TSMC's first fab in the United States failed?

TSMC originally introduced its pure-play foundry business to the United States in 1996 through joint ventures with customers Altera, Analog Devices, ISSI, and private investors (without government funding). Altera is now part of Intel, but ADI remains TSMC's top customer and passionate supporter. I saw ADI CEO Vincent Roche attend a recent TSMC event, and his story of TSMC collaboration is very compelling. The joint venture is part of TSMC's customer-centric approach to business, responding directly to customer requests.

The WaferTech fab was established in 1996 in Camas, Washington (north of the Oregon/Washington State border) with an investment of more than $1 billion, which was a huge sum at the time. Production of 0.35 microns began two years later as part of Philips' technology transfer when TSMC was founded. In 2000, TSMC acquired shares of partners and private investors and took full control of the Washington fab. It's now known as TSMC Fab 11, but apparently this fab is definitely ahead of its time.

WaferTech focuses on embedded flash process technology while supporting a broad portfolio of TSMC technologies with linewidths from 0.35 microns to 0.16 microns. TSMC is a company focused on helping companies deliver differentiated products and has partnered with them on many customization and manufacturing "phased" projects. As a result, WaferTech offers the latest generation of semiconductors worldwide, supporting innovation in automotive, communications, computing, consumer, industrial, medical, and military/aerospace applications.

To complement TSMC's world-class process manufacturing services, WaferTech also provides testing and analysis services at its KAMAZ facility, Washington. In addition, TSMC provides design, masking, and extensive packaging and back-end services at other locations around the world. WaferTech also offers TSMC's leading foundry CyberShuttle™ prototyping services, helping to reduce overall design risk and production costs.

Ron Norris, President of TSMC and Director of WaferTech, said: "With WaferTech's onboarding and shipping, TSMC customers have another guaranteed source of wafers to produce wafers to our standards of excellence. "Now, TSMC is the only foundry in the world that can transparently support customers from different geographic locations."

Ron Norris is another TI-based employee hired by TSMC. Ron himself is a semiconductor legend. He began his career at TI and held executive positions at Microchip in Arizona, Fairchild Semiconductor in Silicon Valley, and Data I/O Systems in Redmond, Washington, so he certainly understands the challenges of semiconductor manufacturing in the United States.

Historically, TSMC has built not only fabs, but also communities. In fact, TSMC Fab is a community in its own right, with everything you need to help you maintain your work-life balance.

One thing you have to keep in mind is that in Taiwan, working for TSMC brings status. You are a rock star. Working at Samsung in South Korea has a similar aura. When TSMC breaks ground on a new fab in Taiwan, you can expect to develop a complete support ecosystem around it with everything TSMC fab needs to succeed, including housing and college-level education for hiring and employee growth.

Unfortunately, at Camas Washington, this is not the case. The WaferTech campus covers 260 acres and covers 23 acres. Key manufacturing facilities include a 130,000-square-foot 200mm wafer fab. More fabs were planned but never built, and the support ecosystem was never formed, so TSMC's Taiwan fab proposal is called a failure in the United States.

There are many reasons for this "failure", including high costs, problems attracting local talent, and timing (soft economy), but in my opinion, it also has a lot to do with the star factor. In the United States, we have forgotten or not yet known how important semiconductors are to modern life, and TSMC is not as famous in the United States as it is today.

Now that TSMC is building fabs in Arizona, Kumamoto, Japan, and Dresden, Germany, it will be interesting to see how TSMC's experience differs around these worlds.

TSMC's Arizona plant is facing delays and doubts

Last December, U.S. President Joe Biden attended a groundbreaking ceremony for a chip manufacturing plant built by TSMC, Arizona, the world's largest chipmaker, and described U.S. union workers as "the greatest technologists in the world." Biden declared, "American manufacturing is back." "If you don't mind me, businesses should hire union workers for a simple reason: they're the best in the world."

His speech drew warm applause from the friendly audience, and TSMC Chairman Deyin Liu also attended the meeting, and took the opportunity to announce that a second chip factory will be built in the southwestern state of the United States.

The moment appears to advance Washington's goal of reducing U.S. dependence on overseas semiconductor facilities, many of which are located in Taiwan.

But nine months on, the Arizona project — once hailed as the crown jewel of Biden's chip and science bill, aimed at making the United States self-reliant in chip manufacturing — has been marred by delays, criticism and growing skepticism.

TSMC has delayed production plans, accused the United States of a lack of skilled labor and called on Washington to provide fast visas for Taiwanese workers. The union countered that the tech giant invented skills shortages as an excuse to hire cheaper foreign labor.

While TSMC doesn't love unions as much as Biden does, hiring nonunion workers primarily through outside contractors, the company faces political pressure to negotiate with unions as Biden seeks to win re-election campaigning — a pressure compounded by just a safety report from Arizona's first plant.

Against the backdrop of tensions between China and the United States, concerns have intensified between the United States and Taiwan, China, where many of the world's most advanced semiconductors are produced, with Taiwan producing more than 60 percent of the world's semiconductors and more than 90 percent of the most advanced semiconductors, while the United States accounts for only about 12 percent of global chip production.

With the Arizona project facing operational and political challenges, analysts question whether the U.S. can emulate Taiwan's success in chips. Even if the U.S. somehow becomes a major player in the semiconductor space, some wonder who will benefit the most.

Most local union members have not been involved in the project and have only now begun negotiations with TSMC on a labor agreement.

Brandi Devlin, a spokesman for the Arizona Building and Construction Industry Council, which represents the state's 14 building unions, said only about a quarter of TSMC's 12,000 workers on sites are union members.

Devlin said the Taiwanese company did not sign much-needed project labor agreements with local unions.

She added: "A job of this magnitude and scope requires an agreement in advance that addresses many issues such as workforce development, staffing, safety, workers and training. "All of this is addressed in the project labor agreement."

American Outlook, a political magazine that aims to "advance the goals of freedom and progress," reported in June that the plant had safety violations, worker injuries, alleged wage underpayments and out-of-state migrant workers.

Luke Kasper, a representative of the sheet metal workers' union, called the plant "the least safe place I've ever walked."

TSMC denied the reports, saying the company conducted "regular audits" in accordance with industry standards. "For TSMC Arizona, our safety and injury accident rates are significantly below state and national benchmarks," a spokesperson said.

Devlin said she knows union and non-union workers have filed reports with the Arizona Occupational Safety and Health Administration.

The Occupational Safety and Health Administration (OSHA) was established by the U.S. Congress in 1970 to provide safe, healthy working conditions for American workers.

"Just like any job, any large workplace, there are problems and incidents," Devlin said. "But unfortunately, I don't know what Arizona and TSMC are doing to address these issues."

She noted that after refusing to sign a project labor agreement for its first factory postponed, TSMC is now negotiating with construction unions to negotiate such an agreement for a second chip factory in the state. According to a press release issued by TSMC last December, the latter plant is expected to begin chip production in 2026.

"They've been discussing issues that are not only for union workers, but also for non-union workers at TSMC," Devlin said. He added that no timetable had been set for completing the talks.

At the same time, the challenges of the company's first plant remained. It was originally expected to open by the end of 2024. It is now expected to be completed in 2025.

TSMC said the reason for the delay was "the insufficient number of skilled workers with specialized knowledge."

Ask labor leaders, however, who attribute it to company management rather than a lack of skilled American workers.

Michael Dee, a business manager at the Arizona chapter of the North American International League of Labor, said "zero" workers from his union were hired to work at TSMC plants.

He added that the semiconductor giant is not a direct employer, but is outsourcing recruitment. "They contacted me and asked to hire 400 workers. Our negotiations are going well. Well, then I received a letter saying that they were not interested.

"Their problem is with management and oversight, not the skilled and trained workforce I can bring to the project," Dee said.

He said the union hopes the current negotiations will help address these issues and develop a project labor agreement for a second fab.

That is, other conflicts have already broken out. Last month, after TSMC announced its intention to bring in about 500 workers from Taiwan to complete the project, a union representing the state's plumbers and plumbers filed a petition with state lawmakers.

The union urged U.S. politicians to "stand with labor and stop TSMC from replacing more than 500 American workers," calling the plan a "slap in the face."

Aaron Butler, president of the Arizona Construction Industry Council and business manager for the United Association Local 469 business manager, accused TSMC of "blaming American workers for construction delays and using that as an excuse to bring in foreigners." those workers who can pay less."

"While TSMC's claim that these temporary workers will not replace American workers, contractors and workers are being 'removed from scope,' a claim of layoffs in the construction industry," he wrote in the July issue of the Phoenix Business Journal. Butler said American workers "created Intel for more than 20 years," referring to another chip giant.

During TSMC's labor agreement negotiations with the union over a second fab, the petition against the company was withdrawn.

Devlin told The Washington Post that the company was seeking "a very specific know-how that only TSMC uses in production." She added that current collective bargaining between the two sides includes the prospect of passing on this skill to American workers.

TSMC believes the company is building cutting-edge semiconductor manufacturing technology in the United States, saying it is in the "critical stage of handling all the most advanced and specialized equipment in advanced facilities."

In a statement, the company said it "places a high priority" on "nurturing the local workforce and is still actively seeking to recruit from within the United States."

A recent post by TSMC on LinkedIn invited "local trading partners" with experience installing semiconductor tools to "ensure the success of the Arizona project," but did not use the word "alliance."

Reviewing developments at the Arizona construction site, W John Kao, president of Taiwan's Tsinghua University, said U.S. workers will face a "learning curve," not only technically, but also about "precision thinking." About "what these high-end chips absolutely need."

Others closely associated with semiconductors have expressed concern that U.S. fabs can be as successful as Taiwanese fabs.

Linburn, TSMC's former vice president of research and development, said the tech giant has had factories in Washington state for more than a decade and has recruited many local workers.

"We could never get it to the same performance as our own Taiwanese plant," he noted. "No matter how hard we try, we will never reach the same level."

Like American workers, Taiwanese workers have their own frustrations.

Gao said many Taiwanese were "nervous" about the U.S. return rhetoric and questioned whether bringing in Taiwanese engineers was in Taiwan's interest, not just U.S. interests.

"Basically, are we being bullied into doing things we don't want to do? We understand what is in America's best interest. But is it in our best interest? ”

He added that engineers and their families may feel "abandoned" and reluctant to relocate because they know the primary goal of the United States is to create local jobs.

John Gao contrasted the company's experience in Arizona with the "good reviews" of the planned German and Japanese plants as a "win-win" partnership. He said "engineers don't mind going" those places.

TSMC is opening an $11 billion fab in Dresden and an $8.6 billion fab in Kumamoto, Kyushu.

According to observers, the disconnect between the U.S. and Taiwan lies in part in media coverage of the Arizona plant.

Chen Taijie, a professor at the Taipei School of Economics, said the overall message from the United States seems to be that "TSMC wants to build a factory in Arizona because Taiwan is too dangerous."

"The Japanese would never say that," he said. "They'll say, 'We need you because this is our customer, this is the local market.'"

Source: Content compiled by Semiconductor Industry Watch (ID: icbank) from semiwiki

Reference Links:

https://semiwiki.com/semiconductor-manufacturers/tsmc/335662-tsmcs-first-us-fab/

https://www.scmp.com/news/china/article/3235737/tsmc-chip-fab-site-arizona-touted-last-year-joe-biden-struggles-delays-and-scepticism