Taiwan Semiconductor Manufacturing Company, known as TSMC, and the union representing workers helping to build the massive chip manufacturing facility last week announced they’d reached a deal.
It covers issues ranging from safety to training, and aims to help the sides work together, after some ongoing disputes.
Mackenzie Hawkins is a reporter for Bloomberg who covers U.S. industrial policy. She joined The Show to talk about the disagreements between TSMC and the union.
Interview highlights
What were the disagreements between TSMC and the union actually about?
MACKENZIE HAWKINS: So TSMC is the leading chip-maker in the world. This massive Taiwanese company that announced a couple of years ago, they're gonna be building chip-making facilities in Phoenix and that will employ around 12,000 construction workers from the greater Phoenix area. And around a quarter of those are members of this Building and Trades Council, which is this coalition of 14 unions in Phoenix. And there were issues almost from the jump with this project around construction timelines, safety guidelines.
But everything came to a head this past summer, when TSMC said that they were delaying the start of the production at their site to 2025. So about a couple of months delay from an initial timeline in 2024, because there weren't enough skilled workers in Phoenix to build the project.
And it seemed at that time that TSMC was bringing in foreign workers, right, to, to do some of the work that the company said it couldn't get folks here to be doing.
HAWKINS: That's right. So TSMC uses the world's most advanced chip-making equipment. These are machines that cost hundreds of millions of dollars to purchase, are incredibly technical. You got one speck of dust, you could lose millions of dollars on a production line. And so they said that they have no choice but to bring in workers from Taiwan who are able to install that equipment.
Now, a lot of union workers in Arizona said, wait, we've been building chip-making facilities at Intel in Chandler for 20 years. We have the people who are able to do this, and TSMC, this foreign company, is just trying to bring in cheaper labor from overseas.
Is there a vast difference between the kind of machinery and the kind of equipment that the workers would have been building at Intel versus what they would be building at TSMC?
HAWKINS: There is a difference. So TSMC is the most advanced chip-maker in the world. They're producing technology that's a generation or two ahead of what other companies like Intel are able to produce. And a big purpose of the CHIPS Act, which is the Biden administration's initiative to rebuild the U.S. semiconductor industry, is to also to help companies like Intel match up to the leading edge, which is right now produced in Taiwan.
But the union workers say we have experience building clean rooms, we have experience standing up these massive facilities. We're also ready and willing to learn, and they wanted TSMC to work with them on training so that they could fill these jobs with union workers rather than bringing over employees from Taiwan.
So in the end, did the deal that the union and the company came up with and agreed to, does that include some kind of training for, for American workers?
HAWKINS: It does. It doesn't quite meet everything that the union wanted. So the TSMC and the Arizona Building and Construction Trades Council put out a joint statement that basically acknowledged, "circumstances may require" [that] TSMC will tap foreign workers that have "specialized experience." So that's most likely talking about the people to install the most advanced equipment that really only exist in TSMC facilities around the world.
But the statement noted that TSMC is committed to hiring locally, including training workers on the ground in Arizona so that they can continue to fill these jobs in the future because TSMC is building not just one chip-making facility, but two, and the second one hasn't even broken ground yet.
So what else is part of this agreement? Like, what are some of the key takeaways in here.
HAWKINS: So the other main takeaway here is safety issues. You know, in the process of kind of learning about this plan and talking to union workers over the past couple of months and also reporting that a lot of other outlets, local and national, had done in the region. One of the big concerns that unions have is that TSMC, in some cases, they allege has not followed safety guidelines that are commonplace across all construction sites in the United States. And there has been incremental progress on safety so far. You know, Arizona Governor Katie Hobbs announced a voluntary safety accord with TSMC late in the late summer, and that was coming off of this sort of big uproar over the foreign workers issue that caused a lot of other, a lot of these other issues to kind of come more to light.
And this new agreement says that TSMC will partner with the unions to maintain transparency on safety issues. And they're also setting up a council of representatives of the company of the subcontractors that employ workers on the site and of union representatives themselves to kind of have an ongoing dialogue around safety and management issues that will meet at least once every three months.
So you mentioned a joint statement put out by the union and the company and it sounds by reading that statement that everybody's, you know, happy with this deal and sort of on the same page. I'm wondering if that really is the case, like, does this agreement do away with some of the bad feelings and some of the disagreements that we had seen over the last several months?
HAWKINS: I mean, there were definitely significant hostilities and high tensions between the Trades Council and TSMC over the summer and reaching an accord of any kind is a substantial step in the right direction.
Now, the question is, how this will actually play out in practice, because you know what they've released publicly is a lot of high-level commitments that we'll need to see if both sides uphold and the months and years ahead as this project comes online and as the facility actually starts producing chips. And a big goal of the unions was to get something on paper with TSMC before TSMC might get any federal funding that will support the project.
So the first grant from the CHIPS Act, which again is this massive effort out of Washington to subsidize the U.S. semiconductor industry, just went out yesterday, and TSMC is widely expected to get something from the government potentially at some point next year. So the union said we need to get something in writing with TSMC. So that when the Biden administration, if and when the Biden administration makes this award, they can point to this and say, hey, TSMC, you've committed to this for these unions. So we going to hold you accountable to that.
Well, and as you have reported, this company seems pretty important both here in Arizona, but also around the country just in terms of its investment and what it is looking to build, how significant in general is the fact that the company and the union were able to come to an agreement for the, the maybe for the nation's industry here?
HAWKINS: It's very significant. I mean, TSMC was one of the biggest targets for the Biden administration when they said we want to make semiconductor chips in the United States, because it's the company that's best at making those chips in the entire world. And it's also a company whose founder has in the past expressed disdain for unions and said unions actually shouldn't be part of this semiconductor making process. Now, that's the founder. TSMC, obviously, based on this accord is excited to work with unions. The company has insisted throughout the process that they are working with the Arizona building and Construction Trades Council.
But we're talking about an industry overall that has generally not been super open to organized labor. And there have really only been a, a couple of union deals in the entire chip-making space in the U.S., not just in the past year, but over the past couple of decades. So the fact that the most prominent chip maker in the world is coming to some type of accord with unions could be sort of a green shoot for organized labor in the industry going forward as it becomes a significant part of the U.S. manufacturing thrust.
