Culture Clash in TSMC's Phoenix Fab
Will a US vs Taiwan culture clash really stop the spice from flowing? Is the mystical "East Asian work ethic" the secret to TSMC's success?
America wants to make chips again. Today, TSMC knows how to make them the best. So we had the CHIPS Act and TSMC got billions in funding.
How’s it going today? Turns out, the hardest part of opening a factory in America might just be incorporating American colleagues.
To get the inside story, ChinaTalk interviewed investigative journalist Viola Zhou, author of a gripping feature about the cultural challenges that TSMC is facing trying to manufacture semiconductors in America. She has also published a piece on Foxconn's quest to make iPhones in India.
The interview gives us a peek into TSMC’s management style, American workers who are struggling to adapt, and culture clashes galore!
Today’s interview discusses:
The challenges faced by Taiwanese semiconductor engineers relocating to Arizona;
TSMC’s management style and the complaints raised by new American employees;
The similarities and differences between TSMC’s expansion to the USA and Foxconn’s expansion to India;
Whether adapting to American work culture will tank the prospects of the new Phoenix Fab
Sleuthing techniques for independent journalism.
Great mountains, great rivers, and great boredom (好山，好水， 好無聊)
Jordan Schneider: What was the most striking thing about living in America for these Taiwanese employees?
Viola Zhou: It’s the great boredom. I felt it when I was in Phoenix too.
I moved to New York City not very long ago, and before that, I was in Hong Kong. I was more accustomed to East Asian cities. I guess I should say big cities because New York City is a lot more like Taipei than it is like Phoenix.
I was asking all the Taiwanese people in Phoenix, “This place is so boring. Why did you come here?”
Phoenix is a diametric opposite of Taipei in many ways.
For example, the food. Now, I don't want to offend Americans, but uh… the food in Phoenix is in no way comparable to what you can get in Taiwan. There's no public transportation in Phoenix. There are no proper malls. There is nowhere for people to hang out. The restaurants and the coffee shops are mostly chain stores – Starbucks, IHOP, Chipotle…I think that is their biggest culture shock in some way. Their life becomes very inconvenient.
Jordan Schneider: One thing I'll say in favor of Phoenix – it has Waymo! You don’t have autonomous driving in Taipei.
The experience of the Chinese managers in India was more of a classic story of showing up in a developing country and having no interest in exploring any of it. I presume their expectations were relatively low going in. Your article discusses how they lived in a compound with a private chef, for example.
But these poor Taiwanese thought that America was “all that,” and then they show up and they're stuck in the suburbs. It sounds kind of brutal.
Your article mentioned that a huge selling point of these jobs was bringing your family to the US. You talked about people timing pregnancies to make sure that their newborns had American citizenship. Were there other advantages to these positions in America?
Viola Zhou: Definitely the biggest selling point of Phoenix is that it is in America.
If your children are born with American citizenship, then they will have more options in life. Really, this story is proof of that. Instead of working for TSMC, you can work for American tech companies with a much better work-life balance. A lot of people also cited their children's education as a main reason that they took up the jobs.
There are local media reports about local primary schools offering special accommodations, such as Mandarin visual aids or English as a second language programs just for Taiwanese students.
I bumped into a teenage girl who is attending an American high school, and then she is a child of two TSMC employees. She said she's doing great integrating. She really wanted to come to America. Because there are so many Taiwanese children in Phoenix now, they have their own little community. They go out together on weekends.
Culture Clash and Growing Pains
Jordan Schneider: So these engineers have their kids enrolled in American high school, they’re kind of bored but they go hiking on the weekends, they’re working really hard – and all of a sudden, they have to deal with these really annoying Americans that 不听话 (follow instructions).
How has it been from the experience of your mid-level TSMC engineer dealing with all these foreign employees for the first time?
Viola Zhou: Americans get off work on time. They get off work at 5:00 pm. They work 8 hours. That was a very big shock.
They also talk about how Americans are more likely to challenge the orders they are given. American employees will ask why they have to do something, and you have to explain it to them, and then sometimes they are not convinced. They complain a lot and challenge their managers a lot.
One person mentioned that in America, people actually eat lunch or snacks during meetings, and they had never seen that happen in Taiwan. Also, in America, people call their managers by name. In Taiwan, employees often refer to their managers with the title “Zhangguan 長官,” which is a military term that means, “Commanding Officer.”
It becomes a vicious cycle. At first, Americans don't get proper training. They have language barriers, and then later, the manager will feel that the Americans are so 麻煩 (annoying) to deal with, they aren’t worth the trouble. Then they’ll just assign tasks to Taiwanese people. It seems like there are two worlds going on. Americans are always getting away with things, but Taiwanese people are having their tasks pile up.
That's where I feel like some people started to get annoyed by working with Americans.
Jordan Schneider: Here’s a lovely quote about the Americans: “It's hard to get them to do things.”
I'm sure it is hard! I'm sure it's really annoying if you've been able to hire your pick of the litter in Taiwan and have incredibly dedicated employees from top colleges who aren't daydreaming about another job.
Another quote: “The Japan factory opened first. I'm very frustrated.”
It's clear that there were some construction challenges, some labor challenges, I'm sure, permitting challenges as well, which maybe you didn't have to deal with in Japan.
I can also very much empathize – I’m a foreigner who's worked in a Chinese workplace. There's a whole lot of BS that maybe actually isn't so great for productivity in the long run.
For the Americans who ended up working with TSMC, what were their motivations and initial interactions with the company?
Viola Zhou: A lot of the practices — such as writing weekly reports about what you have done over that week or making PowerPoints — frustrate the Americans. They feel that these practices have nothing to do with actually producing semiconductors. You have to do whatever your bosses tell you to do, and then you have to stay behind even though you have finished your work. All these things are quite standard for an Asian workplace, but I can totally see why Americans feel frustrated.
They don't feel like they're actually properly learning to do their job. Then there’s an added language barrier on top of this.
One person said they had to draw Chinese characters by hand into translation software, because they weren’t allowed to upload pictures of production materials to Google Translate.
I can't imagine how that works for a foreigner. Not to mention the fact that the content is super dense technical info about making semiconductors.
The company was just incredibly underprepared in terms of management, in terms of culture, in terms of overcoming language barriers. They were not prepared to receive a global workforce.
Jordan Schneider: I was one of the very few foreign-passport holding employee at a large Chinese tech firm when I worked at Kuaishou 快手.
It’s a problem with bureaucracy – these decisions were made by the highest levels of management, but Mark Liu 劉德音 isn’t going to personally make sure that the foreigners have translations.
Some of these things are clearly just temporary growing pains, but there are other bits that are a little more concerning. For example, from your story:
“I’d ask my manager ‘What’s your top priority,’ he’d always say ‘Everything is a priority.’”
“Five former employees from the U.S. told Rest of World that TSMC engineers sometimes falsified or cherry-picked data for customers and managers. Sometimes, the engineers said, staff would manipulate data from testing tools or wafers to please managers who had seemingly impossible expectations.”
It's hard to know how to interpret this, because TSMC is the best company in the world at manufacturing chips. Clearly, they can’t be messing up that badly, despite the American perspective on the management style.
Viola Zhou: On the accusation of falsifying data, I did ask engineers about whether it impacts the quality of the actual chips.
From their answers, I got the impression that actually, a lot of it is bad management. Engineers are humans. They're supposed to make the call about what kind of data collection is needed in order for something to work.
Sometimes, managers ask for data that the engineers think is irrelevant. The engineers would think, “It's impossible for us to get that data. We have no time. But also this indicator is totally irrelevant.”
That's when they started to manipulate data. I think I've heard similar stories in Chinese companies as well. A lot of effort has been wasted in navigating the bureaucracy or making managers happy.
Jordan Schneider: There's the idiom, 上有政策，下有對策 (The higher-ups have their policies, while the lower-downs have their countermeasures), but Americans have different countermeasures than the Taiwanese do. The American version would be prioritizing going home early. The Taiwanese version would be playing video games on your phone for 2 hours from 3 pm to 5 pm, but still not going home before 8 pm.
The way that Americans would deal with some BS requirement from their boss would be to tell them it's a BS requirement. The way the Taiwanese are dealing with it is by just making up some fake numbers and banking on the boss being too busy or apathetic to take any action.
The proof is in the pudding, right? TSMC is not some broken state-owned enterprise. They are an incredibly competitive, successful firm.
My hope is that five years from now, we'll have some happy synergy where the Taiwanese engineers will get to lead more balanced lives, having learned that they can chill out and still make badass chips. The situation reminds me of Gung Ho, a 1980s Michael Keaton movie about a factory that gets bought out by a Japanese firm.
Viola Zhou: If they want, they can adapt over time. The question is, do they really have the incentive to change? Will they transform their management style just for this American factory?
I think it depends on the number of chips the US government wants them to produce in America. If it's a small amount, maybe they’ll just run the firm slowly so they can just absorb the extra cost. But if it needs to be like an actual, efficiently run, profitable factory, in the long run, then they need to figure out a better way to retain the American workers so they don't keep looking for jobs at Intel.
Jordan Schneider: The quality of alternative jobs seems to me to be the key difference between what you saw in India and what you saw in the US.
These are hard jobs. The workers have to wear bunny suits. Unemployment is low and there are plenty of other opportunities.
But when you look at India, it's sort of like China in the 1980s, where you have factory women who are suddenly liberated from patriarchal conditions by being able to make money on their own. They are happy to live independent lives, and they are undeterred by challenges like learning how to use tweezers on an assembly line all day, living in barracks, and getting accustomed to air conditioning. Even a bad factory job is better than being a farmer who lives and dies based on the weather.
Viola Zhou: Even though Foxconn makes less money in India, this move is perhaps more in line with the natural economic logic. It is cheaper to hire workers in India, but the supplier network is not ready yet. Geopolitics are accelerating the process a little bit.
Just like you said, in India, we are seeing Indian women coming out of their villages for the very first time. They take up factory jobs, and they do very hard work with relatively low pay.
But the move to America probably would never have happened without politics.
Jordan Schneider: I’m not so sure about that. The vast majority of TSMC's clients are based in America. It’s easier for the design firms to fly to Phoenix rather than flying all the way to Taiwan.
But manufacturing has basically been entirely within East Asia until now, so that is certainly a big jump.
Companies like Samsung or Huawei have to sell their products internationally, so they started working on international outreach long ago. They have training programs where they send people abroad and have them learn local languages. Maybe Hyundai had similar struggles in the 1980s dealing with the Americans.
Viola Zhou: The older generation of semiconductor engineers say it was the same in the US 30 years ago. Back then, workers at Intel and at Texas Instruments were also working 12 hours a day.
Some people argue that hard work was why TSMC succeeded, while younger Americans are reluctant to work hard, and that’s why America’s manufacturing fell behind.
Personally, I don't completely agree with that. I think America has succeeded in other ways. Workers at Apple and Nvidia have a much better life and they make more money because those companies successfully outsourced component manufacturing.
Would TSMC achieve the same success if they had more relaxed management, or if they were less bureaucratic, less authoritarian, and less militaristic? There’s no right or wrong answer. There is no real comparison there to be made.
Jordan Schneider: That's the key point – TSMC has a market cap of $600 billion, whereas Apple is sitting at $2.5 trillion and Nvidia is $2 trillion. It's better to do design than it is to do manufacturing. Manufacturing is really hard. The salaries have been decreasing in the US relative to other opportunities for the past 30 years.
We could hypothesize that Intel’s fall from dominance was a downstream result of the choice not to double down on EUV, or we could say that their weakness was their choice to be soft and lazy, or we could say that they just weren't able to hire the same talent that could in the 1970s and 1980s because the software and semiconductor design companies could just pay more. Plenty of highly educated and driven Americans today are more than willing to work 12-hour days at OpenAI, SpaceX, in startups, banking and law firms…so long as they’re on a career trajectory to make 1% money, which just isn’t the case in manufacturing today.
But the fact is, TSMC is now the unquestioned world leader in chip manufacturing, which will continue to be true for at least the next few years.
Something has gone right. The secret isn’t just banging your head against a wall and working 16-hour days. There's more magic to this firm than that.
One TSMC employee reports that working with Americans is a little frustrating, but in the end, he doesn't mind:
“Everything comes from working hard. Without this culture, TSMC cannot be number one in the world,” he said with passion. “I want to support TSMC to be great. It’s my religion.”
I mean, no offense to Foxconn, but I don't think anyone's calling Foxconn a religion. There is something really kind of magical that ends up happening in the process of turning sand into microchips.
Viola Zhou: I understand this pride in East Asian and Taiwanese manufacturing. There's a generation of people who are really proud of how Taiwan succeeded in this industry. I really empathize with their loyalty to their companies. But I also understand how Americans have no attachment to their companies at all.
When people say that this is a “cultural difference,” I don’t feel like that covers the whole story. It’s actually not entirely about, “East Asians work harder, they are more willing to put up with stuff, and Americans have a more carefree culture.”
A lot of it is economical. In Asia, people do not have that many options. American companies are really popular employers in China and in Taiwan. People want to go work at a 外企 (foreign company) so they can have a better work-life balance. They don't care about having to learn English or having to deal with foreign bosses.
We shouldn't just make this just about Asian company culture versus American company culture. All workers want a better life. That's universal.
Maybe Americans are just privileged enough that they can afford to make complaints. They can afford to risk getting fired. I remember a Taiwanese person saying, “We have to do more because we are not Americans. We are here on a company visa. We cannot jump ship.”
Jordan Schneider: Even now you're seeing articles in China about how hard it is to find people to work in factories. It makes sense – why would you want to screw stuff together at Foxconn’s Zhengzhou 郑州 factory if you have a college degree?
From your story about India:
[T]he expat staff enjoy the Indian work culture of tea breaks, chatting with colleagues, and going home on time. They recognize they are helping the company spread a Chinese work culture that they know can be unhealthy. At Foxconn’s factories in China, people strive to exceed their targets, sacrifice leave days, and stay late to impress the bosses.
The Chinese workplace is too neijuan [內卷], or “involuted,” several expat employees said. The term, increasingly popular in China, describes the incessant competition in Chinese society and the grinding race to the bottom that comes with it. “Gradually, we’re bringing involution to India,” joked an engineer.
I'm sure this phenomenon will happen in America too. I'm sure the Taiwanese employees would like to see their teenage kids more. I’ve also heard that the Americans successfully lobbied to be able to listen to music while at work. American work culture has something to contribute here.
If TSMC wants some free comms advice, I think they should lean into this! Let Netflix into the fab, go full Formula 1: Drive to Survive and show people just how incredible these factories are. That’s how to solve the talent problem in the long run—show a new generation just how cool semiconductor manufacturing really is.
How Viola Got the Story
Jordan Schneider: Viola, you interviewed more than 20 current and former TSMC employees for your most recent story, both Americans and Taiwanese. What is the reporting process like for a story like this?