TSMC is stalling an agreement that would make its Phoenix plant safer and more efficient, an Arizona union says

• TSMC and a group of unions are in talks to address Arizona workers' safety and training concerns.
• A spokesperson for the coalition said negotiations had made little progress.
• The Arizona factory is central to the US's semiconductor-manufacturing push.

The monthslong feud between the world's leading chipmaker and the union workers building its Arizona factory isn't over.

Taiwan Semiconductor Manufacturing Co. and the Arizona Building and Construction Trades Council, which represents 14 unions and roughly one-quarter of the 12,000 workers on the TSMC site, have been in talks for about six weeks to address some of workers' safety, management, and training concerns.

Brandi Devlin, a spokesperson for the union coalition, told Insider that there hadn't been much progress in these negotiations and that TSMC had provided "no formal response to the agreement presented" by the council.

"We've had discussions with TSMC, and we've provided what we feel is a good framework for an agreement," she said. "We are currently disappointed that we're not any closer to an agreement today than we were weeks ago when we started having these discussions."

The two sides have been discussing the terms of an agreement that would provide a blueprint for how to handle a variety of issues that may arise during the construction process involving recruitment, pay, benefits, and working conditions. The unions are specifically seeking a project-labor agreement, a legally binding collective bargaining agreement that is unique to the construction industry. PLAs aren't standard business practice in Arizona, Devlin said, but there's recent precedent in the US — the chipmaker Micron entered into one with New York unions.

"We want to make sure that everybody on the job site, whether they're union or nonunion, is working in safe, healthy working conditions, that training is adequate, and that any type of issues that come up, that there's a mechanism for addressing those issues," Devlin said.

When reached for comment, TSMC said that it kept an "open channel of communication with all our construction partners, and that includes the unions." The company did not comment on the status of its conversations with the unions.

The US is racing to build advanced chips domestically

These discussions mark the latest development in the US's race to build more semiconductor chips, which are used to power devices as varied as smartphones, televisions, and military equipment. In summer 2022, President Joe Biden signed the CHIPS Act into law, which included over $52 billion in semiconductor subsidies to boost chip manufacturing in the US and create American jobs.

While the US is looking to boost manufacturing across the entire semiconductor industry, TSMC's investment is especially important for economic and national security reasons.

Taiwan's TSMC controls as much as 90% of the production of the most advanced chips. In the event China — which claims the territory as its own — invades the island and chip production screeches to a halt, America doesn't want to be completely vulnerable.

Last year, US Commerce Secretary Gina Raimondo said the US would face a "deep and immediate recession" if it lost access to Taiwanese chips.

This is why TSMC's decision to build two chip factories in Arizona has been viewed by experts as a major development. And that's why any hiccups that push back the factories' construction — and perhaps jeopardize TSMC's long-term investment in the US — could be concerning.

While Devlin said the discussions had not disrupted work on the site, two workers told Insider that resolving the unions' safety concerns would help get construction back on track. They said safety issues on the site had contributed to low-quality work that required repairs and therefore hindered progress.

"It slows everything down," said an engineer who has worked on the site for over a year. "The single biggest issue where I see no resolution is the safety issue." The engineer's identity is known to Insider but has been kept anonymous due to their fear of professional repercussions.

TSMC has defended its commitment to safety and said that its safety-incident rate was nearly 80% lower than nationally reported figures. When previously asked about workers' accusations of safety violations, a TSMC spokesperson said: "TSMC is deeply committed to workplace safety in the operation of all our facilities, along with each of our active construction projects, including TSMC Arizona."

Construction in Phoenix hasn't gone according to plan

Tensions between TSMC and Arizona workers heightened in July, when the company cited an "insufficient number of skilled workers" as a reason the factory's opening date would be pushed back by a year to 2025. TSMC said it planned to get construction back on track by sending experienced technicians from Taiwan to train US workers, a development that surprised union officials and raised concerns.

"TSMC was not providing any details on the number of workers, the timetable of when they would be coming over, the type of training that they would be offering," Devlin said, adding, "There also were concerns whether these workers were going to be displacing the construction workers."

This development, in addition to safety concerns raised by some workers on the site, led an Arizona pipe trades union to start a petition that urged US lawmakers to deny the visas of the incoming Taiwanese workers. In a late-July op-ed, the Arizona Building and Construction Trades Council's president, Aaron Butler, said that TSMC should not blame US workers for its construction delays — and accused the company of using this as an excuse to bring in cheaper labor from abroad.

Tensions may have cooled a bit in recent months. TSMC has maintained that it has no plans to replace any US workers and that any Taiwanese workers who come to Arizona would only be there for a limited timeframe. The local pipe trades union has taken down its petition, and in August, TSMC and the state of Arizona signed a workplace-safety agreement that would subject the company to higher safety standards.

Last week, the national pipe trades union, a member of the union coalition, said it was confident the discussions would eventually lead to a "win-win-win" outcome for labor, contractors, and TSMC.

But if progress on the discussions stalls for much longer — and workers' concerns persist — any better vibes might not last.

If the two sides ever come to an agreement, the unions are hoping the federal government will help them enforce it. TSMC is seeking billions of dollars of US subsidies from the Department of Commerce via the CHIPS Act, but receiving funding could come with greater scrutiny.

"We're kind of looking to the Commerce Department to say, 'If you're going to be giving companies like TSMC funds that are going to help build this project, there should be some type of guidelines in place," Devlin said. "In that ideal world, this labor agreement would be part of those guidelines."