Opinion: TSMC is about a lot more for Arizona and America than we realize. Can we work in good faith to solve our differences amicably?
The machines of the modern world are exquisitely small. They are labyrinths of multilayered transistors and electric circuits that in miniature rival the detail and design of sprawling metropolises.
To see these new devices in all their complexity — in their billions of components — you must put them under microscope.
Whisper thin and virtually weightless, these semiconductors and microchips are marvels that control and operate fighter jets and computers, cellphones and automobiles — virtually all of our modern electronics.
They are drivers of the present and the future and could become one of the most significant drivers of the Arizona economy if we don’t miss our moment.
TSMC made a huge investment in Arizona
The average Arizonan has no conception of the massive project taking shape on the desert floor in north Phoenix near 43rd Avenue and West Dove Valley Road, west of Interstate 17. It cannot be adequately described without superlatives.
Let’s begin with the Taiwan Semiconductor Manufacturing Company or TSMC.
TSMC is the largest and most important producer of the most sophisticated semiconductors and microchips in the world. And it is our new partner.
Western nations and virtually every state in the United States is drooling for the relationship Arizona enjoys with TSMC to develop a close-to-home supply chain for the devices that run the advanced world.
As reported by The Arizona Republic’s Russ Wiles, TSMC originally had planned a $12 billion project in north Phoenix. That has since become a $40 billion play to build two fabs, or factories, on a site that spans some 2 miles by 1 mile.
The project represents the largest foreign investment in Arizona history and one of the largest in U.S. history, The (U.K.) Guardian reports.
With Intel, it makes us a dominant player
The job projections are enormous.
The site is expected to produce 21,000 construction jobs alone. When completed the facility workforce could number 4,500, The Guardian reports.
That’s 4,000-5,000 semiconductor technicians and engineers per factory when the two fabs are completed, U.S. Sen. Mark Kelly recently told The Republic’s editorial board. Today, some 12,000 construction workers are already on site building the new complex, he added.
TSMC would ensure Arizona is a dominant player in high tech for decades to come. They have dropped anchor in the same metropolis where Intel has already harbored its own fleet.
The multinational Intel is headquartered in Santa Clara, Calif., and is one of the world’s largest chip manufacturers. Its instruction sets are found in most personal computers.
Today Intel has four fabs in Arizona and two more under construction.
TSMC adds to the critical mass and is already spurring new growth. Since its emergence in metro Phoenix, 27 semiconductor industry-related companies have announced plans, bought or leased, to operate in the Valley, The Republic’s Corina Vanek reports.
Problems emerge at the TSMC plant
A project as massive as TSMC’s does not happen without hangups, and serious ones have emerged.
Delays began when TSMC discovered that Arizona does not have enough skilled labor to install the sophisticated equipment necessary to produce semiconductor wafers, according to news reports. Further, the company ran into red tape trying to get visas necessary for temporary workers.
At the same time, construction unions in Arizona have complained of the lack of safety standards on the site and have expressed concerns that TSMC wants to replace American workers with foreign workers.
TSMC praised us: Now it says we lack skills to build
Adding even more complications, a sluggish market for microchips in China has reduced the demand worldwide and compelled TSMC to tap the brakes on its ambitious production goals.
In mid-July, TSMC announced it would delay production in Arizona by one year to 2025.
On Sept. 12, Reuters cited sources that said TSMC has grown frustrated with its project in Arizona and “is taking an increasingly optimistic view of Japan as a production base.”
The story described the difficulties TSMC has had recruiting skilled labor in Arizona and the “pushback from unions on efforts to bring in workers from Taiwan.”
This is a project to pull out all the stops
The next day, Arizona Gov. Katie Hobbs and Arizona Commerce Authority President Sandra Watson announced they would in days be jetting off on an eight-day business trip to Taiwan and South Korea.
The Phoenix Business Journal reported that neither the governor’s office nor Commerce Authority responded to questions about “whether the trip is related to recent challenges TSMC has faced in Arizona.”
Whether the trip was planned or not, Hobbs and Watson are smart to engage TSMC at this moment when the relationship appears to grow dicey.
This project is far bigger than any economic development initiative. It was no accident that leading players — President Joe Biden, Apple computers CEO Tim Cook and TSMC founder Morris Chang — were at the December unveiling in Phoenix.
Geo-strategic necessity commanded their attention — the shortage of microchip production in the Western Hemisphere and Western Europe.
Today it is the East that dominates microchip and semiconductor production. Asia has 81% of semiconductor assembly, testing and packaging, and 80% of global printed circuit board production, reports Foreign Affairs magazine.
Arizona’s effort: To make more microchips has a big hole
That imbalance creates an enormous risk for the United States and western Europe should China grow more belligerent under president Xi Jinping and trigger a war of great powers with the invasion of Taiwan.
Last week, German Foreign Minister Annalena Baerbock warned China that its military escalation with Taiwan “would be a horror scenario for the entire world” and called Xi “a dictator.”
That brought a furious backlash from Beijing.
Arizona needs to work in good faith
While TSMC’s Arizona plant would nominally alter the imbalance on global chip production, it would represent an important beachhead for Taiwanese chip production in the United States. It is an urgent early step to counter China and the Asian Pacific’s dominance in semiconductors.
Arizona cannot treat the TSMC expansion as a typical project. It is in no way typical. This is an important national priority that we must make work.
Our construction workers have raised serious concerns about safety on site. These are concerns not to ignore, and Hobbs and Kelly have worked diligently to address them with TSMC.
But our approach as a state, as a government, as business and union leaders, needs to be one of constructive engagement. We cannot get caught up in the routine squabbles that are common to large construction projects.
All of us need to be working in good faith to solve the problems and settle our differences amiably.
TSMC is one of the most highly desired corporate partners in the world. Our partnership with them could lead to thousands and tens of thousands of high-paying jobs for Arizonans well into the future.
More importantly, it will help make the United States safer against a global rival that is authoritarian and hostile to the freedoms we cherish.
In the Reuters article that no doubt alarmed Arizona officials, TSMC’s Chairman Mark Liu also is quoted saying, “Any project … will have some learning curve. In the past five months the improvement (in Arizona) has been tremendous.”
That sounds like a partner who wants to work with us to solve our shared challenges. All Arizona stakeholders need to engage our Taiwanese partner in similar spirit and seize this enormous opportunity for Arizona and the United States.
This is an opinion of The Arizona Republic’s editorial board.