconductor Industry Association (SIA), semiconductor manufacturers will create 115,000 jobs in the US by 2030, but considering the current graduation rates, about 67,000 workers will be lacking.

The Arizona state government and senators, who are seeking economic growth by attracting TSMC's investment, are also making mediation efforts. Arizona Governor Katie Hobbs visited the TSMC factory construction site on the 9th and announced that state officials would expand investigations and training to ensure worker safety.

Mark Kelly, a Democratic US senator representing Arizona, recently explained in an interview with Taiwan's CNA that TSMC and union leaders are having direct and productive talks regarding the plan to deploy Taiwanese personnel to the US, and both sides understand the situation. He emphasized that the workers dispatched from Taiwan to the US will consist of a small group of experts performing advanced tasks.