Taiwan Semiconductor Manufacturing Co. (TSMC), one of the world's largest makers of advanced computer chips, announced plans to build a factory outside Phoenix in May 2020. Four years later, the company has yet to start selling semiconductors made in Arizona.
The Taiwanese company's expansion into the state was seen as a win across the board, as it would boost advanced semiconductor manufacturing in the U.S. and help decentralize TSMC's manufacturing base from Taiwan, an island democracy that has become a focus of China's increasingly aggressive geopolitical assertiveness. TSMC is investing $65 billion in the project, and in April the Biden administration announced it would award the company $6.6 billion in CHIPS and Science Act grants.
U.S. officials have long been concerned about the country's reliance on TSMC. Commerce Secretary Gina M. Raimondo has said the U.S. buys 92% of its “cutting-edge” chips from Taiwan. The TSMC plant in Arizona has become a test of U.S. efforts to diversify its reliance on overseas-made chips.
In Taiwan, TSMC has honed an incredibly complex manufacturing process in which skilled engineers and a government-backed network of specialized suppliers etch microscopic pathways into pieces of silicon called wafers.
But getting it all to root in the American desert proved to be a bigger challenge than the company anticipated.
“We're always conscious that just because something works pretty well in Taiwan doesn't mean we can just bring the Taiwanese way of doing things here,” said Richard Liu, the site's director of employee communications and relations.
In recent interviews, 12 TSMC employees, including executives, said a culture clash between Taiwanese managers and American workers has led to frustration on both sides. TSMC is known for tough working conditions, with workers often called to work in the middle of the night for emergency situations. In Phoenix, disagreements over expectations have intensified, leading some American workers to quit, employees said. Some employees asked not to be named because they were not authorized to speak publicly.
The company has repeatedly pushed back the factory's start date but now says it expects chip production to begin in Arizona in the first half of 2025.
In addition to addressing cultural differences in the workplace, TSMC is also preparing to hire skilled workers to work at its Arizona plant over the next few years as it faces similar challenges in Japan and Germany, where it is also expanding.
In Taiwan, TSMC can leverage thousands of engineers and decades of relationships with suppliers. But in the U.S., TSMC has to build everything from scratch.
“A lot of things really have to be done from scratch here,” Liu said.
Surrounded by scaffolding and construction cranes, the facility is an unmistakable landmark in north Phoenix. TSMC has announced plans to build three factories at the site, modeled after its massive campus in the southern Taiwanese city of Tainan. The first of the factories, a silvery, spaceship-like building, is nearly complete and has begun commissioning.
During construction, the company sent American engineers to Tainan to train and accompany their Taiwanese engineers, giving them an up-close look at TSMC's in-depth work style.
Jefferson Patz, an engineer who had just graduated from the University of California, San Diego, went to Tainan for 18 months of training in 2021, shortly after joining the company.
“Oh my gosh, people work hard,” said Patz, who recalls that this first impression gave him a strong sense of what it takes to succeed in the industry.
Patz said that after returning to Arizona, employees were asked to help with tasks outside of their job scope because of delays in construction at the facility.
This approach did not sit well with everyone. Workers were asked to do whatever was necessary to get the most urgent work done, he said. Some American workers had difficulty staying in Taiwan for long periods of time.
To address tensions between American workers and Taiwanese management, the company provided communications training to managers. Workers were unhappy with unnecessary meetings, so the company Both frequency and number of participants have decreased.
Three Taiwanese workers in Arizona said the company had tried to ease tensions. They said the workload was lighter than in Taiwan. But they said it was unclear whether the lighter workload would last when the factory ramps up to full production next year.
About half of TSMC's 2,200 workers in Phoenix are brought from Taiwan, with 7,200 coming from the US. The company says it will create 6,000 jobs by building two new factories, and plans to eventually reduce the ratio of Taiwanese expatriates to local hires.
“We want this facility to be successful and sustainable,” Liu said. “And by sustainable, I mean we can't continue to rely on Taiwan to keep sending us talent.”
TSMC is embroiled in a war for labor in Arizona as other companies in the region race to boost production and seek skilled workers, and as U.S. chip giant Intel expands its chip factories in the area.
In response, nearby universities have stepped up their instruction in areas like electrical engineering, and TSMC has collaborated with community colleges and universities through practicums, internships, research projects and career fairs.
At Arizona State University, which has emerged as a major talent source for TSMC, the company funds student research projects and makes it easier to evaluate and recruit future workers, said Zachary Holman, associate dean of the university's Fulton School of Engineering.
Some universities are building their own cleanrooms — vast, pristine work areas in the heart of semiconductor factories — to get students used to working in highly controlled environments where technicians wear clean suits and gloves.
One of the manufacturing spaces under construction will be located at the Western Maricopa Education Center, a public high school system that offers technical training.
“Our generation of students have parents who have never set foot in an advanced manufacturing facility,” says Scott Spurgeon. The centre's director said: “Their mentality is still much the same as in the old-fashioned independent manufacturing businesses, coming to work every day and coming out with dirty clothes and dirty hands.”
In nearby cities such as Mesa, Arizona, nearly 1,000 participants have graduated from an intensive, two-week program to train semiconductor engineers.
“We're becoming a silicon desert,” says Tom Pearson, dean of Chandler Gilbert Community College, one of the schools running the program.
