U.S. executive writes: TSMC has offended American workers
Source: The content is compiled from bizjournals by Semiconductor Industry Observer ( ID: icban k), thank you.
In July, TSMC Chairman Mark Liu reported disappointing second-quarter results to shareholders. The company's year-over-year profits fell for the first time in four years, the Phoenix Business Journal reported. The slump in demand for electronic equipment has hurt TSMC's profits and created uncertainty for the completion of the company's manufacturing plant in north Phoenix, which has been delayed until 2025. The slump in demand for electronic equipment has hurt TSMC's net profit and plunged the company into uncertainty just as it nears completion of a manufacturing plant in north Phoenix, the opening of which has been delayed until 2025.
The company also cited a lack of skilled U.S. workers to complete the project on schedule, both as a reason for its disappointing financial results and as a reason to bring in hundreds of Taiwanese workers on temporary visas.
As president of the Arizona Building and Construction Industry Association and representing over 15,000 union construction workers (thousands of whom have been building Arizona semiconductor factories for over 40 years), I disagree with Mark Liu. Blaming American workers for this project's problems is not only offensive to American workers, it's also inaccurate.
Back in 2020, TSMC announced that it would invest $12 billion to build a semiconductor factory in northern Phoenix, joining other companies such as Intel to create what some call a "semiconductor desert." Soon after, thousands of Arizona construction workers went to work bringing their years of training, knowledge and experience in advanced construction processes to build the facility with a focus on safety, efficiency and quality workmanship.
Now, those jobs are at risk. This is all done through the worker visa program, which allows overseas workers (in this case from Taiwan) to get good construction jobs. They justified the move by claiming Arizona workers lacked the training, skills and experience needed to build the facility. This is simply not true.
Is TSMC paying less to foreign workers?
While TSMC claims these temporary workers will not replace American workers, contractors and workers are being "descoped," which is what the construction industry calls layoffs. TSMC claimed that Arizona workers lacked experience and skills, so temporary workers were needed to "train" Arizona workers.
In fact, our workers are well-equipped to meet the current demands of semiconductor construction. In fact, our employees have been building Intel factories for more than 20 years. Union workers complete a rigorous, multi-year apprenticeship program that includes hundreds of hours of classroom training and field experience. The fact that the union I represent has provided all the hours TSMC requested is in direct contradiction to TSMC’s positioning of the problem as a lack of skilled American workers. TSMC also did not inform us of the skills our workers allegedly lacked, or what training these Taiwanese workers would provide our workers.
That leaves only one alternative conclusion: TSMC blames its construction delays on American workers and uses it as an excuse to bring in overseas workers whom they can pay less. (Voiceover: Implying that TSMC is just trying to save money?)
Members of the Arizona Building and Construction Industry Association are asking TSMC to cooperate with us in good faith. We share TSMC's hope that this project will be completed on schedule. Thousands of our members go to work at TSMC every day to complete designated technical work. Please do not misrepresent the reasons for the delayed completion of the North Phoenix manufacturing plant, let alone the decision to bring in foreign workers.
TSMC sends more Taiwanese workers to U.S. factories
As temperatures in Phoenix topped 115 degrees Fahrenheit (46 degrees Celsius), union electricians at construction sites for chip manufacturing giant Taiwan Semiconductor Manufacturing Co. (TSMC) felt cheated.
TSMC has complained for months that its second factory in the northern suburbs of the fastest-growing U.S. city has been delayed by costly labor shortages. Last month, the company announced plans to send 500 or more workers from Taiwan to speed up construction of the massive semiconductor foundry, which aims to produce leading-edge chips by 2026.
The company told a local news outlet that it was bringing E-2 visa holders to the site and said the total number of workers to be dispatched had not yet been determined. "This will have no impact on our U.S. hiring or on-site construction workforce," the company said in an earlier statement to The Outlook.
Asked about the issue on "Good Morning Arizona" last week, Sen. Mark Kelly, D-Ariz., said: "I have discussed these jobs specifically with the CEO of TSMC U.S. It’s important that the jobs are there for Arizonans.” They’re bringing in a small group of people to do some training. "
Yet local union representatives say workers are already feeling the impact of the company's non-union recruitment. The Phoenix electricians union IBEW 640 said it suspects the company has been purging union workers and replacing them with overseas personnel.
Intel and TSMC are racing to build an advanced semiconductor foundry in Sun Valley. Both offer electricians an "incentive wage" of $5 an hour, above the negotiated rate of $33.65 an hour for workers hired through union contractors. Incentive pay is conditional - for example, if an employee misses a day due to illness, she will have her incentive pay deducted for that week.
Unionized electricians at TSMC were told on Monday, July 10, that their incentive pay would be eliminated, according to two union representatives. After receiving the news, at least 50 union electricians decided to leave and find work elsewhere, they said. Job postings have been posted at multiple construction sites in the area, including one that recently broke ground on a nearby data center.
A week later, TSMC’s unionized electricians were told incentive pay would be reinstated, representatives said. TSMC subsequently offered the union contractor 25 non-union employees recruited from Taiwan to help address the new labor shortage, but the contractor declined because the union contractor only uses workers dispatched from the union hall, according to representatives.
TSMC has rejected a project labor agreement with local unions that the unions said would give them greater incentives to train a new workforce of unionized construction workers.
One electricians union representative, who spoke on condition of anonymity, said he believed the sudden elimination and reinstatement of incentive pay was a ploy to replace union workers with foreign workers. "What it does is, it creates a labor shortage, and by creating a labor shortage, now it's convenient for them to come along and say, well, you can't manage this, so here are 25 people," he said.
Aaron Butler, president of the Arizona Building and Construction Industry Association and business manager for the pipefitters union, said they have seen "more" Taiwanese workers at factories in the past two weeks. The union also has a large presence at the plant.
Kelly's office did not respond to questions about whether the senator assisted TSMC or its suppliers in obtaining visas. "Senator Kelly and his team have met with Phoenix-area labor leaders regarding TSMC worksite issues and raised their concerns directly with TSMC Global Chairman and TSMC Arizona CEO. Senator Kelly is committed to ensuring Arizona workers benefit from this project," a spokesperson said in a statement.
TSMC has been struggling to recruit enough workers for months. The company has rejected a project labor agreement (PLA) with local unions, which said it would give them more incentive to train a new workforce of unionized construction workers in the region. TSMC founder Chang Chang is an avid opponent of unions and has spoken publicly about his role in avoiding the organizing movement at Texas Instruments.
Although both TSMC and Intel offer union electricians the same wages and benefits, union representatives told The Outlook that Intel treats its employees better, making it easier to recruit.
Electricians union representatives predict hiring challenges will remain unless TSMC raises incentive wages. Last week, the IBEW 640 union hall called for 120 skilled operators, but there was no one available to handle them, he said.
"It's been like this for two years. We were too low on the scale and now it's too hot. You're not going to get people from Nebraska coming to Phoenix when it's 120 degrees outside," he said.
Pipefitters, who have the most people on site and are paid more than electricians, have less trouble answering work calls, Butler said.
But many Phoenix job sites face an uphill battle to recruit, given the high demand for local jobs, moderate wages and sweltering heat. Temperatures in Phoenix topped 110 degrees for the 18th day in a row on Monday, as the Southwest baked under a record-breaking heat dome.
However, instead of raising wages to speed up hiring, TSMC is bringing in non-union workers from abroad. Ironically, its labor challenges and strong complaints may also help it secure more subsidies from the CHIPS Act, which provides $52 billion in federal subsidies to fabs. According to the Wall Street Journal, TSMC is counting on receiving up to $15 billion in subsidies from the CHIPS Act, including tax credits and grants.
Last week, TSMC announced that its gross profit in the second quarter of this year was between 52% and 54%.
The company also enjoys extraordinary market power. In June, TSMC’s market share in contract chip manufacturing exceeded 60%. TSMC makes chips for technologies that have attracted significant interest in recent months, including Nvidia graphics processing units for the artificial intelligence chatbot ChatGPT. It is also a contract chipmaker for Apple, Qualcomm and other top consumer electronics makers.
Todd Achilles, a former Hewlett-Packard executive, studies the structure of the semiconductor market for the Project on American Economic Freedom, a think tank that promotes competition. He previously served as an executive at a Taiwanese consumer electronics company. Achilles said in an interview with Outlook that TSMC's widely reported concerns about the challenges of building factories in the United States are part of an effort to secure more generous government treatment.
"They're completely positioned," Achilles said. "They are a very disciplined company. They are trying to reduce all costs in the U.S. fabs."
A TSMC spokesman declined to comment for this article.
*Disclaimer: This article is original by the author. The content of the article is the personal opinion of the author. The reprinting by Semiconductor Industry Watch is only to convey a different point of view. It does not mean that Semiconductor Industry Watch agrees or supports the view. If you have any objections, please contact Semiconductor Industry Watch.
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