A recent Washington Post op-ed by former Obama Administration Car Tsar Steven Rattner on some potential pitfalls regarding last years passed CHIPS Act cited potential difficulties with the Taiwan Semiconductor Manufacturing Company (TSMC) and its planned facility in Phoenix that is scheduled to open in 2024.
President Joe Biden visited the TSMC site last December, praising its construction as an example of the United States reentering the world of semiconductor manufacturing.
In the article, Mr. Rattner wrote:
“…But while TSMC has committed to build a major facility in Phoenix, it has complained that the new plant’s cost will be much greater than its equivalent in Taiwan, partly because of regulatory requirements, higher labor costs, lower productivity, likely construction delays, and higher taxes.
In a podcast interview, Morris Chang, the 91-year-old founder of TSMC, who was born in China and made his early career in the United States, acknowledged the national security considerations but called U.S. semiconductor efforts “a wasteful and expensive exercise in futility.” He noted that his company has had a smaller facility in Washington for 25 years, and chips made there cost 50 percent more than those it manufactures in Taiwan…”
The former Car Tsar also pointed out that the review process under the National Environmental Policy Act, while important, could also be cumbersome because the process can take close to four and a half years.
Reacting to the Rattner piece, Phoenix Mayor Kate Gallego relayed:
“TSMC’s investment and expansion into Phoenix and our country is a mammoth undertaking, and our ability to be nimble, resourceful, and helpful is very important to the process. I am in regular communication with TSMC leadership and am looking forward to witnessing the positive results of this landmark investment in our community.”
Rattner and Gallego are both right.
Reinvorgating American manufacturing in the latest advanced technologies like semiconductors and clean energy is vital to enhancing this nation’s economic vitality and providing well-paying middle-class white, blue, and green-collar jobs.
However, the companies that are being recruited to help steer this Manufacturing Renaissance do need regulatory process time assistance as long as shortcuts are not made that could jeopardize worker and public safety. Increased Tax Incentives like research/development and manufacturing credits would be acceptable as well because the return on American economic and wage growth should be higher as a result.
Hopefully, these normal issues associated with any major legislation will get smoothed over in the near future now that everyone knows what needs to be addressed.