President Joe Biden risks a major setback to one of his signature legislative achievements after Taiwan’s biggest chipmaker said it was forced to delay production at its marquee project in Arizona, a key battleground state in next year’s election.
(Bloomberg) — President Joe Biden risks a major setback to one of his signature legislative achievements after Taiwan’s biggest chipmaker said it was forced to delay production at its marquee project in Arizona, a key battleground state in next year’s election.
As part of its so-called Bidenomics push, the administration has focused on bringing jobs back to the US, particularly in high-tech manufacturing like semiconductors, by doling out billions in subsidies and tax breaks. Taiwan Semiconductor Manufacturing Co., the world’s leading chipmaker, in 2020 committed to building a $12 billion facility outside Phoenix with the goal of making high-end semiconductors on American soil by late 2024.
The company announced on Thursday that it won’t start production at the Arizona plant until 2025 — after the US presidential elections — and cited the lack of a skilled labor force as well as costs in America as reasons for the postponement.
That doesn’t bode well for Biden, who is criss-crossing the country in an attempt to convince skeptical voters that he deserves a second term principally because his signature policies will juice their local economies. It’s not clear what would happen to the subsidies under a new administration, though congressional support for the program is strong and bipartisan.
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While many early projects spurred by Biden’s industrial policy, particularly in the electric vehicle and clean energy sectors, are in Republican bastions, the TSMC plant is in a battleground state former President Donald Trump carried in 2016 and Biden flipped in 2020.
White House Deputy Press Secretary Olivia Dalton told reporters Thursday the administration is confident the workforce development included in the CHIPS and Science Act “will enable us to ensure that we have the workforce we need.”
She called TSMC’s investment “historic” but declined to comment on the timeline and referred to the company.
The push to bring semiconductor manufacturing back to the US picked up after global shortages of chips led to production delays and furloughs in sectors from medical devices to autos. Most chips are produced in Asia and the most advanced ones come from Taiwan and South Korea.
Increasing geopolitical tensions over Taiwan have further motivated American politicians and allies around the world to de-risk and diversify their supply chains away from the self-governed island that China claims as part of its territory and vowed to reunify with the mainland — by force if necessary.
The news of TSMC’s production delay also sparked concern in Washington where Arizona lawmakers had more questions than answers.
“I’ve got to get more details about why they’re behind schedule but I don’t think it’s a bad omen,” said US Representative Debbie Lesko, who represents north Phoenix where the TSMC facility is being built.
US Senator Mark Kelly, an Arizona Democrat, said he is worried but realizes that “big programs often result in this type of delay.”
Republican political consultant Marcus Dell’Artino, who works in Phoenix, said he was not surprised that the chipmaker was having problems finding workers given the tight labor market in the area.
“Nobody is shocked that they are having problems getting workers,” he said. “Everybody in Arizona who is operating a business is suffering from the same problem. Finding trained individuals quickly isn’t as easy as putting out a Help Wanted ad. There’s so much more competition for workers.”
He said that the explosive growth in the Phoenix area has brought an influx of new residents, but they’re driving up housing costs, which could make it harder to recruit more people to the area. That’s even tougher for a highly trained field like chipmaking, he said.
“The fact that nobody saw this problem coming, that’s more shocking,” he said.
Last December, Biden visited the Arizona site, which he touted as a potential “game changer” that could help Apple Inc. bring more of its supply chain home.
In return, TSMC gave Biden’s ambition another boost by announcing its intention to build a second plant in Arizona and raise the total investments to $40 billion. The Taiwanese chipmaker also said it will upgrade its planned technology at its first plant.
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Besides TSMC, the White House has also pointed to planned investments by Samsung in Texas and Intel in Ohio, which Biden refers to as a “field of dreams,” as evidence that their agenda is bearing fruit.
The Commerce Department has yet to announce recipients for the federal grants and it’s not clear when any of the leading firms will begin producing chips on US soil.
“I thought it was on track,” said Arizona Representative Raul Grijalva. “It’s not just a surprise. It’s a sense of disappointment that we’re finding ourselves with these last few days, questioning something that was perceived to be on track.”
–With assistance from Ryan Teague Beckwith and Erik Wasson.
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