TSMC delays US chip fab opening, says US talent is insufficient

Arizona chip factory won't be operational until 2025, TSMC said.

See full article...

 

[deadman12-4]

This has boondoggle written all over it. Brought to you on the backs of US taxpayers.

You are right in that its political, but that doesn't make it bad. Getting chip production inside the country, instead of a place china has been threatening to invade for years? Thats a VERY smart move, yet still political.

This is about economic security.

 

[deanzaZZR]

Finally, Arizona doesn't get earthquakes.

Yet, Taiwan is one of the most seismically active places on the planet.

 

[wackazoa]

Conspiracy time…

I wonder how much of this is related to a story I read where their revenue was down from last year.

The head of TSMC has always seemed to be a person who likes to wait for the market to backup before he makes any move forward. Almost as if he wants to make sure that he never has slack on the production lines, so hed rather have backorders.

Also didnt they state that only the Taiwan fabs will be state of the art, all the outside fabs will be last generation runs only.

So tie that in, with a downturn in demand/revenue and methinks TSMC is gonna push this fab as far back as they can waiting/hoping for higher demand.

 

[abcd]

The article didn't really clarify that TSMC does not want to build this fab in the US. They were basically forced to do it by the US government. Here are the comments from the founder of TSMC:

"In fact, TSMC founder Morris Chang had repeatedly stressed that the US efforts to increase onshore manufacturing of semiconductors is wasteful and an expensive exercise in futility due to a lack of manufacturing talent and extremely high costs. He also noted that the cost of producing the same chip product in the US is 50% higher than in Taiwan, and no reason can be found for maintaining viable production in America." Link

They have already announced that chips from this plant will be priced higher than chips from Taiwan. They plan to sell them to customers who required domestically sourced chips.

I'm in the semi industry. I am not as negative as Chang about our ability to compete in the semi space, but it is true that the semi industry in Taiwan can attract the best and the brightest at lower wages than they will need to pay in the US. Working at TMSC is a prestige job there. In the US, they need to compete with FAANG companies, hedge funds, law firms, etc. that throw a lot of money at smart people. You don't go into semi in the US to get rich.

edit - additional comment: Chang also has said that the US should stick to what we're good at - chip design - rather than manufacturing. Chip layout and design takes less infrastructure, so it can be done competitively in high cost regions. Obviously, this omits the fact that the US is concerned about the geo-political risks of being reliant on production of cutting edge chips in a country claimed by China as a runaway province.

 

[riverstyx]

Yet, Taiwan is one of the most seismically active places on the planet.

They had to make do because, well, where the hell else were Taiwanese people supposed to start their own fabs? Where possible, fabs tend to choose dry, seismic inactive palaces. Arizona is a common location as a result. Japan had a tons of fabs and it’s a big deal every single time there’s a slight tremor because they have to shut everything down and they lose a bunch of wafers.

 

[deanzaZZR]

This is about economic security.

Do you believe these plants in the US will be profitable on their own? If not, will Americans be prepared to spend additional tens of billions once this first tranche is spent?

I do think the work culture aspect is important to consider. TMSC is planning a chip facility in Japan. I'm not a betting man, but if I were, I would bet on that plant being more successful long-term.

 

[QuantifiableQuoll]

If the rumors are to be believed, TSMC has a terrible corporate culture. So I'm wondering if these hiring struggles are at least partly self-inflicted.

https://fortune.com/2023/06/03/tsmc-arizona-plant-jobs-salary-culture-hiring/

 

[cbrubaker]

It seems likely that two things are going on...

America truly does not have the talent that they've used in Taiwan to create the world's most sophisticated fabs.

Also, the inherent human power struggle between laborers and owners/management. Those with power or in charge, tend to abuse that power, with laborers getting the short end of the stick.

From the outside, it's hard to know where TSMC falls on the spectrum for each of these. Then each of us has a different tolerance for what requires activism and pushback.

Either way, I'm excited to see a TSMC plant opening up in America. I think our country and the world in general is better off when things critical to modern civilization are spread around the globe.

One more thing to keep in mind - these guys are building two fabs in the same geographic region in which Intel has major operations, and is also building out a new fab. And this happens to be a geographic region with an extreme climate that makes enticing others to come from outside the region. Even worse, the location of the fab itself is kinda remote, especially from the concentration of semiconductor talent currently residing in the Phoenix metro, which is mostly in the East/Southeast due to the proliferation of Intel and Motorola derived operations (NXP and On Semiconductor).

So locally, not a lot of people locally who have the skillset want to commute all the way to the opposite side of a metro region that is roughly 100 miles in diameter. And nobody wants to move to Hell ("But Its a Dry Heat"(R)) for the rates TSMC is paying.

 

[riverstyx]

"TSMC has cited US building costs being more expensive than costs in Taiwan as another setback" - what an idiotic argument, all costs related to construction should have been known to a couple percent long before doing the deal. yeah, it costs more per square whatever to build in the usa than in taiwan. duh.

I don’t think Americans realize just how high construction costs here are compare to other countries. We routinely spend billions on projects that better paid union workers finish in other countries for a quarter of the price. Even Nordic building costs are a small, small fraction of ours.

 

[veldrin]

I haven't followed all the links in the story, but the idea of getting the fab up and running with TSMC employees who know how do to things the TSMC way, and then onboarding/training US workers later doesn't seem unreasonable. It may be an uncomfortable truth that the US is behind in semiconductor manufacturing, but even if it's only a little bit true, I doubt that you can take an engineer from Intel or TI and drop them in to TSMC's operation without retraining.

Sure, that makes sense when it comes to operating the fab, installing some of the more esoteric equipment that is not shared with older fabs, etc.

Electricians running wires in the wall/in conduit and terminating it in sockets that are used in all kinds of manufacturing facilities, though? They can fuck right off with that.

 

[Penforhire]

I wonder how much of this is how rapidly salary expectations are changing?

My work is not directly semiconductor, more passive device manufacturing than active, but we see a relatively sudden shift in salary expectations in the last year or two. People with little or no experience are asking for similar pay to highly experienced team members. Or maybe we are just cheap, across multiple businesses under the same parent company (other locations have the same complaint lately). Hard to say from my fixed perspective.

 

[OrangeCream]

They are talking about building the fab not running the fab.

Those two are very tightly connected though right?

It’s like building a gym, a supermarket, a dentist’s office, or a bank. They have different requirements and you can’t build one and then drop in a different business afterwards without extra work.

So I assumed that constructing the fab would also entail the necessary tailored requirements tied to operating the fab, such as clean rooms, water recycling, electrical requirements, machining, dust removal, wastewater treatment, etc.

 

[EdelweissPirate]

The disconnect is a rather more Pacific Rim attitude to worker treatment, I would expect.

In the same vein, I can’t help wondering whether a cultural disconnect is part of the problem. The fact that TSMC asked a union contractor to hire non-union workers implies that they didn’t understand how inflammatory that question would be to a union shop.

Asking that question is like lighting a fuse, so I’m not surprised by the reaction TSMC got. (IMHO, there are some good historical reasons for that reaction).

Also, American union culture can be fairly weird¹ , especially to outsiders encountering it for the first time.

I’ve been a member of the Teamsters, and I’ve also covered trade shows as a journalist where attendees were strictly forbidden from changing a burned-out lightbulb in their own booths.

Rather, they had to pay a union electrician $75 to do it for them. Not $75/hr—$75/bulb. (This was in Anaheim, CA in the late ‘90s). It often took a hour or two for the electricians to respond. And as they did the work, a few electricians were incredibly—and bafflingly—smug to the people working the booths.

Those people were often hourly or contract workers themselves; if that smug sanctimony was attempt to stick it to The Man, those electricians’ aim was crap.

It was legitimately exasperating. I found myself exasperated for the vendors, even though I understood why that rule existed and didn’t have any lightbulbs to change.

Plus, union culture can be overtly hostile to perceived enemies, and significant parts of that culture have hair-trigger enemy detectors.

This is all to say that TSMC might simultaneously:
(a) have a real point about worker skill,
(b) have a weak understanding of American union culture,
(c) have some legitimate frustration with that culture, and
(d) be doing some fairly sketchy things to circumvent labor laws/union rules.

[edit: fixed a missing word and a missing period]


——————
¹ I obviously have mixed feelings about unions. They’re eager to remind us that they brought us the weekend—and they did!—but they’re somewhat less eager to remind us that they also brought us Derek Chauvin.

 

[reever]

Not sure why I’m getting downvoted… Why do you think we broke a treaty and refused to defend Ukraine? It’s because they don’t have anything we want, like oil. If they did, you bet your ass we’d be over there fighting Russia.

Who is we in this context, you mean certain politicians or administrations, and people within those administrations?

I hope something like your personal political ideology isn't preventing you from using specifics when the US government does anything.

It's very very very common for right leaning people to use unspecific language when they refer to things right leaning do or did or have done, but hyper specific language whenever talking about the groups right leaning folks pledged jihad against like liberals or members of the Democratic Party

 

[Mazzicc]

I mean, if they're foreign nationals, shouldn't it be pretty easy to get exact numbers of how many visas there are for these people that are being brought in? Instead of saying "small numbers" or "temporary".

There should literally be an exact list of the employees, and their visa arrival and departure dates, right?

 

[TylerH]

Not sure the earthquake issue makes sense. Taiwan is on the 'ring of fire' the enormous arc of subduction zones that trigger the majority of earth's seismic activity.

And it sure the hell isn't in a desert.

You make my point for me on why building in Arizona is better than building in Taiwan. See a few examples:

https://semiengineering.com/recent-earthquakes-highlight-risk-to-semiconductor-manufacturing-sites/

Semico Research considers fabs in Japan, Taiwan, and the west coast of the United States to be in the high-risk areas for earthquake activity.

https://www.cnbc.com/2021/11/24/samsung-announces-17-billion-chip-plant-in-texas.html

Texas has the right weather and geological stability for such a facility and a good supply of tech-savvy workers.

https://www.macrofab.com/blog/how-to-build-a-chip-factory/

It is also important for [fabs] to avoid airports or geological fault lines so that vibrations don’t disrupt the machinery.

https://www.informit.com/articles/article.aspx?p=31338&seqNum=4

Crowded, expensive, and prone to earthquakes, the Santa Clara Valley would seem the worst place to build a fab, and geologically speaking it is.

https://www.cnbc.com/2021/06/04/why...g-water-dependent-chip-plants-in-arizona.html

“A chip factory cannot shake, not even a microscopic amount,” he said, adding that they set such factories into the bedrock to keep them still. “Even a 0.5 Richter shake can ruin an entire crop of chips.”

 

[aexcorp]

Basically all the issues we all saw coming (and so did TSMC). The one thing I learned was the location of the TSMC fabs that is not so great compared to where the current talent is in the Phoenix metro.

Lots of people are talking about not wanting to go to Arizona, but isn't it one of the fastest growing state along with Texas? I'm sure some of these people are going there to retire, but I'm also hearing tech workers are moving to both states in some number. What's so bad about Arizona vs. Texas or elsewhere? And isn't the cost of living lower there than in tech bastions like CA and MA?

The issue with unions merits a bit more detail IMO. I do wonder if it's about costs as much as what those costs get you. My admittedly limited experience with union workers is that they're used to stopping work at set times and might push back when asked to do extra work. This is probably quite a different situation than what TSMC finds in Taiwan and I wonder if that's part of the problem.

 

[lurknomore]

As long as the Fab doesn't run, the US economy is dependent on Taiwan's fabs (that's not an exaggeration, as the Nasdaq would tumble by well over 50% if TSMC couldn't produce chips), and therefore the US military will tell China to stay away from Taiwan.

TSMC is the most important asset of the Taiwanese Army.
The government there should be subsidizing TSMC to stall the fab opening for as long as possible. They may not give money directly, but they sure have told them what's at stake.

 

[Mordics]

In the same vein, I can’t help wondering a cultural disconnect is part of the problem. The fact that TSMC asked a union contractor to hire non-union workers implies that they didn’t understand how inflammatory that question would be to a union shop. I am not at all surprised by the reaction to that question.

Also, American union culture can be fairly weird¹ , especially to outsiders encountering it for the first time.

I’ve been a member of the Teamsters, and I’ve also covered trade shows as a journalist where attendees were strictly forbidden from changing a burned-out lightbulb in their own booths.

Rather, they had to pay a union electrician $75 to do it for them. Not $75/hr—$75/bulb. (This was in Anaheim, CA in the late ‘90s). It often took a hour or two for the electricians to respond, some of them were incredibly smug to the people working the booths. Those people were often hourly or contract workers themselves; if those smug electricians were trying to stick it to The Man, their aim was terrible.

It was legitimately exasperating. I found myself exasperated for the vendors, even though I understood why that rule existed and didn’t have any lightbulbs to change.

Plus, union culture can be overtly hostile to perceived enemies, and significant parts of that culture have hair-trigger enemy detectors.

This is all to say that TSMC might simultaneously:
(a) have a real point about worker skill,
(b) have a weak understanding of American union culture,
(c) have some legitimate frustration with that culture, and
(d) be doing some fairly sketchy things to circumvent labor laws/union rules.



——————
¹ I obviously have mixed feelings about unions. They’re eager to remind us that they brought us the weekend—and they did!—but they’re somewhat less eager to remind us that they also brought us Derek Chauvin.

TSMC has had a US Fab for over 2 decades and even successfully resisted a unionization push there. They are not unsophisticated or unfamiliar with the way things work in the US.

 

[theramenman]

Couple of things I wanted to point out as someone who has worn two hats that are somewhat relevant in this field (I worked in the construction industry for a decade before going back to school for computer engineering):
1. Construction costs in this country are absurdly high. We build a mere fraction of the housing other countries build, a mere fraction of the offices, wear-houses and rail infrastructure too. The best practices are forgotten and we end up re-learning lessons project to project. If you wonder why it takes almost 20 years to repurpose damn near complete existing tunnels in the NYC area for example while costing 10s of billions while other high income, unionized, western countries spend as low as 10% of that, take a closer look at that issue.

2. We absolutely do have an issue with skilled workers. I previously worked at Micron (opinions my own, etc etc) and they pay pretty decent wages. You would not believe how difficult it is to find competent technicians. We just don't teach hands on skills in our schools (we had to teach things as basic as how to hold a screw driver and righty tighty) and many people are not even aware of the jobs. We spend years (its a high skill job, your buddy who worked at the GM truck plant isnt gonna walk into the fab and become a technician overnight) training people from scratch. When youre starting a new fab, you just do not have that luxury.

The sad matter of fact is that America is no longer at the forefront of physical manufacturing and electronics manufacturing. We have shortages of electrical and computer engineers, competent project managers and construction workers, and of technicians skilled (and frankly, healthy) enough to do the work. We neglected to keep our workforce trained in physical work in favor of service, finance and software jobs. Its not a remote surprise to me that anyone is having issues.

 

[terrydactyl]

“Getting access to the requisite skills and skilled workers to keep the construction plan on time is a challenge.”

Captains of industry love to tout the benefits of a free market. That is, until they are on the losing side of the supply/demand equation.

 

[ProfessorShonku]

Congress needs to fix legal skilled immigration asap, separately from the policy nightmare that is illegal immigration and border crossing, DACA and everything else that is nearly unsolvable without making a lot of people unhappy.
Legal skilled immigration is an economic issue, and migration/illegal immigration/path to citizenship is a human/social issue. Congress conflates these two and doesn't solve anything.

 

[IncorrigibleTroll]

What's so bad about Arizona vs. Texas or elsewhere? And isn't the cost of living lower there than in tech bastions like CA and MA?

It's a litterbox. I'm quite happy to deal with high northeast living costs in exchange for trees. As lovely as the Breaking Bad / BCS crew makes the desert look, I don't think I could spend more than a few days there without losing my mind. I spent 4 days in Nevada once and was climbing the goddamn walls.

 

[DistinctivelyCanuck]

IBM put a bunch of fabs and ancillary facilities and such in upstate NY, Vermont, and across the border in rural Quebec. meets the 'needs water', 'geologically stable' , but ' large technical workforce' ? not so much. I was being recruited for a position in one of the sites and was surprised at how they seemed to think that the location was a bonus...

 

[riverstyx]

Congress needs to fix legal skilled immigration asap, separately from the policy nightmare that is illegal immigration and border crossing, DACA and everything else that is nearly unsolvable without making a lot of people unhappy.
Legal skilled immigration is an economic issue, and migration/illegal immigration/path to citizenship is a human/social issue. Congress conflates these two and doesn't solve anything.

Canadians are stealing our thunder. We are no longer the top destination for legal skilled immigration. Why spend years trying to get here, often being stuck behind a queue of hundreds of thousands of asylum seekers, when you can apply for a residential permit in Canada. https://www.bbc.com/news/world-us-canada-66249400

 

[Xipher]

Why in the world are they building in Arizona? A place where the temps are sky rocketing from climate change. If cooling is such an issue, then that seems a rather riske place to fabricate. Look at the enormous coolers in the background of the pic.

Maybe it's cheap labor? Or significant tax breaks from Arizona?

There is another article on that topic
https://meincmagazine.com/gadgets/202...eep-building-foundries-in-the-arizona-desert/

 

[lordofshadows]

No skilled labor for the price we want to pay

 

[IncorrigibleTroll]

IBM put a bunch of fabs and ancillary facilities and such in upstate NY, Vermont, and across the border in rural Quebec. meets the 'needs water', 'geologically stable' , but ' large technical workforce' ? not so much. I was being recruited for a position in one of the sites and was surprised at how they seemed to think that the location was a bonus...

It's easier to forget about the language squabbles on this side of the border.

 

[Architect_of_Insanity]

Maybe this is a wakeup call to stop belittling intelligence and milking college students for every cent they have now in the future for 30 years... we used to do great things and now we're just running around being told to be fearful of smart people and new ideas.

 

[TylerH]

Yet, Taiwan is one of the most seismically active places on the planet.

Taiwan got its start in manufacturing in the late 80s, when chip fabrication was much less demanding in terms of constraints. We're taking the very beginnings of the sub-micrometer era... I think in 1987 when TSMC was founded chip sizes were at about the 800nm scale.

They just happened to have a big head-start compared to everyone else, and did very well on monopolizing that head-start, world-wide.

All of this can be true while still acknowledging that, geologically, Taiwan is a really bad place for building chip fabs for modern and future fabrication constraints, let alone geopolitically.

 

[hypomnema]

——————
¹ I obviously have mixed feelings about unions. They’re eager to remind us that they brought us the weekend—and they did!—but they’re somewhat less eager to remind us that they also brought us Derek Chauvin.

And the vegetarians brought us Hitler, they never take credit for that, the louts.

 

[ShortOrder]

Not sure why I’m getting downvoted… Why do you think we broke a treaty and refused to defend Ukraine? It’s because they don’t have anything we want, like oil. If they did, you bet your ass we’d be over there fighting Russia.

I'm fairly certain we never had a treaty promising to defend Ukraine. Feel free to provide a link if I'm misinformed.

 

[deadman12-4]

Do you believe these plants in the US will be profitable on their own? If not, will Americans be prepared to spend additional tens of billions once this first tranche is spent?

I do think the work culture aspect is important to consider. TMSC is planning a chip facility in Japan. I'm not a betting man, but if I were, I would bet on that plant being more successful long-term.

Theres been this thing called a chip shortage for like 5 years. I'm not concerned with them selling.