TSMC Delays Arizona Chip Plant's Mass Production Amid Labor Shortage

The Biden administration's move to bolster America's supply chain for next-generation computer chips by increasing domestic production through the CHIPS and Science Act has encountered an issue with the world's largest contract chipmaker, warning about mass production delays. 

On Thursday, Taiwan Semiconductor Manufacturing Co. announced it would postpone mass production at its plant in Arizona to 2025 due to a shortage of skilled workers, the Nikkei reported. 

tsmc delays arizona chip plants mass production amid labor shortage

"We are encountering certain challenges, as there is an insufficient amount of skilled workers with the specialized expertise required for equipment installation in a semiconductor-grade facility," TSMC Chairman Mark Liu said on a conference call after earnings. 

Liu said TSMC had sent skilled technicians from Taiwan to compensate for the delays and shortage of trained workers in the US. 

"We expect the production schedule of N4 [4-nanometer chipmaking technology] process technology to be pushed out to 2025," he continued. 

TSMC is the largest contract chipmaker with clients like Apple, Qualcomm, and Nvidia. Also, on Thursday, the company revised its full-year outlook downward on continued macroeconomic headwinds developing in China and the rest of the world. 

"It's all about macroeconomics. In fact, higher inflation and interest rate [hikes] impact demand in all market segments in every region in the world. ... China's economic recovery is also slower than we expected," said C.C. Wei, CEO of TSMC

Wei said, "While we have recently observed an increase in AI-related demand, it is not enough to offset the overall cyclicality of our business." 

When building out domestic chip production, backed by federal subsidies from the Chips Act, the talent to construct these high-tech facilities is mainly in Taiwan and Korea. So access to skilled workers remains problematic as Western countries attempt to decouple from China. 

The key word is 'attempt' because Morgan Stanley said in a recent note to clients, "The reality is that a complete decoupling of the US economy from China is neither possible nor desirable." 



Authored by Tyler Durden via ZeroHedge July 20th 2023