TSMC delays US chip fab opening, says US talent is insufficient
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I am going to say that Police Unions, which are vastly different than regular labor unions, absolutely cultivated Chauvin.
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They learn't from the best.
Your shitty internet companies are getting `how much?" in subsidies and then pissing them against the wall.
They get paid to offer United States salaries? What happens if they are lower than in Tiawan?
And given that we are talking about the United States (who can't seem to grasp the difference between America and United States) they will be lower.
But their (the importees) medical "care" costs will be higher so they need more money to pay for said care don't they?
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And Taiwan is still ruled by the Republic of China, unlike the mainland.
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Listen, people still build houses in Florida. That doesn't mean building in Florida is not a stupid ass decision. It is--your house is likely gonna need to be rebuilt in a few years because hurricanes and floods are a thing. But, somehow, there are still economic factors at play that, for some people, outweigh the environmental cost of living in a place like Florida.
Stable geology is better for chip fabrication, plain and simple. Companies can and do engineer chip fabrication plants in unstable locations, but it costs a shit ton more (see one of the articles I linked to that mentioned $3500/sqft for the fab rooms suspended in mid-air vs normal $80/sqft costs for the rest of the plants). If there is a place that has everything else a company needs, and it has stable geology, that's a win-win, rather than just a win. Arizona (and similar places nearby like Texas) has an amenable regulatory environment, a better hiring pool than most other places in the country, thanks to education focuses over several decades, ideal water options, and stable geology/optimal climate conditions.
As I mentioned in the prior post, as chips have continued to shrink in scale down to the single-digit nm scale, demands for stability have only increased. I am not an expert in chip fabrication nor in geology, so I don't know if there is a hard line or ratio of quake size-to-fabrication scale where at a certain quake size, you can't reliably fabricate chips of a certain scale or smaller, or you'll have junk silicon at the end of the process... but I bet there is a line somewhere, even if it's got a big +/- tolerance for safety reasons. The stability demands from 10, 20, 30, 40 years ago were less than what they are today, and the demands today will probably not be as stringent as the demands in another 10 or 20 years... that's just the nature of things.
As for draining aquifers causing stability problems, I completely agree with you, but I don't think chip fab companies fully appreciate that or at least are not in a position to do anything about it directly, since the drainage issues in that region come almost entirely from farms used to grow alfalfa for Middle Eastern cattle. (most likely I think they are just hoping it doesn't affect them to the point where it becomes unaffordable to deal with).
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Taiwan was first administered by the Qing dynasty in 1684, which was an empire formed by a nomadic people group called the Manchu who conquered a large chunk of modern-day asia.
What does that have to do with the PRC? That government has never, in its entire history, been in charge of Taiwan.
Taiwan spent longer as a part of Japan than it ever did as a part of any of the various governments that have controlled pieces of modern-day China over the course of history.
EDIT: also, they weren't made a province of the Qing dynasty until 1885. So they were only an official part of the Qing government for 10 years, until they were conquered by Japan in 1895. Before that, settlement from the mainland was mostly prohibited, and the Qing dynasty pretty much ignored the place.
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I completely agree that Taiwan is a sovereign nation that has never been ruled by China. Unfortunately only power matters in this world. China can send 3 or 4 million troops across the strait and thousands of aircraft while encircling the island with a blockade. There’s no way we’ll go to war with China over Taiwan. The UN will send a sternly worded statement which China will ignore. I doubt we’d even sanction them.
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I have been hearing little bits for a while from Taiwanese media about complaints about not getting the right kind of working attitude from US employees. The actual issues cover a range of real reasons, but building up a labour pool takes time, and it also takes time for management to adjust to a new location and culture.
The big question is whether both sides are willing to eat a little humble pie and to make the adjustments needed to work together. I see bumpy roads ahead.
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Taiwan was colonised by Chinese from the mainland over a range of years from at least the 17th century, and for a while was an outpost of remnants of the defeated Ming Dynasty before it was brought under the control of the Qing Dynasty (look up Koxinga). China has as good a claim to it as any, and at least as much as the US has a claim to Guam and numerous other territories.
According to the Wikipedia article (conclusive proof, I know!) “The Qing dynasty ruled over the island of Taiwan from 1683 to 1895” (article on “Taiwan under Qing rule”). Being made a “province” is not the key date.
Then again, perhaps Taiwan should be handed back to the original inhabitants who lived there for thousands of years? They are currently mostly huddled in a corner of the island. Of course, that would also require handing back most of the US on the same basis.
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I have a coworker that is leaving their visa job in the US because it's easier to get citizenship in Canada with a visa job there.
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TSMC really, really doesn’t want to build fabs abroad. They are doing this under pressure from US administration. This sounds more like an excuse to delay (forever if possible) than a legitimate reason.
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This is such a predictable and dumb conversation. Qing China was China regardless of where they came from. The Manchu's adopted Chinese political, legal and cultural institutions. Heck, they even modeled their government, legal and foreign relations on the Chinese model when they carved out their kingdom in Manchuria. Both the PRC and ROC governments are products of these shared political and cultural histories. Both governments claim to represent all of China. Both governments agrees that Taiwan is a province of China. The outcome of the civil war started by the KMT has yet to be determined.
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What is going on in AZ? First they sell escentailly unlimited water rights to a gang of Saudis and now subsidising a foreign fab plant which will also require vast amounts of water.
Meanwhile whole towns are running out of water, who is getting the cash to allow this?
Meanwhile whole towns are running out of water, who is getting the cash to allow this?
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The PRC has no claim on it, as the ROC still exists.
You mean started by the CCP.
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So the thing you were told doesn't apply, the Budapest Memorium, you're going to claim applies here. With nothing to back it up. No treaty. No defense pact. Nothing.
You're an idiot.
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TSMC revenue down 10% and net income fell 23.3% year over year. They also sight weakening PC and smartphone demand - aka Apple products. Arizona fab build is a capital intensive project and a huge USD cash eating hog.
TSMC's gripe is solely costs associated with completing this project (ie. union whining/bashing). They're attempting to squeeze the General Contractor(s) on lowering overall costs with a legitimate claim of crying billion dollar poverty tears.
TSMC needs to produce those costlier chip sets for Apple and others for the U.S. plant to recoup their costs. Selling low margin DRAM chips won't cut it for keeping this facility operational. If the U.S. economy continues to slow, chances are high there will be a prolonged pause on fab construction.
TSMC's gripe is solely costs associated with completing this project (ie. union whining/bashing). They're attempting to squeeze the General Contractor(s) on lowering overall costs with a legitimate claim of crying billion dollar poverty tears.
TSMC needs to produce those costlier chip sets for Apple and others for the U.S. plant to recoup their costs. Selling low margin DRAM chips won't cut it for keeping this facility operational. If the U.S. economy continues to slow, chances are high there will be a prolonged pause on fab construction.
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This is a little bit of what CA was calling AZ out on. AZ agreed to lower water rights in exchange for federal funding for their canal project decades ago and then in the negotiations over the Colorado river deal claimed they couldn't lower usage because of these agreements. CA was like 'you knew what you had rights to, the law of the river is decades old, you promised something you couldn't deliver on, that's your problem'. And CA never tried to attract these plants to the other side of the Colorado, where there is equally arid conditions and where the University of California turns out even more students (we sent more than our fair share to TSMC, including my son who has been actively recruited to work in that facility) because we knew we couldn't guarantee that water despite having the most senior water rights because we had to uphold commitments to residents and farmers.
But toward the topic of the article, before I retired we installed a facility of comparable complexity that had very precise seismic and EM requirements and finding qualified workers to do that installation outside of those that had previously worked on these projects was impossible. This was the first such installation in the US. We did inquire about training local workers and it would add months to the project to do that, and we'd be responsible for paying for that training, which wasn't cheap. Basically we'd be hiring those non-local workers for as long of a stint to train the local workers as it would take them to just install it, while also paying the local workers to be trained, and then paying the local workers the same amount for that period of time again to do the installation. So it added 3x to our labor costs related to that part of the project and delayed the project by the length of time to set up and do the training. The local workers of course wanted the job - it paid a lot, and it paid double when you factored in the training - but there was no marginal value from that training. We had no idea if there would ever be a 2nd facility like this in the united states for these guys to work on, and it was up to the NSF to increase the grant to cover that cost and even the federal government didn't see the value in adding that training to the US labor pool at that time.
We don't usually put the burden on the customer to pay for the training of the contractors employees in order to win a contract. The reason they're asking for it to be done the way is they don't know if they'll ever use that training ever again. I'm very pro-union, but ASML equipment always comes with an installation team. That's why that stuff costs $150M each. I don't see why it wouldn't be sufficient to have those workers operate under the terms set by the union for a situation like this.
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This is normal.
Engineering degrees cost about 4x as much as humanities/social science degrees to confer, but pay the same tuition, so universities are really struggling to expand engineering degrees under their revenue structure because they lose money on every engineer. Like a LOT of money. But theirs is pressure to produce STEM degrees, and the cheapest of all STEM degrees to produce is math, followed by CS. CS degrees are a lot cheaper than EE - about half. So universities balance that equation by pushing CS hard.
This is not a new problem. 15 years ago I got a call by the CA governors office to produce a report on a provided engineering labor pool and what the UC/CSU/private system could produce over a 10 year period in order to attract a large manufacturer (I was the statewide authority on this at the time) and based on existing funding models (which were pretty bad in the shadow of the Great Recession) we weren't even close, and the cost to build those programs out across the state was substantial.
In the US there are ZERO programs to incentivize universities to build degree pipelines to meet national training needs. There are some from employers - we had a big one from Boeing - the article mentions AZ tipping one up for TSMC - but this is a problem of our own making. The thing that killed that manufacturer deal in CA is that they would have needed not just the entirety of California's 10 year production of industrial engineers, but the entire countries. We wouldn't have just needed to expand our existing programs but tip up more than a dozen new ones - and quickly.
So you're seeing the adage "Every system is perfectly designed to get the result that it does." at work. Nobody designed the system to crank out CS degrees, but a LOT of people neglected to examine the incentives in the system carefully enough to prevent the folks downstream to not figure out that the optimal solution was 'more CS degrees'. I was witness to a moment that could have changed that system in some small way, and saw how they chose to not change it.
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Replying because this is a widely misunderstood thing. The US treaty didn't say we would defend Ukraine. We said we wouldn't attack Ukraine if they gave up nukes. Russia also said they wouldn't attack Ukraine if they gave up nukes. Neither party agreed to defend Ukraine in the event the other party attacked.
Russia violated the treaty. The US did not. We have not attacked Ukraine.
You, like many other people, think that the US should have defended them anyway, but that's a whole other thing, and one that requires contending with the possibility of a nuclear exchange.
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Remember this article in 3 to 5 years when they've met their staffing levels for funding payment and they suddenly need to cut 10% of their well paid American jobs.
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TSMC in Taiwan is probably one of the main reasons to the US comittment to defend the island.
Are they really on a hurry to weaken that?
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TSMC aren't idiots. They knew there would be clashes over salaries, unions, work hours, commitment, and corporate culture. That's part of why they didn't want to build a plant in the USA. But then Biden bribed them with vast quantities of inflationary dollars to ignore their misgivings.
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Shortage of talent? Who would have thought such a thing, especially in a State where funding for public education continually gets cut and puts us near the bottom of rankings in the US. As Gomer Pyle so eloquently said "surprise, surprise, surprise".
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For instance, in my neck of the woods, Michigan turns out more engineers per capita than pretty much any other part of North America. And our programs aren't bad, either. But that is in part because a lot of the big tech and R&D centers for the automakers, major suppliers, and automation shops are nearby. So there's a lot of visibility of engineering as a career, and there are incentive programs and sponsorships from employers even at the community college level for skilled trades and technical programs.
A part of the problem is finding qualified instructors, since we don't pay a lot of professors on the same scale as what a good veteran in their field would make outside of academics.
Another part is infrastructure and facilities. It's hard to put out a robotics engineer without having robots for them to work with. The more specialized the discipline, the more equipment they typically need, and the fewer students who will be using it.
Yet another part is student outreach and academic incentives. Engineering degrees are not easy, there's a lot of topics where we ask for a lot more competence in school than typically is required in the field, such as doing physics and calculus equations without modeling, because we haven't updated a lot of our academic structures for those courses since ubiquitous internet and CAD became a thing. Students may not want engineering degrees, since while they make money, everyone was talking about even higher pay scales for stuff like FAANG software work.
It also doesn't help that a lot of lobbyists, businesses, and other folks have been pushing CS and "learn to code" so hard, since it increases the talent pool for some of our most visible companies (Apple, Facebook, Google, etc), and makes it so that there are more applicants competing for a given job, as a force to push back against rising wages, that is less fraught with policy challenges than continuing to lean on visa pools, while also looking magnanimous about sponsoring jobs that theoretically lead into prosperity.
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Dutch colonisation predates Chinese colonisation. The Qing dynasty only ever held the western edge of Taiwan from 1683 ti 1895 when Japan took over. Japan then lost Taiwan at the end of WWII to KMT.
KMT and the CCP had a civil war in Mainland China with KMT retreating to Taiwan.
CCP has as much claim to Taiwan, as US has to the UK.
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Actually, ASU is one of the most interesting universities to look at in terms of how to meet educational need. They have 70K in-person students and 60K online. Those are MASSIVE numbers. They're doing really innovative things there. States like CA would do well to take some of those lessons.
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UMich (not sure about MSU, etc.) has a financial structure that makes it a bit easier to build out engineering-focused programs than a lot of other university systems. They definitely pay competitive wages for faculty there - I did a fair bit of poaching from them and nobody there was being particularly underpaid.
But faculty salaries are part of why engineers are expensive to train, and the equipment as you note. An engineering lab is a good $1000/sq ft to build and up. Need vent hoods, wind tunnels, dynos, it adds up super fast. The salary pressures you note is an instance of Baumols cost disease. In the private sector engineers are incredibly productive, but educational systems haven't improved instructors productivity at all, so where Apple can get $3M/year worth of profits out of an engineer, and can pay accordingly, a faculty member supporting 50 students doesn't generate remotely that much - at least at a public - to allow us to offer competitive salaries. That productivity mismatch drives up wages for engineers at Apple, but also at universities, which drives tuition up. See my comment above about ASU doing at least some things to combat this, with good results.
Not sure where things at UMich are now, but in CA engineering is consistently the hardest program to get admitted to anywhere in the state - there is so much more demand than what the state can meet.
I disagree on the lobbying. Industry is screaming for more hardware, not software. But CS is cheap to instruct, so that's what they get.
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This... It costs more and takes far longer to do any kind of capital construction in the US. Even compared to places we'd think would be more expensive (eg historic areas of high-wage pro-union northern European nations).
There were several news pieces doing comparisons of that nature around the 2021 US infrastructure bill.
Here's one (gifted link free to read) for a background read...
https://www.bloomberg.com/news/arti...9.tmHYwAjGxKxTZP3MoZ7xe3YmzuXvESvDroE82oesgVY
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Besides what others have shared, also consider our unemployment rate is low and training people is hard: training (from scratch) also meaning you need folks who are underemployed, young, or looking for a career change. How many of you are planning to start a new career as a trainee in the next few months? Zero, do I hear zero? So... you need people who already at least have related skills.
Those folks also need to come through union approval (according to OP). Then figuring out to get them to stay in Arizona for several months to years after that, but not having any further employment prospects for them (how many more US-based fabs are you building). Also, building out an English/Spanish training program that fits all of those needs when all of your top folks are from a country that is not primarily English-speaking.
Yes, it's doable, and yes it's going to be super-expensive.
That's also before getting to the major differences in work-habits / work-ethics between east Asian nations and US values...
Those folks also need to come through union approval (according to OP). Then figuring out to get them to stay in Arizona for several months to years after that, but not having any further employment prospects for them (how many more US-based fabs are you building). Also, building out an English/Spanish training program that fits all of those needs when all of your top folks are from a country that is not primarily English-speaking.
Yes, it's doable, and yes it's going to be super-expensive.
That's also before getting to the major differences in work-habits / work-ethics between east Asian nations and US values...
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Anecdotally, I have a relative who got into TSMC but quit due to work stress. It must be pretty tough there if he couldn't hang on for the prestige.
And on a tangent, I'm reminded I just started reading/watching Zom 100, where the main character's desk job was so awful that a zombie apocalypse lets him rediscover the joys of life. It's like a joke about Japanese work culture where I'm not native enough to tell how big the grain of truth is. Still pretty funny!
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According to a NYTimes article that interviewed TSMC engineers, the issue was most than just having a large supply technical workers, but that also are willing to work extremely hard and do whatever they are told without questioning things too much.
https://www.nytimes.com/2023/02/22/technology/tsmc-arizona-factory-tensions.html
https://www.nytimes.com/2023/02/22/technology/tsmc-arizona-factory-tensions.html
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Besides, Budapest Memorandum is a memorandum not a treaty. So, nobody has violated any treaty here.
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And Chinese lived in the Penghu (Pescadores) ( and visited and traded with the inhabitants of Taiwan in the Song Dynasty. I'll save you a visit to Wikipedia, we are talking 800+ years ago.
The Dutch were driven out of Taiwan by a Ming loyalist "pirate" in the 17th century. Taiwan was then officially incorporated into China.
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You waste a lot of posts on a useless point of errata, considering that the people of Taiwan hold elections, which are considered to be reasonably fair these days, and the trend is going further from any kind of reunification with the mainland, under PRC or ROC rule. Taiwan has minimal interest in what the specific details of them being a Chinese province are, in much the same way that Americans are largely uninterested in the specific details of which bit of land used to belong to which European power.
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Honestly, would have made a lot more sense to build this facility someplace like Minnesota or Wisconsin.
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password123
Ars Scholae Palatinae
I see no mention of the new fab planned or under construction in Ohio. Would not that fab also experience similar difficulties? That fab is Intel's and the location is Ohio (not a desert like AZ), so things could be different. Hopefully the Intel fab construction will not get hit with skilled labor shortage, but we'll probably find out sooner than later. It would be really good to have a least one new fab in the US become functional "soon".
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US based chip makers are having the same trouble hiring technical workers. It's not that they're Taiwanese. It's that few people in the world can just walk in the door of a chip fab and do the work. They have to be trained, or hired from a competitor.
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