The Demand for Cutting-Edge Chips: Challenges for the Leading Supplier

A few years ago, the world's biggest chipmaker used a buddy system to train new recruits. Senior engineers would mentor them and teach them the ropes.

However, everything changed three years ago. TSMC saw a surge in growth due to a global chip shortage and increased geopolitical tension. As a result, they had to develop a rigorous training program to quickly onboard tens of thousands of new hires.

In 2021, TSMC established the Newcomer Training Center within a large science park located in Taichung, central Taiwan. This center is now crucial for the company's global expansion.

In a world where Moore's Law reigns supreme, emphasizing the doubling of transistors on microchips every two years, speed is vital for TSMC and its customers such as Apple (AAPL), Nvidia (NVDA), and AMD (AMD). Speed is also a priority for US President Joe Biden, who is relying on the company to enhance manufacturing in Arizona.

Today, new engineers in Taiwan and some from overseas must spend eight weeks at the center, as recently seen by CNN.

"We can now train newbies in a more organized way, helping them learn quickly and establish a strong base," shared Marcus Chen, one of the center's instructors. "Efficiency is a core value at TSMC, so we strive to do everything efficiently."

The center is designed to mimic a fabrication plant, also known as fabs, where chips are manufactured.

In one area, a robotic arm rotates to clean and polish a semiconductor wafer by pressing it on a pad using a process called chemical-mechanical polishing. In another section, a machine lifts a group of wafers up to the ceiling and transports them around the facility.

A growing problem

The engineers trained at the center won’t just be deployed across TSMC’s fabs in Taiwan. Some will be used to “seed” its facilities globally.

"According to Lora Ho, the company's senior vice president of human resources, when launching a new facility, a specific number of employees from Taiwan are initially brought in. Over time, the goal is to decrease the number of assignees and focus on hiring more local staff."

The Newcomer Training Center opened in 2021.

The Newcomer Training Center opened in 2021.

John Mees/CNN

TSMC, also known as Taiwan Semiconductor Manufacturing Company, is often referred to as the most important company in the world. They are responsible for producing around 90% of the world's super-advanced semiconductor chips, which are essential for powering various devices such as smartphones and artificial intelligence applications.

In response to increasing demand and the need to be closer to its customers, TSMC is constructing new fabs in the United States, Japan, and Germany. While their current plants are located in Taiwan, eastern China, and Washington state.

Last month, the chip giant opened its first fab in the Japanese city of Kumamoto and is planning to open two $40 billion facilities in Phoenix, Arizona in the near future to produce smaller, more advanced chips. Additionally, the company has committed to investing $3.8 billion to construct a fab in Dresden, Germany, marking their first venture in Europe.

The semiconductor industry is facing a shortage of talent due to the high demand, especially for chips used in AI technology. TSMC announced last year that the construction of one of its fabs in Arizona would be delayed due to a lack of skilled workers in the field.

"Finding top talent has always been a challenge, but it has become even more crucial in recent years as the importance of semiconductors has been recognized worldwide," shared Stewart Randall, who leads the electronics and embedded software team at Intralink, a consultancy.

According to Randall, the increase in the number of semiconductor fabrication facilities and their capacity is not only influenced by geopolitics but also driven by market demand. This translates to a growing need for individuals with expertise in IC (integrated circuits or semiconductor) design, IC manufacturing, and materials science. As a result, countries are actively competing to attract and retain these skilled professionals.

TSMC’s Ho mentioned that one of the main challenges the company is dealing with is a shortage of talent. She pointed out that there is a scarcity of talent globally and emphasized the need to expand their talent pool if they want to grow internationally.

TSMC currently has about 77,000 employees around the world. In a few years, the number will reach 100,000, Ho added.

Culture shock

TSMC has not only struggled with a shortage of skilled workers but also with adjusting to the varying work cultures between Asian and Western countries.

In Taiwan, TSMC engineers receive high salaries but have to work long hours and weekends. Moreover, in the event of an earthquake, engineers are required to go back to work immediately, regardless of the time of day.

The Newcomer Training Center is built to resemble a fab.

The Newcomer Training Center is built to resemble a fab.

Kristy Hsu, who is the director of the Taiwan ASEAN Studies Center at the Chung-hua Institution for Economic Research, mentioned that Taiwanese employees are used to working overtime and being on-call. However, she pointed out that this may not be the norm for other workers.

The chip fabrication industry, along with testing and packaging, requires a lot of labor, leading to overtime work. People in this industry need to be ready to work extra hours, even during holidays like Chinese New Year or Christmas.

This work culture has been a tradition in Taiwan and other East Asian countries like Japan for many years. However, it may pose challenges when introduced in countries like the US and Germany.

As TSMC expands globally, they are learning how to efficiently manage teams from different parts of the world. According to Ho, it is important to adjust to local practices and be socially acceptable. Certain things that work in one location may not work in another. She highlighted the need to adapt to the local culture, as the management style in Taiwan may not be suitable for other countries like the US.

"People in Taiwan are more willing to follow instructions. However, in the US, you need to explain why in a way that they understand," she explained.

The decision by the chip giant to expand its production outside of Taiwan has caused some concern among locals, including lawmakers. They fear that this could potentially reduce the island's significance as a leading global semiconductor hub.

Ho reassured that those concerns are not significant.

"I believe that it will not diminish Taiwan's strengths as we are still heavily focused in Taiwan, and the latest technology will continue to originate from here," she explained. "Instead of taking away, it will actually broaden Taiwan's visibility and provide us with the opportunity to learn how to navigate the global market."

— CNN’s Juliana Liu contributed reporting.

Editor's P/S:

The rapid growth of TSMC has highlighted the pressing need for skilled professionals in the semiconductor industry. The company's establishment of the Newcomer Training Center in Taiwan showcases their commitment to onboarding new hires efficiently and building a strong foundation for their global expansion. This center provides a structured and immersive training environment, enabling engineers to gain hands-on experience in a simulated fabrication plant setting.

TSMC's global expansion brings both opportunities and challenges. While it diversifies their production capabilities and brings them closer to customers, it also requires adapting to varying work cultures. The company recognizes the importance of adjusting to local practices and respecting cultural norms. However, it remains to be seen how TSMC will effectively manage and integrate teams from diverse backgrounds while maintaining their core values of efficiency and speed. As the semiconductor industry continues to evolve and competition intensifies, TSMC's ability to navigate these challenges will be crucial to their sustained success and global leadership. commitment to addressing these challenges and maintaining its global leadership position.