Bad news for Biden?, TSMC Delays Production Plan in the United States Biden | USA | TSMC

Recently, Taiwan's leading integrated circuit company TSMC confirmed that due to a lack of professional personnel, its factory in Arizona, USA, which was originally scheduled to start production in 2024, will be postponed for one year. Some comments suggest that this highlights the challenges TSMC faces in expanding overseas and the obstacles faced by the US government in attempting to reshape the semiconductor supply chain.

Encounter challenges

TSMC announced the establishment of a factory in Arizona in May 2020, with construction starting a year later. The original plan was to start production in 2024.

TSMC Chairman Liu Deyin stated at the financial report press conference on the 20th that the factory construction process is entering a critical stage of installing professional equipment. However, the shortage of personnel caused delays in the progress.

"We have encountered a certain challenge - a lack of professional personnel when installing equipment in semiconductor grade facilities." Liu Deyin predicts that the mass production time of 4-nanometer process chips will be postponed from the original plan of 2024 to 2025.

Liu Deyin added that in order to accelerate the progress of factory construction, TSMC is dispatching experienced technical personnel from Taiwan to the United States to provide short-term training for local technical workers.

This news was reported by the media last month. The Nikkei Asia Review quoted insiders as saying that TSMC and its suppliers are in negotiations with the US government regarding the processing of non immigrant visas, with the aim of sending over 500 experienced workers to the US as early as July to accelerate the installation progress of equipment such as cleanrooms and pipelines.

TSMC emphasized that the special personnel will only stay in the United States for a limited period of time and will not have an impact on the approximately 12000 workers on site every day and the company's recruitment in the United States.

According to insiders, the mission personnel aim to "improve work efficiency and help make up for lost time during the construction process." Previously, due to a shortage of American workers with first-hand experience in building semiconductor production facilities, and many people not familiar with factory requirements, multiple installation processes were delayed.

TSMC and its suppliers have dispatched additional forces to supervise and promote construction progress. It is reported that it may take another year to build a qualified production line after completing the equipment installation.

As expected

It is expected that TSMC's production plan in the United States has been postponed this time. According to previous reports from Taiwanese media, TSMC had previously been indifferent to setting up factories in the United States due to high costs. There is a shortage of talent in chip manufacturing in the United States, as well as a lack of upstream and downstream businesses such as raw materials, IC design, and packaging testing.

So, why does TSMC have to go? TSMC founder Zhang Zhongmou once bluntly stated that TSMC chose to do so under the urging of the US government.

Public opinion has noticed that in recent years, in the context of great power competition, the US government has continued to exert efforts in high-tech and cutting-edge fields.

For example, US President Biden signed the $280 billion Chip and Science Act in August last year, attempting to attract more funds, production activities, and job transfers to the United States by providing huge subsidies to the domestic chip industry.

Last October, the US government also issued comprehensive restrictions aimed at curbing the development of China's chip industry. According to reports, the above measures are expected to be further expanded by the end of July this year.

At the same time, as the world's largest semiconductor manufacturing enterprise, TSMC is inevitably attracting the attention of the United States. The public opinion has noticed that it is in its own interest to demand TSMC to transfer talent and production capacity to the United States under the pretext of "Taiwan Strait security risks".

It is reported that TSMC originally planned to invest $12 billion in the United States, which will be increased to $40 billion thereafter. Some comments suggest that this is one of the largest overseas investments in US history.

However, if an Asian company wants to transfer its production business to the other side of the ocean, it is inevitable that it will not adapt to the local conditions. In February 2022, it was reported that the construction progress of TSMC's Arizona factory was three to six months later than expected due to the COVID-19 epidemic and labor shortage.

Peter Hanbury, a partner of Bain Corporation, noticed that TSMC's production activities in Taiwan have been relatively smooth, but it is not easy to establish production capacity overseas, involving different work methods, business management models, and legal environments. The current labor shortage in the United States can be said to exacerbate the situation.

"Nikkei Asian Review" stated that TSMC's chip factories in Taiwan can usually be put into production within 30 months, but it may take more than three years to put the US factory into production.

At present, TSMC's production plan in the United States has been postponed until after the 2024 US presidential election, which is also seen as a setback to Biden's ambition. Especially considering that Biden has initiated a re-election campaign, and Arizona is expected to become a battleground state in next year's election.

In the process of running for election, there are variables as to whether Biden can convince voters that his economic policies will drive local economic development. Furthermore, it is unclear whether there will be any changes to the Chip and Science Act after the new government takes office.

Dutch lithography machine manufacturer Asma warns that politicians seem to underestimate the complexity of building new chip factories.