Taiwan Semiconductor Manufacturing Co (TSMC) appears to be encountering some culture shock and safety issues at its new fab in Arizona.
On Nov. 7, Arizona state authorities cited TSMC for worker safety violations, fining the company US$16,131, after a man died in May.
The Arizona Division of Occupational Safety and Health released its six-month investigation into the fatality and cited TSMC for failing to keep the workplace free from hazards likely to cause death or serious harm.
At about the same time, the chip giant was also sued for alleged discriminatory hiring practices favoring Asians, prompting a flurry of debate on whether TSMC’s Taiwanese management culture can be transplanted abroad.
Despite this, the US Department of Commerce finalized US$6.6 billion of subsidies under the CHIPS Act, with at least US$1 billion possibly disbursed this year.This seems to signal continued confidence in TSMC’s ability to climb the learning curve and adapt to US corporate culture and the legal terrain there.
In Kaohsiung, TSMC is also facing a culture shock that was absent at its Hsinchu and Tainan fabs — unexploded ordnance (UXO) at the site of a 2-nanometer fab at the Nanzih Industrial Park (楠梓科技產業園區). In less than three months, TSMC construction workers uncovered two unexploded World War II bombs. The site was a strategic Japanese oil refinery during the war and was heavily bombed by the US Air Force.
TSMC and the Kaohsiung City Government contacted the 8th Army Corps Command to dispose of the bomb, while a Kaohsiung official noted that other UXOs have been uncovered during work at the site.
However, with work resuming after the ad hoc removals, the company and the local government seem not too concerned about uncovering more bombs. Nonetheless, some observers and engineers worry there might be a residual UXO hazard without a full sweep.
Last month, a similar device exploded at Japan’s Miyazaki Airport about one minute after a passenger jet was taxiing nearby, narrowing escaping a mass casualty event and resulting in the cancelation of more than 80 flights. As a former navy base for Japanese kamikaze missions, it was a frequent target for US bombings.
The Japanese government and military took immediate measures to sweep five airports for additional live bombs.
Traditionally, unexploded devices are not recognized as a significant hazard during planning and construction due to the low frequency of discoveries and a lack of recorded fatalities.
However, growing demand for new housing, infrastructure and taller buildings with deeper foundations — especially on land released from military use, raise the likelihood of encountering UXOs. Despite their age, World War II UXOs are also getting more dangerous due to impact sensitivity — an excavator hitting a bomb could trigger an explosion.
Geir Petter Novik at the Norwegian Defence Research Establishment said the increasing volatility is due to “the formation of sensitive crystals or salts” in amatol, an explosive widely used during the two world wars.
Given the likelihood of additional bombs coupled with constant disturbance of the area, TSMC’s management of this risk is critical to avoid possible injury, delays and cost overruns. This might also be an opportunity for TSMC to demonstrate how it can adapt its risk management culture to local conditions and “glocalize,” that is, global companies adapting to cross-cultural and local conditions.
To be fair, TSMC is on a steep learning curve, facing unchartered territory in Arizona with a foreign corporate culture while addressing a new UXO risk in Kaohsiung. Its Asian predecessor, Samsung, climbed a similar curve in past decades, adapting its homogenous Asian culture to a more diverse corporate culture and learning to glocalize.
Taiwan is a newcomer, but given TSMC’s history of a well-run “military like” management culture and diligence, it should quickly glocalize to local standards in Arizona as well as in Dresden, Germany.
As for adapting to the local terrain in Kaohsiung, it is unclear whether TSMC or the Kaohsiung City Government as landowner has jurisdiction and financial responsibility for risk mitigation. Nonetheless, the military maintains good capability for UXO disposal.
In an e-mailed response, a senior Ministry of National Defense official wrote: “Not only have we cleared huge amounts of landmines in Kinmen and Matsu, but also helped with numerous WWII bombs or munitions discovered across Taiwan.”
“Theater of operations commands have their organic ordnance disposal teams, along with a special ordnance disposal company, the Taiwan Marine Corps,” the official said.
It should be no problem whether the city or TSMC partners with the ministry to sweep the site. In 2014, the city and the company had a solid partnership in disaster relief when gas pipeline explosions in Kaohsiung killed 32 people and injured 321 others. TSMC immediately deployed 1,900 staff and donated NT$70 million (US$2.16 million at the current exchange rate) in aid for reconstruction, garnering much gratitude from residents.
The UXO challenge presents another opportunity for TSMC and the city government to partner again. This time, rather than “managing the damage,” they can “manage the risk” to support completion of the fab and continue to fortify Taiwan’s “silicon shield.”
Christina Lin is a senior research fellow at the National University of Kaohsiung’s International Relations Research Center and a senior associate fellow at the NATO Defense College’s Research Division. She was a 2022 Taiwan fellow at the Ministry of Foreign Affairs with a research focus on Taiwan’s role in the transatlantic semiconductor supply chain.
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