The Signal August 22, 2023

Taiwan Semiconductor Manufacturing Company vs Arizona Pipe Trades 469 Union: Everyone Loses 

TSMC is looking to bring specialists from Taiwan to the US, against the will of The Arizona Pipe Trades 469 Union. The fight is bad for all since resisting technological change is a recipe for disaster.

Kevin O'Marah Avatar
Kevin O'Marah

The 2022 CHIPS Act was supposed to lessen US dependence on foreign semiconductors which, despite their importance to both economic and military competitiveness, had largely stopped being made domestically. The world’s top chipmaker, Taiwan Semiconductor Manufacturing Company (TSMC), had already started building a factory in Arizona when the law was enacted and announced plans for a second factory in the state, partly to take advantage of the subsidies available.

It seemed like industrial policy was working – but there’s been a snag. TSMC is asking the US government for 500 visas to bring in specialists from Taiwan to handle some of the most technically difficult work around installing semiconductor fabrication equipment. The Arizona Pipe Trades 469 Union is fighting it.  

Graph depicting global semiconductor manufacturing by location. Source: Boston Consulting Group, Semiconductor Industry Association.

Fighting for Pride 

The heart of the fight is about the skills of union members in comparison to the specialists and, simply put, pride. TSMC doesn’t like unions and isn’t shy about saying so. The union, meanwhile, is incensed over insulting social media posts that suggest US workers are lazy or incompetent.  

The union insists that the skills required are well within their members’ capabilities and that TSMC is exaggerating the technical skill required to spite them. The local Pipefitters president, Aaron Butler, was quoted in a thoughtful article from the vigorously pro-union magazine The American Prospect, explaining how silly he thinks TSMC’s position is: 

“What pipefitters, electricians, and others do is hook up equipment. The pipe does not care what it’s going to. My guys don’t make the chips, they’re not trying to run the lithography equipment. We connect the piping to the mechanical connection, pressure-test the line, make sure it’s clean and quality, and walk away.” 

An emotional dispute rooted in pride is threatening an important industrial policy initiative. 

Technology Is What Really Matters  

TSMC became the global semiconductor Goliath over three decades of manufacturing integrated circuits designed by other (fabless) companies, including Apple, Qualcomm, and NVIDIA. This outsourced manufacturing approach, known as the ‘foundry’ model, meant that 100% of TSMC’s technology development has been laser-focused on mastering the atomic-level complexities of producing electronic parts with features as small as two nanometers.  

It’s easy to see why TSMC’s technical leadership would cringe at the Pipefitters’ quote above. 

The bigger issue is whether unionism can coexist with the industrial policy moves being made by the US government, including not only the CHIPS Act but also the Inflation Reduction Act, which subsidizes green energy technology, as well as growing restrictions on trade in strategic materials and cross-border M&A. The mission is to shore up selected industries with government help to encourage domestic manufacturing, foster the growth of nearby suppliers, and develop worker skills to kickstart a virtuous circle of technology innovation and scaling. 

Union demands are sand in the gears of a much larger process. Trade tensions, the COVID experience, and a long-run need to reduce the carbon footprint of global supply chains are conspiring to regionalize the world economy. Plus, dueling industrial policies among mega-economies mean that winners (China, EU, US) and losers (UK, Indonesia, Australia) are starting to emerge in the race to lead key industries like batteries, solar panels, and, of course, semiconductors. 

Unionism’s reputation for resisting technology is at least partially deserved, as this quote from International Longshoremens’ Association President Harold Daggett screams: “There’s going to be an explosion, and the ILA and the dockers around the world are going to light the fuse, it’s time we put companies out of business that push automation.”  

Is it possible that unions truly believe they can halt the march of technology?  

Embrace the Chance to Learn and Earn 

The Luddites of nineteenth-century England ultimately failed, as have most efforts to put the genie back in the bottle. Unions are not inherently the problem, though, as the Teamsters showed with UPS. The key to finding a win-win is for organized labor to participate in the evolution of technology, both in terms of better pay and growing skills. Otherwise, everyone loses.