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...

 

[TylerH]

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.

If you are referring to the Budapest Memorandum, that was a set of agreements to respect Ukraine's (and other nations') sovereignty and support their entry into United Nations bodies. It was not a defense pact.

You may have also missed, somehow, the well over $100 billion we have provided in lethal and on-lethal assistance to Ukraine in support of their effort to defeat Russia. The US is very much fighting Russia in every sense except a direct, one-to-one, hot war.

 

[riverstyx]

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.

Buddy I think Taiwan is smart enough to not bribe their companies to fuck with their biggest weapons supplier and one of few remaining allies.

 

[aexcorp]

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.

This made me LOL. I definitely thought it looked cool in Breaking Bad. Also I liked the scenery in Nevada, but then I was there just for a vacation and there is lots of cool stuff like Lake Meade and the Grand Canyon. I could have a very different take if I lived there.

Arizona?? Its over 40 degrees there in the summer, who would want to work there? There are at least a dozen other states that are better to build a fab.


Its also low in Alabama and Georgia, and both have decent tech sectors, and less extreme climates. There are plenty of other low cost good states on the east coast too. Its stupid to build large projects in a desert.

I'm not advocating for Phoenix, I've never been and I think people moving there is a terrible idea from a sustainability perspective. I'm just surprised at the strong reactions here. Lots of places in the US get to 40c in the summer these days (and more so in the coming years). I'm in the DC area and we get that every summer at least a few weeks, with high humidity to boot. The metro area continues to grow... Texas gets hot as hell too and people are moving there in droves.

 

[deadman12-4]

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.

The reason texas and arizona are bad is because they don't have the skilled worker base. Yes, they have low taxes and you don't have to pay workers as much. However, the low taxes, zero saftey net, and crappy education means a lack of skilled tech workers.
There is a reason that high skill jobs tend to cluster in states that have strong support for workers, taxes that support a saftey net and education, and such. Not only do those areas produce most skilled workers, those are the areas that the skilled workers WANT to live in.

Building where its cheap is stupid if you can't hire anyone to go there. Go to Texas? Well, what if your female? Get pregnant and suffer/maybe die from a miscarriage? Then get charged with murdering an infant?
LGTBQ? Get hate crimed just by going to texas (and the state would promote it).
Black? GOP claims racism doesnt exist anymore...

There have been endless things written about why building in bf nowhere is a bad move. Its also not a mystery why workers don't want to move to arizona/texas.

 

[Br.Bill]

And nobody wants to move to Hell ("But Its a Dry Heat"(R)) for the rates TSMC is paying.

At first I thought this seemed a prudent observation. I'm a Phoenix native who left there in 1996 not only because it was growing its sprawl too much and I hated watching the desert wildlife be systematically destroyed, but chiefly because my family and I were done with being hot as hell.

So I just checked recent statistics and Phoenix is still the 18th fastest growing metro area in the USA as of early 2023. So people are generally still moving there in great numbers despite the heat and the area's water availability crisis. It doesn't seem like they're being deterred by the climate or the looming reality that the Valley of the Sun is going to be the overbaked version of 1980s Detroit when the water runs out.

Since it doesn't seem to be the heat, what is the reason that TSMC isn't getting acceptable candidates?

 

[ColdWetDog]

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/


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


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


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


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

And yet, as you point out, the majority of chip fabs are in earthquake prone regions. And they still keep on manufacturing the things. My point is that, even if it is something of a point for Arizona, it can't be all that important. And Arizona isn't exactly earthquake free. Further, whole scale mining of aquifer water tends to increase local earthquake activity. Just not sure that it makes all that much difference to TMSC.

 

[dima1109]

Salary opportunities will need to be good to entice people to relocate and endure the challenge of the desert climate.

right, because a) there have never been any semiconductor fabs in arizona before this, and b) places like phoenix and las vegas have not been among the fastest-growing metros in the country over the last 20 years

 

[TobiB]

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

Yes, but building a fab is different to building a single-family house.

 

[The Dark]

Is this true? From what I understood these Fabs would be taking over a portion of 5nm production with all cutting edge production remaining in Taiwan?

When the second fab was announced last November, TSMC also stated that the first Arizona fab would make 4nm chips and the second one would be for 3nm chips.

 

[Ushio]

What do you mean you can't find highly specialized workers willing to work 60 hours a week for $3 an hour?

You think anyone in Taiwan is working for $3 an hour? This isn't a mainland China company neither is it majority based in China.

 

[EdelweissPirate]

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.

Okey-doke! That pretty much blows my theory out of the water—and I appreciate that, because it was plain wrong.

I thought they must have US-based management consultants who told them these things, but that maybe an obtuse executive ignored their advice. But you’re right—TSMC already knew.

But that makes it incredibly weird that TSMC asked a union contractor to hire non-union workers. Was TSMC intentionally inflamatory as (somehow) a negotiating tactic?

Did a mid-level, first-time-in-the-US TSMC employee ask a dumb question and the contractor is blowing it out of proportion as a negotiating tactic? I have no idea.

 

[aexcorp]

The reason texas and arizona are bad is because they don't have the skilled worker base. Yes, they have low taxes and you don't have to pay workers as much. However, the low taxes, zero saftey net, and crappy education means a lack of skilled tech workers.
There is a reason that high skill jobs tend to cluster in states that have strong support for workers, taxes that support a saftey net and education, and such. Not only do those areas produce most skilled workers, those are the areas that the skilled workers WANT to live in.

Building where its cheap is stupid if you can't hire anyone to go there. Go to Texas? Well, what if your female? Get pregnant and suffer/maybe die from a miscarriage? Then get charged with murdering an infant?
LGTBQ? Get hate crimed just by going to texas (and the state would promote it).
Black? GOP claims racism doesnt exist anymore...

There have been endless things written about why building in bf nowhere is a bad move. Its also not a mystery why workers don't want to move to arizona/texas.

I think things are a bit more complex than that. A lot plays out at the regional/local level. Alabama isn't widely known for high-skills, but Huntsville area is. Same with Mississippi and yet there is a growing geospatial/space cluster there. Arizona does have other fabs already, and universities that have solid training programs in relevant fields.

I'm not disputing the socio-cultural aspects, on the other hand. But still, your final sentence is factually wrong. Texas and Arizona are both drawing a lot of workers, incl. skilled and high-skilled workers. You might not like it or understand it, but it's true.

 

[jey9]

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.

It's the uncomfortable truth, but it is the truth, that American factory workers are underskilled compared to their Chinese/Taiwanese counterparts. That became completely lost in all the bullshit anti-globalism push over the last several years. It's not just semiconductor manufacturing. Across industries, the reality is more like the movie Gung Ho than any politician is willing to admit.

We (as a country) drank the Kool-Aid that Chinese manufacturing was driven by price, while anyone who works in supply chain knows the landing cost of Chinese tech goods is equal and that the real advantage of building there is infrastructure and expertise.

 

[ProfessorShonku]

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 out schools 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.

Completely agree. Anyone who has even little bit exposure to high skill job market knows how hard it is to hire right now, especially positions that require experience in high tech fields.
Companies will have to offer ungodly amount of money to essentially poach the workers and convince them to move their family which is very, very hard because nobody wants to move their kids to a different school and uproot their lives.
Also a bunch of high level engineers and managers are stuck with H1B (especially Indians and Chinese nationals) who cannot easily move anyway.
The solution is to enable legal immigration. Our senators, namely Chuck Grassley and Dick Durbin need to stop with their virtue signaling and let the immigration reforms pass one by one.

 

[poochyena]

Lots of places in the US get to 40c in the summer these days (and more so in the coming years). I'm in the DC area and we get that every summer at least a few weeks, with high humidity to boot.

?? That doesn't sounds right, and I looked, and the all time record is 41, but the average yearly record is only in the high 30s https://www.currentresults.com/Year...xtreme-annual-washington-high-temperature.php
I'm in Alabama and during summer time its rare it gets above 37. 40+ is very rare outside of Arizona, New Mexico, Texas, and Florida (and parts of California).

 

[ConflictedDude]

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?

Geologically stable, decided lack of major weather events (other than heat), ASU is a feeder school to Intel (as is to Microchip, OnSemi, and Motorola when it actually did semiconductors). Water is going to be a problem, but much of what's used can be recycled.

Living in AZ is no picnic this time of year, but that only lasts a couple of months or so

 

[IncorrigibleTroll]

?? That doesn't sounds right, and I looked, and the all time record is 41, but the average yearly record is only in the high 30s https://www.currentresults.com/Year...xtreme-annual-washington-high-temperature.php
I'm in Alabama and during summer time its rare it gets above 37. 40+ is very rare outside of Arizona, New Mexico, Texas, and Florida (and parts of California).

Hey, we only just adopted metric ~50 years ago. We still mess up the numbers occasionally.

 

[Kanten]

So find people with potential and train them. Jesus Christ. This is how you should be hiring in the tech sector anyway.

You mean HR was wrong in saying that I needed a masters degree for help desk?

 

[MMarsh]

It's the uncomfortable truth, but it is the truth, that American factory workers are underskilled compared to their Chinese/Taiwanese counterparts. That became completely lost in all the bullshit anti-globalism push over the last several years. It's not just semiconductor manufacturing. Across industries, the reality is more like the movie Gung Ho than any politician is willing to admit.

We (as a country) drank the Kool-Aid that Chinese manufacturing was driven by price, while anyone who works in supply chain knows the landing cost of Chinese tech goods is equal and that the real advantage of building there is infrastructure and expertise.

For the last 120 years, if you wanted a big complicated engineering project in an esoteric specialized field to be done right, you often brought in American, British, German, Canadian, etc. expats to run the parts of it that needed specialized knowledge. Those same people would hop from country to country every few years, wherever their skills were needed.

This situation doesn't seem much different. Half of the world's talent base for building and running the best leading-edge fabs is concentrated in one clump around TSMC's main campus, and America simply doesn't have enough people who know all the necessary bits and pieces of how to do this. If you're trying to replicate the same technology, your choices are to either guess and try and make a lot of expensive and time-wasting mistakes, or else bring in the Taiwanese expats who already know how to get it done.

It's not just training. It's the experience and the institutional knowledge that you get when a team of thousands of people have spent a couple of decades working together to advance the state of a super-advanced technology. You can't just write a university curriculum and start churning out people who know how to do every last bit of that in four years.

Fights over union vs. non-union and local vs. out-of-town labour are common to literally every construction project. I've seen them come up on jobs with three-figure price tags.

 

[LosAngelesPandas]

Nodding in Wisconsin... f*** Foxconn.

You can actually say it, you know.

 

[mir-teiwaz]

At first I thought this seemed a prudent observation. I'm a Phoenix native who left there in 1996 not only because it was growing its sprawl too much and I hated watching the desert wildlife be systematically destroyed, but chiefly because my family and I were done with being hot as hell.

So I just checked recent statistics and Phoenix is still the 18th fastest growing metro area in the USA as of early 2023. So people are generally still moving there in great numbers despite the heat and the area's water availability crisis. It doesn't seem like they're being deterred by the climate or the looming reality that the Valley of the Sun is going to be the overbaked version of 1980s Detroit when the water runs out.

Since it doesn't seem to be the heat, what is the reason that TSMC isn't getting acceptable candidates?

Anecdotally, from the job offers they sent out a few years ago related to this AZ fab - uncompetitive salary and a requirement to relocate to Taiwan for half a year of training. But it's not clear to me how much of this missing labor is engineering staff and how much of this is facilities staff. I think it may be the latter and they are just being cheapskate, as much as people moan about skilled labor drain in the US, the people are there, you just gotta resist the urge to bean count and pay them.

 

[NetMage]

Why in the world are they building in Arizona? A place where the temps are sky rocketing from climate change.

I thought controlling humidity was a big deal for Fabs, even more than water availability (which can be recycled), so Arizona was a good fit.

 

[Zomboe]

I think reporting things like this is counterproductive. There was a war and the current Chinese mainland dictatorship has never been in charge of Taiwan. Taiwan developed a democracy eventually as they moved away from their own dictatorship.

Agreed, very bizarre to see the phrasing "reclaim Taiwan" on Ars.

 

[aexcorp]

?? That doesn't sounds right, and I looked, and the all time record is 41, but the average yearly record is only in the high 30s https://www.currentresults.com/Year...xtreme-annual-washington-high-temperature.php
I'm in Alabama and during summer time its rare it gets above 37. 40+ is very rare outside of Arizona, New Mexico, Texas, and Florida (and parts of California).

I exaggerated slightly. The typical weather is high 30s Celsius for weeks throughout July and August, with a perceived temperature of over 40c due to humidity much of the time. High 30s with limited ability for the body to sweat really takes a toll (I imagine you get that in Alabama too). We were blown away by how differently things felt in Nevada with similar temperatures (high 30s when we were there) but very low humidity.

We do get 40c regularly though, but it REALLY depends on where you measure. A lot of the data for record-keeping comes from Ronald Reagan airport, which is right on the Potomac river, and therefore cooler. In the center of the city and away from Rock Creek Park that cuts the city more or less in half on the North/South axis, thermometers in the shade show 40c every year with the heat island effect. At least that's been my experience over the last 20 or so years I've been here.

 

[Unclebugs]

This excuse by TSMC is simply that, an excuse. They obviously can't accept the blame for screwing up, so these cowards are blaming the inferior and more expensive US workers. I would use stronger language, but this malarkey is so transparent that even gentle words blow it apart.

 

[Ceedave]

Usually that is politics in one form or another. The state offered them something, or didn't have some tax they were trying to avoid.

With regards to getting this thing up and running, I think for strategic reasons it would make a whole lot of sense to let in as many Taiwanese on short term visas as needed to get the thing up and running, and to get it done ASAP. Yes, that will undercut some US workers in the short term, but the downside of that pales in comparison to the downside of China invading Taiwan and the inevitable loss of the entire TSMC production there. If Covid taught us anything it is that off shoring strategically important industries is a horrible idea, regardless of whatever "efficiencies" doing so might provide. Consider the following analogy. Your home is short on space but your neighbor and good friend has plenty of space, so he lets you store all of your (rare and hard to replace) tools there. Then one day his house burns down and all of your tools are destroyed. Suddenly you cannot make or fix anything because you no longer have any tools. That is pretty much the situation we are in with respect to chip manufacturing. (Yes, a better solution would have been to spread the tools around to several sites so that they could not all be lost in one fell swoop. However, when a tool costs billions of dollars, redundancy is not so easy to do. Witness the current situation, where there are problems setting up even one extra plant.)

While it is possible that a few months delay in this one plant could be strategically important, it is far from certain. And my suspicions are aroused by arguments that benefit corporations at the expense of workers in the interest of “strategy”.

 

[KiraV]

Completely agree. Anyone who has even little bit exposure to high skill job market knows how hard it is to hire right now, especially positions that require experience in high tech fields.
Companies will have to offer ungodly amount of money to essentially poach the workers and convince them to move their family which is very, very hard because nobody wants to move their kids to a different school and uproot their lives.
Also a bunch of high level engineers and managers are stuck with H1B (especially Indians and Chinese nationals) who cannot easily move anyway.
The solution is to enable legal immigration. Our senators, namely Chuck Grassley and Dick Durbin need to stop with their virtue signaling and let the immigration reforms pass one by one.

People become skilled through training and experience. The solution is for companies to invest in their workforces, pay that ungodly amount of money to bring in the people they need, and then have them train up successors. Leaving American workers and students behind to import more workers shouldn't be looked at as the first and most viable option.

This is a problem decades in the making, and quick fixes that keep companies fighting over the same pools of workers are only going to make it worse in the long run.

 

[sxotty]

Agreed, very bizarre to see the phrasing "reclaim Taiwan" on Ars.

Hopefully we see less of it in the future.

 

[Ceedave]

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 “entrepreneurial” (and US tax codes, and their abuse) brought us Trump
…and the US military brought us Timothy McVey.
…and the World Wide Web brought us Meta.
…and Santa Claus brought me a lump of coal.

 

[.劉煒]

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.

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.



——————
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.

This is why right to work laws exist.

 

[.劉煒]

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

I believe this is referring to the https://en.wikipedia.org/wiki/Budapest_Memorandum .. which doesn't directly promise defense.

 

[wingfire]

For the same reason that they built fabs in Taiwan, that's where all the schools putting out the trained specialists are. Arizona universities built up their semiconductor coursework for this reason just as Taiwan's did theirs.

Today I learned! Thank you! That definitely makes sense.

 

[s73v3r]

Yup. I work in semiconductors. I'm deeply skeptical that they are willing to pay me enough to move to Arizona. You'd have to literally double my salary before I'd even consider it, and even then, I'd be doing it only long enough to scrounge up the money to retire early.

There is a reason why a lot of American semiconductor fabs are near urban areas that people want to live in. You are going after a pretty small pool of highly technical workers. Unless we are in a downturn, you have to really fight for your share of workers. Money will get you pretty far with many people, but location matters a lot.

Intel has several in Arizona as well.

 

[DavidV81]

That's because TSMC wants people to work crazy long hours for less pay. Most people with the skills would rather work 35 miles away at one of the five Intel fabs in Chandler. TSMC picked Phoenix because they were hoping they could steal Intel workers.

 

[s73v3r]

Not sure why I’m getting downvoted… Why do you think we broke a treaty and refused to defend Ukraine?

Citation Needed

 

[poochyena]

I exaggerated slightly. The typical weather is high 30s Celsius for weeks throughout July and August, with a perceived temperature of over 40c due to humidity much of the time. High 30s with limited ability for the body to sweat really takes a toll (I imagine you get that in Alabama too). We were blown away by how differently things felt in Nevada with similar temperatures (high 30s when we were there) but very low humidity.

We do get 40c regularly though, but it REALLY depends on where you measure. A lot of the data for record-keeping comes from Ronald Reagan airport, which is right on the Potomac river, and therefore cooler. In the center of the city and away from Rock Creek Park that cuts the city more or less in half on the North/South axis, thermometers in the shade show 40c every year with the heat island effect. At least that's been my experience over the last 20 or so years I've been here.

Its currently 47 in phoenix right now. Its been over 40 for several weeks now I believe. huuuge difference between "sometimes high 30s or low 40s" and "regularly low to high 40s".

 

[deanzaZZR]

Agreed, very bizarre to see the phrasing "reclaim Taiwan" on Ars.

Taiwan was first administered by China in 1684. Taiwan was designated as a prefecture of Fujian Province.

 

[s73v3r]

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?

Much of that is less wanting to go there, but being priced out of other places.

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.

You mean they're doing the work they're paid to do, and not giving out free labor.