Taiwan's Ministry of Economic Affairs is willing to help TSMC overcome constraints it might face in setting up overseas manufacturing plants, according to Minister of Economic Affairs Wang Mei-hua. The Taiwanese company created quite a stir earlier this week when it announced that a highly hyped chip manufacturing facility currently being built in Arizona will see a year-long delay as it struggles to find adequate labor for installing advanced machines at the site. These problems have forced TSMC to fly in labor from Taiwan to train workers at the American plant, and Ms. Wang has expressed support for TSMC's overseas expansion plans by stating that her ministry will aid the company if required.
TSMC's Arizona Fab Delay Prompts Help Offer From Taiwanese Ministry
Ever since TSMC announced its Arizona site, industry observers have pointed out the differences in working cultures in Taiwan and the U.S. that could create problems for the firm during the initial phases of setting and operating the plant. One active voice has been TSMC's founder Dr. Morris Chang, and the firm's chairman Dr. Mark Liu has also stressed that working in the semiconductor industry is quite hard due to the complicated nature of chip fabrication and competition in the industry.
Another crucial factor surrounding the new plant is high costs. At TSMC's earnings call for the second quarter of 2023, Dr. Liu commented on these costs and shared that they are higher due to different factors such as the scale of the facility, the ecosystem and supply chains.
According to him:
From a cost perspective, the initial cost of overseas fabs are higher than TSMC's fabs in Taiwan due to: one, the smaller fab scale; two, higher costs throughout the supply chain; and three, the early stage of semiconductor ecosystem on those overseas sites as compared to a matured ecosystem in Taiwan. In our recent meetings with senior government officials in the U.S., Japan and Europe, we discussed our plans to expand our global manufacturing footprint to them. We also emphasized one of our major responsibilities is to manage and minimize the cost gap to maximize return for our shareholders.
He added that labor costs were also higher than what TSMC had anticipated and that TSMC is working with suppliers to set up an ecosystem to reduce costs over the long run.
A strong supporting ecosystem for chip manufacturing facilities was also on Ms. Wang's mind as she visited Taiwan's Dihua commercial area in Taiwan with Premier Chen Chien-jen. In comments made to reporters, the minister shared that all of TSMC's advanced chip manufacturing facilities are in Taiwan because of a strong supportive ecosystem. She added that TSMC's global manufacturing facility layout is in response to the global political situation, and the speed of setting up new factories depends on the construction site and country.
She added that TSMC's international expansion plans are motivated by a mix of political and business reasons, with customers preferring sites overseas as well. Ms. Wang also shared that her ministry is willing to extend TSMC any help it might need in setting up overseas chip making plants.
TSMC is currently training workers at the Arizona site to set up advanced chip manufacturing machines. These have also caused concern among local workers that their jobs and wages might be at risk, and the firm has clarified that the training plan will impact neither.
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