TSMC was going through a transformation around the same time Bruce found out about the recruiter. The coronavirus pandemic has exposed deep problems in origin chains, and the global chip shortage has slowed the production of cars, smartphones and refrigerators around the world. Meanwhile, U. S. policymakers were rallying around what would become the CHIPS and Science Act, a sweeping law designed to boost semiconductor production in the United States. TSMC, which makes most of its chips in Taiwan, was under pressure to expand its global production capabilities.
Bruce would work as a semiconductor engineer. The recruiter explained that he would first spend more than a year in Taiwan to learn the ins and outs of the complex process of manufacturing the chips. There, in a cactus-filled suburb of Phoenix, TSMC builds a sprawling new factory to make the chips. the kind of chips that power U. S. iPhones and fighter jets. It would help bring the last chip factory in the U. S. online. U. S. Bruce there.
Taiwan Semiconductor Manufacturing Company (TSMC) planned to open a plant in Phoenix, Arizona, in 2024. It was intended to create thousands of jobs, but the expansion didn’t take off.
In this story, Rest of World follows the experience of an American engineer, Bruce, and other TSMC employees, and explores how nostalgia and tensions between Taiwanese and American colleagues are hurting the chip giant’s expansion in Phoenix.
Written through Viola Zhou. Narrated through Daniela Dib.
Original story: https://restofworld. org/2024/tsmc-arizona-expansion/
But over the next two years, Bruce discovered that the truth of racing at TSMC wasn’t exactly what he had imagined. While working on nanoscale processes to make state-of-the-art chips, he had to deal with language barriers, long working hours, and strict hierarchies. Bruce soon began to ask what he had signed up for. The plant, which was originally scheduled to come online in 2024, has been delayed; Production at the plant is now expected to begin in 2025. Bruce, who said he signed a non-disclosure agreement with TSMC, requested anonymity for this story.
He wasn’t the only one disappointed with TSMC’s progress in Arizona: Other U. S. workers who spoke to the rest of the world echoed Bruce’s concerns. Over the past two years, the company has moved many Taiwanese workers and their families to Arizona. In a gleaming new facility, the staff has discovered an active structure and a company that strives to unite the professional and cultural standards of Taiwan and the United States.
Over the past four months, the rest of the world has spoken to more than 20 current and former TSMC workers, from the U. S. to the U. S. and Canada. All requested anonymity because they were not authorized to speak to the media or because they feared retaliation from the company. In February, the rest of the world traveled to Phoenix to visit the developing TSMC complex and spend time with the burgeoning network of transplanted Taiwanese engineers.
U. S. engineers complained of inflexible and counterproductive hierarchies within the company; TSMC’s Taiwanese veterans have described their U. S. counterparts as lacking the kind of determination and obedience that are the foundation of their company’s good fortune on a global scale.
Some 2,200 painters now work at TSMC’s plant in Arizona, nearly a portion of whom come from Taiwan. As tensions at the factory simmer, TSMC has stepped up its investments and recently secured billions of dollars in grants and loans from the U. S. government. “Whether or not the factory will succeed in manufacturing state-of-the-art chips with the same speed, power, and cost-effectiveness as amenities in Asia will be noticeable, and many are skeptical of an American paint force under TSMC’s military-type command system. “] tried to make Arizona Taiwanese,” G told the rest of the world. Dan Hutcheson, semiconductor industry analyst at research firm TechInsights. “And it’s just not going to work. “
TSMC responded to a detailed list of questions from the rest of the world.
TSMC’s facility is located on the northern outskirts of Phoenix, surrounded by miles of desert hills and wide roads. A glass-walled workplace construction sits next to a huge parking lot, with a circular wafer-shaped fountain of silicon just outside. the doors of the establishment.
Next to the construction are the incomplete production facilities. The facility, originally scheduled to open in 2024, looks like giant stadiums. Once completed, the entire complex will cover 1,100 acres, the equivalent of 625 football fields.
On a Monday in February, at lunchtime, Taiwanese and American engineers would walk in and out of the construction site wearing clear badges, helmets and backpacks, making it less difficult and faster for staff to get through security checks.
TSMC was born thousands of miles away from the arid Arizona desert on Taiwan’s northern coast. Morris Chang, an American-trained chip engineer who spent 25 years at Texas Instruments, founded the company in 1987. He did so at the invitation of the Taiwanese government, which at the time wanted to stimulate the island’s economy.
In the 1980s, corporations such as Intel and Texas Instruments were designing and producing their own chips. TSMC did something different. Chang’s corporation would concentrate solely on contract production: consumers would send designs and engineers from the corporation’s production plants (also known as “factories”) adopt the best production methods, minimize the number of defective chips, and reduce costs.
The style has proven to be a success. ” All of a sudden, it’s effective,” TechInsights’ Hutcheson told the Rest of the World. “They can teach you how to become a plumber. But at the end of the day, it’s more effective for you to focus on what makes you money and then pay someone else to come do the plumbing.
Meanwhile, chip production collapsed in the U. S. and Europe and migrated to East Asia, lured by government incentives. Hutcheson said high prices for building new facilities were preventing new corporations from joining the festival and, in the end, strengthening TSMC’s dominance.
Since then, TSMC has grown into a $660 billion behemoth that has allowed “factoryless” chip designers like Nvidia and Apple to thrive. The company can now cram more computing power into less space than almost any other chipmaker. Samsung and Intel are still rezagados. la Taiwanese corporation.
TSMC is also considered the most important company in Taiwan, with Taiwanese calling it “the divine mountain that protects the nation. “TSMC’s worldwide dependence, locals believe, could even cause the West to protect Taiwan against an imaginable Chinese invasion. The loss of Taiwan and with it TSMC would lead to a global technological collapse.
TSMC experts have told the rest of the world that the key to the company’s good luck lies in an intense, military-style work environment. Engineers work 12 hours a day, and also on weekends. Taiwanese commentators joke that the company works with engineers with a “slave mentality” who “sell their liver” — local slang that emphasizes the intensity of the paintings.
Until the pandemic, it made sense for TSMC to operate in Taiwan, where it had unwavering government support, low operating costs, and access to the island’s most sensible talent. Outside of a small factory in Washington and two factories in mainland China that made chips with older technologies, the company had little interest in foreign expansion.
“The global has changed. “
That changed in the late 2010s, when governments became aware of the geopolitical importance of the semiconductor industry and embarked on a race to attract chip production giants. Around 2019, the Trump administration began courting TSMC to build a larger, more complex factory. in the U. S. Unidos. La pandemic has further highlighted weak problems in the chain of origin. “Global has replaced,” he told the rest of the world. Relying on chips from a faraway country, on China’s doorstep, suddenly became precarious. “What is a purely economic solution, from a purely economic point of view, is no longer a purely economic solution because of geopolitics,” Shivakumar said.
In May 2020, Keith Krach, then U. S. Deputy Secretary of State, announced that TSMC had agreed to open a $12 billion facility in Arizona. The site would create thousands of jobs, boost cutting-edge research, and attract more sources of semiconductors. chain corporations to the U. S. U. S. The chips coming out of the factory were meant to force smartphones, 5G base stations, and complex F-35 fighter jets. Krach said.
TSMC’s investment, Krach later told U. S. media, prompted policymakers to give greater incentives to the entire chip industry. In the summer of 2022, the Biden administration passed the CHIPS Act, which dedicates $53 billion to expanding the domestic semiconductor industry. TSMC announced it would build a second factory at the same time in Phoenix, expanding its total investment to $40 billion.
Despite the commitment of TSMC and Washington, the idea of exporting a Taiwanese-style pictorial culture to the United States came from the beginning. Morris Chang, who retired in 2018 but remains the public face of the company and the godfather of Taiwan’s semiconductor industry, has cast doubt on the Phoenix initiative.
When Nancy Pelosi visited Taiwan in 2022, Chang lectured the speaker of the House of Representatives about the demanding situations the U. S. would face in mastering the microscopic precision required in chip production. Since then, Chang has also warned about the lack of skill in the United States. and how complicated it is for Taiwanese managers to supervise Americans. Speaking to the Vying for Talent podcast in April 2022, Chang concluded that offshoring semiconductor production from the U. S. would be “a very costly and futile exercise. “
In 2021, when construction began in Arizona, TSMC flew Bruce and about six hundred new U. S. recruits to the coastal city of Tainan in southern Taiwan. There, they would spend more than a year of education at Fab 18, TSMC’s most complex mass production facility. .
Upon arriving at the facility, Bruce swiped his smartphone and went through the steel detectors. It was inspired by the semiconductor production line: elevated rails carried wafers from station to station while personnel in white protective suits operated the machines. as if I was visiting some kind of living thing that was bigger than humans; he was bigger than us,” Bruce recalls.
But difficult situations also became immediately apparent. At Fab 18, at most all communication was done in Taiwanese and Mandarin Chinese, the two most widely spoken languages in Taiwan. Americans struggled to understand the meetings, production patterns, and gossip among local engineers. In theory, each and every American was supposed to have a Taiwanese friend: a longtime employee from Arizona who would help them navigate the workplace. But the Americans said their friends were either too busy to help with translations or didn’t know enough about the technical processes because they had just been transferred from other production lines.
Many interns, Bruce added, relied on Google Translate to get through the day, with mixed results. The technical terms and photographs were difficult to decipher. A U. S. engineer said that because he wasn’t allowed to upload painting documents to Google, he tried translating documents by copying Chinese text into a popular handwriting program. It didn’t work out very well.
A former Taiwan-trained U. S. TSMC engineer said his manager asked him to stick to daily transfer meetings, which were held in Mandarin, simply by watching the related PowerPoint presentations. “I was blown away by their expectations,” he told Rest of the World. I like demanding situations and going above and beyond, but this leadership is crazy. “
TSMC’s paint culture is notoriously rigorous, even by Taiwanese standards. Former executives have praised Confucian culture, which promotes diligence and respect for authority, as well as the strict ethics of Taiwan’s paintings, as key to the company’s success. Chang, speaking last year about competitiveness with the U. S. , said that “if [a machine] breaks down at one o’clock in the morning, in the U. S. , it will be repaired the next morning. But in Taiwan, it will be set at 2 a. m. “And, he added, the wife of a Taiwanese engineer “went back to sleep saying a word. “
During their visit, the Americans were able to learn about the company’s intense artistic culture. To prevent leaks of intellectual assets, staff were prohibited from using private devices inside the factory. Instead, they were given corporate phones, dubbed “T’s. “”phones,” which couldn’t connect to most messaging apps or social networks. In one department, officials implemented what they called “stress tests” by pronouncing assignments that were due on the same day or week, to make sure Americans were able to meet tight deadlines and sacrifice non-public time like Taiwanese staff, two engineers told the Rest of the World. Managers embarrassed U. S. staff in front of their peers by suggesting they leave engineering, one painter said.
TSMC has tried to bridge some cultural differences. After U. S. interns asked to play their families and listen to music at work, TSMC relaxed the firewall on the T-phones to allow everyone to access Instagram, YouTube, and Spotify. Some Taiwanese employees attended a conference on American culture, where they learned that Americans respond more to stimuli than criticism, according to an engineer who attended the session.
But U. S. and Taiwanese engineers say the education of new workers is grossly inadequate. Managers have excluded Americans from high-level meetings conducted in Mandarin, according to a former TSMC engineer. Some Americans said they rarely had a chance to deal with the disorders on their own and were mostly guilty of watching. “It’s like math in school,” Bruce said. “You can watch your instructor solve 500 practice disorders on the board, but if you don’t solve some disorders on your own, you won’t pass the exam. “
As the educational sessions progressed, tensions mounted. Engineers told the rest of the world that some Taiwanese engineers had calendars with bikini-clad models on their desks and shared sexual memes in the organization’s chats. An American colleague, according to an American intern who witnessed the conversation, asked a Taiwanese engineer to remove the wallpaper from his computer showing a bikini model. A former U. S. engineer said some of his local colleagues called him a “white breeding pig,” implying that he was only in Taiwan to sleep with local women. At one meeting, one official said the Americans were less desirable. than Taiwanese and Indian workers, according to other people who saw leaked notes circulating among interns.
“They’re actually trying to argue that Americans are slower because of their inferior technical capabilities, but I don’t really believe that. That’s the truth,” an American engineer who recently left TSMC told the rest of the world. “The Taiwanese create this false sense of urgency with each and every task, and they actually insist that ‘you have to finish each and every one of them right away. ‘But that’s just not realistic for other people who need to have an overall work-life balance.
Several former U. S. workers said they were not opposed to working longer hours, but only if the responsibilities were significant. “I would ask my manager, ‘What’s your most sensible priority?’ he would say, ‘Everything is a priority,'” some of whom said, ‘Like this, like this, like this, a lot of times, I would work overtime to do things only to find out that it wasn’t necessary. “
Education in Taiwan, which usually lasted a year or two, wasn’t all that miserable, the Americans said. On weekends, interns would tour the island, marveling at the country’s highly effective public transportation network. Bruce spent his weekends hiking and frequenting nightclubs. He chatted with families who run food stalls at night markets and entertained strangers who asked him for selfies with strangers.
Still, at least dozens of interns gave up before the education was over, according to U. S. employees. TSMC announced a recurring retention bonus in 2022. The remaining U. S. staff will be able to return to the U. S. When the U. S. government began to speculate that the company had hired them only to secure investments under the CHIPS Act, Bruce said. But he stayed: he wanted to see TSMC come to life in Arizona.
In late 2022, workers began migrating from the humid south of Taiwan to the desert north of Phoenix. The organization included Americans, as well as many Taiwanese workers who would help install the tools, manage the suppliers, and prepare the Arizona plant for mass production.
For Taiwanese, many of whom were making plans to stay in Phoenix for a long time, that meant moving entire families (with young children and dogs) to a foreign country. Many saw it as an exclusive opportunity to explore the world, practice English, and send their children to American schools. Younger families plan their pregnancies so they can give birth to U. S. citizens. “If we need to have children, of course we will have them here,” a Taiwanese engineer told the rest of the world. “As U. S. citizens, they will have more functions than others. “
To cover the cost of living, TSMC provided Taiwanese staff with a subsidy for the purchase of a car and a house. Some families have moved into employee-only apartment complexes, called “TSMC villages. “Local schools have brought visual aids in Mandarin for studying. Rooms for Taiwanese students. A Chinese Baptist church in Phoenix has organized English classes, taught by past generations of Taiwanese immigrants, for newcomers settling in.
Many have experienced culture shock. Taiwan’s bustling cities are densely populated and offer plentiful public transportation, ubiquitous street food, and 24-hour retail stores just a few blocks away. In North Phoenix, daily life is car-free, and East Asian faces are few and far between. enter. ” Everything is so big in America,” said one engineer, recalling his first impression. He said his wife summed up his impression of the United States: “Big mountains, big rivers and a lot of boredom. “
Taiwanese engineers brought with them TSMC’s intense artistic culture. Having spent years under the grueling control of the company, they were used to long hours, after-hours calls, and harsh therapies from their managers. In Taiwan, the salary and prestige were worth it. , told the Rest of the World: despite the challenges, many were proud to work for the island’s most important company. It was the most productive job they had hoped for.
But U. S. personnel didn’t have the same sense of loyalty. In the United States, engineers had a multitude of job characteristics that featured competitive pay and plenty of free time. Taiwanese staff described their colleagues in Phoenix as arrogant, reckless and more willing. to defy orders. ” It’s hard to convince them to do safe things,” a Taiwanese engineer from Phoenix told the Rest of the World.
Bruce said career situations weren’t for Americans when they moved to Arizona. U. S. employees also had no say in how the company was run, and found the servility of their Taiwanese colleagues irritating. TSMC staff were asked to write reports and maintain other documents. in PowerPoint format so that they could make normal presentations to senior management. The Taiwanese staff were used to it, while the Americans were impatient to write weekly work reports. Americans were also dissatisfied with the fact that their Taiwanese colleagues were falling behind in the workplace. for no intelligent reason. ” I’m leaving,” Bruce said.
Five former U. S. employees U. S. officials told Rest of the World that TSMC engineers falsify or cherry-pick knowledge for consumers and managers. Sometimes, according to engineers, staff manipulated knowledge from verification equipment or wafers to satisfy managers whose expectations seemed impossible. Other times, one engineer said, “Because the staff was so spread out, they did everything they could to get rid of the work. “Four U. S. employees described TSMC’s culture as a way to “save face”: staff were trying to form a team, department, or company. they seem good, at the expense of the power and well-being of the workers.
In mid-2023, TSMC announced delays in the structure of its first factory in Arizona, dubbed Fab 21: production there would begin in 2025 instead of 2024 as planned. TSMC blamed a shortage of professional workers. However, construction unions complained about the dangers of protection and questioned whether TSMC was this as an excuse to bring reasonable hard work from Taiwan.
Engineers who were meant to run the production lines were reassigned to remote jobs for Fab 18 in Tainan and invited to participate in evening meetings. Some U. S. and Taiwanese engineers were reassigned to help speed up construction of the facility and were asked to supervise the structure painters. Dressed in cleanroom suits and hard hats, the engineers rarely picked up trash from unfinished sites. A former painter remembers his fellow painters picking up bottles of urine left behind by construction crews.
As in Taiwan, language barriers have contributed to tensions in Phoenix. Bruce said his branch manager, who came from Taiwan, spoke poor English. Therefore, instead of communicating directly with Bruce, he would pass his comments or orders through a Taiwanese. colleague. A U. S. engineer said leaders were giving Taiwanese personnel vital tasks, thus depriving Americans of hands-on experience. Later, a former worker joked that the biggest skill he learned at TSMC by creating PowerPoint slides.
Disgruntled Americans flocked to record-breaking court cases on online review site Glassdoor, denouncing long work hours, stress, unrealistic deadlines and an “Asian culture. “TSMC lately has a rating of 3. 2 out of five stars on the site. By comparison, U. S. chipmakers Intel and Texas Instruments have a score of 4. 1. Glassdoor’s poor score has made it difficult for TSMC to hire experienced U. S. workers, a former TSMC executive told the rest of the world. Another former worker said he convinced six engineer friends to turn down TSMC’s offers. .
“TSMC is the worst position to work in on Earth. “
The company has made new attempts to adapt to American art culture. In early 2023, TSMC hosted weekly English and culture categories for Taiwanese managers. A former TSMC employee who painted in the education program said managers were asked to yell at painters in public or threaten to fire them without consulting human resources. “They said, ‘Okay, okay, I get it. I’m going to do that,'” the painter reminded the rest of the world. “But I think in the warmth of at the time they forgot about it and they did it. “
Taiwanese managers have been reminded not to ask their employees why they are taking leave for health reasons, nor have job seekers been asked if they plan to have children, an illegal but common question in Taiwan. A former TSMC engineer said the company had already sent an email reminding that the Mandarin term “nei ge,” which is not unusual and means “it,” may sound like the N-word.
In December 2023, after months of negotiations, TSMC reached an agreement with Arizona’s structural unions, agreeing to expand a workforce education program, workplace safety transparency, and focus on local hiring.
Meanwhile, some U. S. engineers have begun looking for opportunities in corporations with lower expectations and higher career prospects. Employees began joking that joining TSMC was a stepping stone to Intel, which was also expanding to Arizona at the time. An engineer who worked at Intel and TSMC said his Taiwanese colleagues had also asked him about vacancies at Intel, where they hoped for a better work-life balance.
Several former American painters said they felt relief after resigning. In the organization’s discussions, the engineers celebrated the departure of their friends. “TSMC is the worst position to paint on Earth,” a former U. S. TSMC engineer told the rest of the world. Another, who recently left the company, described TSMC as “a purely authoritarian painting structure. “
Bruce resigned in 2023. He is still friends with his former Taiwanese colleagues and has kept his TSMC badge, water bottle, and TSMC jersey as souvenirs. He said he felt triumphant coming out. The staff had expressed their considerations in meetings with management, but did not see any replacement coming. “We gave each and every one of them a chance to listen, but they never did,” he told the Rest of the World.
Three years after the structure began, the first planned plant in Phoenix is still unfinished. During an earnings call in April, TSMC CEO C. C. Wei said the facility has entered “technical wafer production,” and wafer prototypes will be produced for the advertising operation next. year. In January, TSMC also announced additional delays at its second installation. Originally scheduled to begin operations in 2026, it won’t open until 2027 or 2028.
Chang-Tai Hsieh, an economics professor at the University of Chicago, told the Rest of the World that TSMC has found the U. S. to be a complicated environment to operate in due to the complex regulatory process, strongly-structured unions, and a workforce less accustomed to long hours, which is common at TSMC in Taiwan. TSMC’s profits from its U. S. factories will be smaller, unless its consumers are willing to pay more to source from U. S. factories,” Hsieh said. “The only explanation Phoenix wants is to make sure that the U. S. government is not going to be able to do anything. “UU. no oppose them. In 2023, TSMC generated more than 65% of its profits from consumers in the United States. During the April earnings call, CEO Wei said consumers are pricing in Taiwan’s higher door production prices.
“The explanation they want Phoenix for is to make sure the U. S. government doesn’t oppose them. “
That same month, after years of negotiations, the U. S. governmentThe U. S. government announced plans to give TSMC $6. 6 billion in grants and about $5 billion in loans, and TSMC agreed to build a third factory in its Phoenix that will begin operations by the end of the decade. (Meanwhile, Intel earned $8. 5 billion in subsidies in March and Samsung earned $6. 4 billion in direct investments in April. )
Despite the flood of investment, the U. S. still has a long way to go before becoming self-sufficient in chips, experts have told the rest of the world. TSMC Arizona’s first two facilities are expected to manufacture 600,000 wafers a year, a fraction of the company’s existing annual capacity of 16 million wafers. Many U. S. -made chips are available in the U. S. The U. S. still wants to be shipped back to Asia for assembly, testing, and packaging. Chip packaging company Amkor, which has most of its factories in Asia, will build a factory in Arizona. to package Apple chips made at TSMC.
The U. S. wants to offer a timely and consistent offer to corporations like TSMC to create the kind of chip ecosystem that took Taiwan three decades to build, according to Jason Hsu, a former Taiwanese lawmaker and now a fellow at Harvard Kennedy. School focused on semiconductors and geopolitics. It would be less difficult to entrust this task to its Asian allies. ” You don’t have to raise a cow to get milk,” Hsu said. “You just have to make sure the milk can be delivered to your door. “
On February 24, 2024, TSMC opened its new factory, in Kumamoto, Japan, where construction had begun about a year later than in Arizona.
At the opening ceremony, visitors were treated to Taiwan’s iconic pineapple cakes and were greeted through the beloved mascot bear, Kumamon. Thanks to strong support from the government, local associations, and a cheap workforce working 24/7, the plant was completed at lightning speed. velocity.
“We committed to having it ready in two years because that’s what TSMC asked us for,” Kumamoto Governor Ikuo Kabashima told Bloomberg. Chang hailed the plant as the beginning of a “renaissance of semiconductor production” in Japan.
Although the Japanese factory will produce less complex chips than the U. S. factory, the news of Kumamoto has sparked a feeling of envy in Phoenix. There, the engineers felt they were even further behind.
On the same weekend as the Japanese factory’s opening, Taiwanese engineers faced the hardships of the Americans at a rally in Phoenix. “The Japanese factory opened first. I’m very frustrated,” said a Taiwanese engineer.
Sitting together in a room, the engineers admitted that while they had made progress in adjusting to life in the United States, TSMC had not yet struck a balance between the two art cultures. Some Taiwanese employees complained that the control was too accommodating by giving less to Americans. cadres, paying them high salaries and allowing them to leave the cadres early.
Another engineer said the company had American babies. “If local employees are ready, this is our chance to apply for a green card,” he joked.
Another engineer said he shared Americans’ frustration with the hierarchy, the countryside and the long hours. But he believed those elements had allowed TSMC to leapfrog its competition and become a chip leader.
“It all comes from hard work. Without this culture, TSMC can’t be number one in the world,” he said passionately. “I need TSMC to be awesome. It’s my religion. “
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