In mid-July TSMC Chairman Mark Liu said during an investor conference call that construction of the Arizona fab was behind schedule and that mass production of 4 nm chips would would have to be postponed to 2025. Liu cited as reason that “there is an insufficient amount of skilled workers” in the United States with the specialized expertise required to install the unique equipment for the cutting-edge chip fab.

Liu said at the time that the company was planning to solve the problem by “sending experienced technicians from Taiwan to train the local skilled workers for a short period of time.”

He did not expect his comments to stir up a storm at home and abroad.

In Taiwan, his statement triggered concern that the start of production at the Arizona fab could be delayed further, causing costs to soar, and the project probably turning into a bottomless money pit for TSMC.

In the US the specter of technicians being dispatched from Taiwan touched a raw nerve with labor unions.

In late July, U.A. Local 469, the leading labor union for pipefitters, plumbers, and welders in Arizona, filed a petition titled “Block TSMC Foreign Worker Visas”, opposing the issuance of 500 foreign worker visas for TSMC employees from Taiwan.

In an article published in the Phoenix Business Journal in August, Aaron Butler, business manager with the labor union and president of the Arizona Building and Construction Trades Council, accused TSMC of undermining American jobs and said that TSMC should not blame US workers for the construction delays.

“Blaming American workers for problems with this project is as offensive to American workers as it is inaccurate,” Butler wrote. “This leaves just one alternative conclusion: that TSMC is blaming its construction delays on American workers and using that as an excuse to bring in foreign workers who they can pay less.”

U.A. Local 469 declined several CommonWealth Magazine phone requests for an interview on the grounds that is officers were too busy.

With an investment of US$40 billion the Arizona fab is the biggest investment that TMSC has undertaken to date, and the highest investment ever made by a foreign company in the United States.

In December this reporter witnessed Biden at the tool-in ceremony proudly declaring “American manufacturing is back”, touting the TSMC fab as an important achievement of his administration.

So where is this historic mammoth project headed? We went to Phoenix in September to find out.

Backlash from the local union

Disenchanted workers: Taiwanese are squeezing out American skilled workers

Office building of U.A Local 469. (Photo: Elaine Huang)

In the middle of the desert a massive factory building with the sign “TSMC” is rising. The fab sits in the middle of nowhere against the backdrop of traffic noise from the nearby highway.

The offices of U.A. Local 469 are located at the city center of Phoenix. Here I meet 42-year-old Rich, a union member.

He does not hide his discontent with TSMC. “TSMC did not only speak negatively about American workers which made us very angry. They are even preparing to bring Taiwanese over to the United States to squeeze out us American workers,” says Rich, not hiding his indignation.

Rich had just quit his job at the TSMC fab construction site and was preparing to Chandler, a city about one-and-a-half hours away, where Intel is building two leading-edge semiconductor factories, Fab 52 and Fab 62, under its “Eagle Project” capacity expansion.

Rich has nine years of work experience at large construction sites. He did five years of on-the-job training with the union in welding techniques, specializing in plastic pipe welding and orbital welding.

When he received a phone call in 2022 from a contractor, also a union member, who was looking for veteran skilled workers, Rich quickly agreed to join the first phase of the TSMC fab construction. Since the construction site is only a 15-minute drive away from his Phoenix home, Rich thought this was a truly ideal job opportunity.

Having worked for large fab construction projects of Intel, Micron Technology, and Microchip Technology, Rich thought that he could handle the new job with ease thanks to his previous experience. After joining the TSMC fab project, Rich led a team of ten workers. He habitually carried a work log, recording daily progress at the construction site.

But his initial enthusiasm quickly evaporated. “There’s a lot of communication going wrong,” he recalls.

Chaotic communication leaves workers frustrated

After starting to work at the TSMC fab construction project, Rich realized that project management and the chain of command at the construction site differed vastly from what he was used to from American chip factory projects. Here he had to report to at least four general contractors in charge of different works such as civil engineering or electrical and mechanical services whereas at the Intel project the workers of contractors had only to deal with a single general contractor.

“Who are we supposed to listen to? The designs also changed frequently,” he points out in describing the dilemma.

What made his life particularly hard was the fact that he never received complete construction drawings. Without understanding the scope and details of the respective construction it was not possible to follow the drawings.

A supervisor at a Taiwanese construction firm that has cooperated with TSMC for many years, tells CommonWealth Magazine that the different approaches to managing construction in Taiwan and the United States can be blamed for Rich’s conundrum.

He points out that TSMC has built many chip factories using advanced process technology which means they have the best expertise. At the Arizona site CTCI from Taiwan, a leading provider of engineering, procurement, and construction services, serves as civil engineering general contractor. High-tech process equipment providers Ace Dragon Group and Marketech International Corp. (MIC) are responsible for the first and second batches of equipment, respectively, and act as general contractors for electromechanical works. TSMC for its part directly manages the general contractors.

“TSMC plays the role of construction project manager, they put out contracts themselves and manage these GC (general contractors),” the industry insider explains. TSMC has worked with these contractors for a long time so that communication is very fast.

“Construction drawings are more like sketches. These cooperating companies have worked with TSMC in Taiwan for so many years, they don’t need to look at drawings to know how to make changes,” he elaborates.

However, transplanted to the United States the “Taiwanese model” does not work that well anymore. There construction is subject to permits that are based on relevant drawings. Construction work is carried out in line with the drawings. At the site, a general contractor supervises work progress and communicates with the workers.

Intel offers attractive “per diem allowances”

For Rich the last straw that made him quit was the fact that TSMC originally did not pay per diem allowances. Such allowances serve to cover costs for lodging, meals and mixed expenses incurred when traveling. 

Three months after TSMC’s Arizona fab project broke ground, Intel CEO Patrick Gelsinger launched the Fab 52 project at Intel’s Ocotillo campus in the nearby city of Chandler. Hoping to attract skilled workers, Intel began to offer per diem allowances, which had the intended effect, not just on Rich.

“I and a few colleagues decided to quit (TSMC) and go to the Intel site. In one week alone we can get per diem allowances worth 1400 US dollars,” he reveals.

Subsequently, TSMC followed suit and began to pay per diem allowances to stem the exodus. But Rich and his colleagues had made up their minds as they preferred to work for Intel “where they understand how things are done in the United States”.

TSMC's ongoing construction site. (Photo: Elaine Huang)

In August, TSMC Arizona President Brian Harrison tried to calm the storm in an interview with CNBC, saying the accusations that TSMC was bringing in cheap Taiwanese workers to cut costs was a “misconception”.

He said TSMC was bringing in only a small number of Taiwanese technicians who are skilled in unique installation techniques and methods needed to put in expensive EUV equipment for advanced processes that currently do not exist in the United States. He said only a small number of Taiwanese technicians will be dispatched to provide assistance. “The primary function that they will have is to train, coach and mentor the workforce in the United States, which is very capable, but they just don’t have experience on these specific tools and equipment,” Harrison said.

He also dispelled the perception that Taiwanese technicians are cheaper.

“It actually is more expensive to bring in the workers from Taiwan, pay them a fair US salary, while they are in the US, and pay for all their relocation and housing and support, it actually makes them more expensive.”

At its third quarter 2023 earnings conference in October, TSMC responded to an inquiry by CommonWealth Magazine regarding the union disputes at the Arizona site. TSMC CEO C.C. Wei told the conference that TSMC receives strong support from the city of Phoenix, State of Arizona and U.S. federal government and continues to develop positive relationships, working closely with local trade and union partners. “We are making good progress on the fab infrastructure, utilities and equipment installation issues in our first fab and the situation is improving,” Wei stated. So far, 1,100 local employees have been hired for Arizona fab operations, many of whom are sent to Taiwan to further their skills in extensive hands-on training in TSMC fabs,.

Strong support from local government: worker visas are issued

Progress at the Arizona site indicates that the disputes with the labor union did not affect construction work progress.

TSMC’s Arizona project is playing an important role in the Biden administration’s efforts to make the United States less dependent on chip imports. Further delays at this flagship project would not look good as Biden is seeking reelection next year. Against this backdrop, the labor union’s online petition “Block Taiwanese Worker Visa” failed to gain the expected support from local politicians. Even the mayor of Phoenix and the senator for Arizona state, who are members of the traditionally union-friendly Democratic Party, put in a word for TSMC to ensure smooth sailing for the fab’s construction.

In an interview with CommonWealth Magazine in August, Arizona Senator Mark Kelly confirmed that the U.S. government had not denied a single visa for Taiwanese TSMC workers.

In September, Phoenix Mayor Kate Gallego also pointed out to CommonWealth Magazine that the TSMC project was the largest investment that the city had ever seen. She said it was bringing high-wage jobs to the local community which would change the city, and that thanks to the investment Phoenix is receiving international attention.

“I think there's been confusion about how unusual the tool is and how advanced it is," she said. "It's familiar to people in Taiwan, so it makes sense that individuals with experience would train our local workforce."

"No one is saying that we don't have a great workforce here in Phoenix, we are just saying this is a new tool and we need to train individuals here on the incredible innovation,” she added.

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Have you read?

• TSMC in Arizona: Navigating water shortages
• Morris Chang: No TSMC without K. T. Li
• Is Intel ready to challenge Samsung, TSMC?

Translated by Susanne Ganz
Uploaded by Ian Huang