A factory explosion in the United States, TSMC responded

2024-07-29

TSMC stated that the explosion did not cause any damage to its wafer foundry facilities.

On the afternoon of May 15th local time, an explosion occurred at TSMC's chip factory in Arizona, USA, injuring one worker who was sent to the hospital. TSMC's latest response indicated that the cause of the explosion was an abnormality in the outsourced sulfuric acid cleaning truck that entered the site. An outsourced cleaner driver was inspecting when an accident occurred, resulting in severe injuries to the man. TSMC said that an ambulance was dispatched immediately to take him to the hospital, and the accident site was handed over to the fire department for investigation, which will not affect operations or projects.

TSMC stated that the explosion did not cause any damage to its wafer foundry facilities.

According to a recent statement from the local construction union, the driver has died. The Arizona State Construction Industry Committee, a union alliance composed of about 3,000 members working on TSMC projects, confirmed the worker's death on the evening of May 15th local time.

The union stated: "The safety and well-being of construction workers are our top priority, and we hope that all regulatory agencies conduct a thorough investigation of this incident. The goal should be to determine whether the construction site has taken sufficient safety measures, to investigate the cause of the accident, and to take any necessary measures to prevent such tragedies from happening again in the future."

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In fact, in April last year, there was a fire alarm incident at TSMC's Phoenix factory area. At that time, TSMC officials urgently issued a statement to clarify that the fire alarm was due to flames emerging from a garbage pipeline outside the chip factory.

It is reported that TSMC will carry out three phases of the project in Phoenix.The first phase is expected to start mass production in the first half of 2025, directly adopting the 4-nanometer process technology. The second phase is anticipated to begin mass production in 2027 and 2028, utilizing 3-nanometer and 2-nanometer technologies. The total investment for both phases is approximately 40 billion U.S. dollars, with an annual production of over 600,000 chips upon completion.

Not long ago, the U.S. Department of Commerce also announced plans to provide TSMC with up to 6.6 billion U.S. dollars in financial subsidies and 5 billion U.S. dollars in low-interest government loans for the construction of an advanced semiconductor factory in Phoenix, Arizona. TSMC has agreed to expand its investment in the United States from the previously announced 40 billion U.S. dollars to 65 billion U.S. dollars and to build a third chip factory in Arizona, which has attracted high attention.

The third phase is expected to be put into production before 2030, with an expected adoption of 2-nanometer or more advanced process technologies.

TSMC mainly engages in the manufacturing, sales, packaging, testing, and computer-aided design and photomask manufacturing of integrated circuits and other semiconductor devices.

On May 14, TSMC stated that it plans to start the construction of a factory in Europe in the fourth quarter of this year. Paul de Bot, the head of TSMC's European business, said that the work of the factory is proceeding as planned. TSMC announced in August last year that it would build its first European factory in Germany. The factory is expected to start production by the end of 2027.

Kevin Zhang, who is in charge of TSMC's international business, told reporters that he believes the subsidy for the factory under the "European Chips Act" will be approved, but it has not yet been realized.

"We have very strong support from the European governments - the European Union and the German government, and we are very confident that we can get good support there. It is a very exciting time for the European semiconductor ecosystem... (TSMC will) directly enter the backyard of major automotive customers."

Kevin Zhang said that the Dresden wafer factory will produce chips at the 22-nanometer production node: "ESMC will enable us to bring the most advanced MCU technology to the heart of automotive use."Additionally, the newly-appointed governor of Kumamoto Prefecture in Japan, Kei Kimura, stated in an interview on May 11th local time that he is prepared to ensure comprehensive support to attract TSMC to build its third chip factory in the prefecture. Kimura Kei expressed that he has proposed to visit TSMC's headquarters this summer to discuss the establishment of a new factory. TSMC's first factory in Japan has already started operations in February, with mass production expected to begin later this year, and the second factory is scheduled to start construction before the end of the year. Both factories have received subsidies from the Japanese government.

Financial report data shows that as of March 31, 2024, TSMC's consolidated revenue for the first quarter was approximately 132.455 billion yuan, a year-on-year increase of 16.5% and a sequential decrease of 5.3%; net profit was 50.397 billion yuan, a year-on-year increase of 8.9% and a sequential decrease of 5.5%. The first quarter operating profit was 55.656 billion yuan, a year-on-year increase of 7.7%, and the estimated 53.834 billion yuan; the first quarter gross margin was 53.1%, with an estimated 53%.

More than half of U.S. chip workers are ready to resign, affecting TSMC

Not long ago, a report by McKinsey pointed out that in 2023, more than half of the semiconductor and electronics industry employees in the United States intend to resign within 3 to 6 months, while the same survey in 2021 showed that 40% of employees wanted to resign, and the proportion of employees intending to resign continues to increase.

McKinsey Senior Consultant Wade Toller said that the U.S. semiconductor industry is about to enter a period of expansion in labor demand, but at the same time, the technical workforce in the industry is becoming less satisfied with their jobs and showing an aging trend, with about one-third of the population in the semiconductor industry being over 55 years old.

The shortage of manpower is an "ominous sign" for chip manufacturers such as TSMC and Intel. Both TSMC and Intel are currently building chip factories in the United States. The United States has introduced the CHIPS Act, with ambitious plans to rebuild semiconductor manufacturing, but to achieve these goals, there must be enough technical manpower.

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