Why TSMC Has Struggled to Manufacture Chips in Arizona
Taiwan Semiconductor Manufacturing Company, one of the world’s biggest makers of advanced computer chips, announced plans in May 2020 to build a facility on the outskirts of Phoenix. Four years later, the company has yet to start selling semiconductors made in Arizona.
The Taiwanese company’s presence in the state was viewed as an all-around win: It would boost advanced chip making in the United States and help diversify TSMC’s manufacturing away from Taiwan, an island democracy that is the focus of increasingly aggressive geopolitical claims by China. TSMC has committed $65 billion to the project, and in April, the Biden administration announced that the company would receive a $6.6 billion grant funded by the CHIPS and Science Act.
American officials have long been concerned about the country’s reliance on TSMC. Gina M. Raimondo, the U.S. commerce secretary, has said America buys 92 percent of its “leading edge” chips from Taiwan. The TSMC factory in Arizona stands as a test of American efforts to diversify its reliance on chips produced overseas.
In Taiwan, TSMC has honed a highly complex manufacturing process: A network of skilled engineers and specialized suppliers, backed by government support, etches microscopic pathways into pieces of silicon known as wafers.
But getting all this to take root in the American desert has been a bigger challenge than the company expected.
“We keep reminding ourselves that just because we are doing quite well in Taiwan doesn’t mean that we can actually bring the Taiwan practice here,” said Richard Liu, the director of employee communications and relations at the site.
In recent interviews, 12 TSMC employees, including executives, said culture clashes between Taiwanese managers and American workers had led to frustration on both sides. TSMC is known for its rigorous working conditions. It’s not uncommon for people to be called into work for emergencies in the middle of the night. In Phoenix, some American employees quit after disagreements over expectations boiled over, according to the employees, some of whom asked not to be named because they were not authorized to speak publicly.
The company, which has repeatedly pushed back the plant’s start date, now says it doesn’t expect to begin chip production in Arizona until the first half of 2025.
On top of working to address the cultural differences in the workplace, TSMC is gearing up to recruit skilled workers to staff the Arizona plant for years to come. The company faces similar challenges in Japan and Germany, where it is also expanding.
In Taiwan, TSMC is able to draw on thousands of engineers and decades of relationships with suppliers. But in the United States, TSMC must build everything from the ground up.
“Here at this site, a lot of things we actually have to do from scratch,” Mr. Liu said.
The facility, surrounded by scaffolding and construction cranes, is an unmistakable landmark in northern Phoenix. TSMC has announced plans for three factories at the site, modeled after its giant campus in the southern Taiwanese city of Tainan. The first factory, a silver spaceshiplike building, is nearly complete and has begun test runs.
While it was under construction, the company sent American engineers to Tainan for training and to shadow their Taiwanese counterparts, observing TSMC’s all-hands-on-deck way of working up close.
Jefferson Patz, an engineer fresh off a master’s degree from the University of California, San Diego, went to Tainan in 2021 for 18 months of training shortly after he joined the company.
“Oh, my gosh, people work hard,” Mr. Patz said. He recalled that this initial impression had given him a strong sense of what it took to succeed in the industry.
After returning to Arizona, Mr. Patz said, employees were expected to pitch in with work outside their job descriptions because construction of the facility was behind schedule.
This approach did not sit well with everyone. Workers were required to do whatever was needed to finish the most pressing job, he said. Some of the American workers also found it difficult to spend a long stretch of time in Taiwan.
To address the tension between American workers and Taiwanese management, the company gave managers communication training. Since workers have complained about unnecessary meetings, the company has reduced both their frequency and the number of participants.
Three Taiwanese employees in Arizona said the company had tried to lessen the tensions. They described their workloads as less intense than in Taiwan. However, they said they were unsure if lighter workloads would continue as the factory built up to full production next year.
About half of the 2,200 workers at TSMC in Phoenix were brought in from Taiwan, 7,200 miles away. The company said it would create 6,000 jobs as it built the next two factories. It plans to eventually reduce the ratio of Taiwanese transplants to local hires.
“We want to make this site a successful site and a sustainable site,” Mr. Liu said. “Sustainable means that we cannot keep relying on Taiwan sending people here.”
TSMC has competition for labor in Arizona. Other companies in the area are looking for skilled workers in the race to increase production. Intel, the American chip giant, is expanding its chip factory in the area.
In response, nearby colleges and universities have ramped up their instructions in fields like electrical engineering. TSMC has collaborated with community colleges and universities through apprenticeships, internships, research projects and career fairs.
At Arizona State University, which has emerged as a major source of workers at TSMC, the company funds research projects for students, making it easier to assess and recruit future workers, said Zachary Holman, vice dean of the university’s Fulton School of Engineering.
Some colleges are even building their own clean rooms, the cavernous and spotless work areas at the heart of semiconductor factories. The idea is to acclimate students to operating in the highly controlled environments, where technicians wear clean suits and gloves.
One of those manufacturing spaces being built is at Western Maricopa Education Center, a public high school system that provides technical training.
“We have a generation of students whose parents have never once stepped foot into an advanced manufacturing factory,” said Scott Spurgeon, the center’s superintendent. “Their concept of that is still much like the old mom-and-pop manufacturing where you show up every day and come out with dirty clothes and dirty hands.”
In nearby Mesa, Ariz., and other cities, nearly 1,000 participants have graduated from a two-week intensive program in semiconductor technician training.
“We’re becoming the Silicon Desert,” said Tom Pearson, a dean at Chandler-Gilbert Community College, one of the colleges that run the program.