Community and Labor Groups React to CHIPS Act Contract with TSMC

Washington, DC – Members of CHIPS Communities United (CCU), a coalition of unions, environmental, social justice, civil rights, and community groups, responded to the contract announced on Friday between the CHIPS for America Program Office and Taiwan Semiconductor Manufacturing Company (TSMC) for its facility in Phoenix, Arizona – only the second CHIPS Act contract to be finalized. 

The coalition raised concerns about the lack of transparency in job creation and job quality, supposedly a central goal of the CHIPS and Science Act.

“The Biden-Harris Administration has committed to use CHIPS and Science Act funds to encourage the creation of good, sustainable manufacturing jobs that revitalize our communities, but the final contract with TSMC does not reflect those priorities,” said Carl Kennebrew, President of IUE-CWA, the industrial division of the Communications Workers of America. “We know that the semiconductor industry has a well-documented history of low pay for production workers, lax standards for exposure to toxic chemicals, and union busting. Addressing those issues requires transparency and public reporting on enforceable commitments, which appear to be absent in the TSMC contract.”

CCU applauded the improved transparency around environmental issues, but voiced concern about the limits to contractual commitments.

“With possible risks to the energy security supply chain looming, the United States cannot allow the semiconductor industry to hide its poor environmental record behind a veil of excuses,” said Harry Manin, Sierra Club’s deputy legislative director. “We thank the Biden-Harris administration and Commerce Department for proving that chipmakers can be held to transparent contractual commitments, including public reporting on energy, water, and waste impacts. The administration should seize the opportunity to bake renewable energy, toxic-free environment, and good-job standards into forthcoming contracts. Success will seal innovation, competitiveness, and popular support into domestic chipmaking for decades.”

The coalition praised the department for publicizing the formal commitments TSMC has made in exchange for public money, including: 

• TSMC has agreed to make its environmental compliance public through progress reports on the company’s webpage. This agreement allows the local community to understand the impact of the facility on water, energy use, waste materials, and public health.
• The company provided more detail about its workforce training plans for both construction and production workers.
• The Commerce Department offered more detail about TSMC’s commitments for workforce development and health and safety.
• TSMC has agreed to forego stock buy-backs for five years, though this commitment is subject to unspecified exemptions.

But the coalition remains concerned about the absence of transparency around job creation, workers’ right to organize, and wage and benefit standards. The administration has promoted the CHIPS Act in part because of its potential to create good manufacturing jobs for US workers. The Phoenix community deserves to know how public funds are being spent, and workers in the area deserve to know what commitments were made about their jobs. Access to that information will enable communities to work with the government to hold TSMC accountable to the workforce and other job quality commitments they make.

Specifically, we call out the following issues with the community impact report:

Concerns about working conditions

• Based on the announcement and community report, the contract lacks job commitments from the company including: minimum number of full-time equivalent jobs to be created or retained, minimum hourly wages to be paid, minimum hourly benefit levels to be given, and annual cost of training provided for each job classification of construction workers, production workers, technicians, and engineers, including information on which classifications will be temporary workers, contractors, or direct employees of the recipient.
• The announcement does not include a commitment from TSMC to allow its workers to join a union free from intimidation, captive audience meetings, exposure to anti-union consultants, threats of retaliation, and other obstacles to achieve bargaining.
• The announcement says that TSMC will adhere to the administration’s Good Jobs Principles, but does not specify what that will involve nor require the company to report publicly on its compliance.

Concerns about the environment

CCU appreciates that environmental concerns and solutions originally identified in the draft Environmental Assessment (EA) have now been incorporated as binding requirements in the final contract, given the passage of legislation exempting most CHIPS Act recipients from NEPA review. But the contract replicates some of the weaknesses in environmental protection that CCU identified in the draft EA.  

• According to the public language, management of toxic chemicals, a concern both to workers and to the surrounding community, will be regulated by guidelines developed by industry – SEMI’s S2. Unlike government regulations, this standard is not easily available for public inspection since it is proprietary, copyrighted, and can only be inspected by purchasing it. Allowing a regulated entity to write the regulations that will be applied to it violates basic principles of good government. Ultimately, S2 is no substitute for protective workplace health and safety regulation, which has historically been missing in semiconductor production. 
• Commitments to protect workers and the public from highly toxic forever chemicals (PFAS) are vague and inadequate. In previous documents, the company has said it would send PFAS-containing wastewater to an off-site disposal facility, without identifying an environmentally acceptable method of destruction. CCU remains concerned about how PFAS waste will be separated, stored, and treated and what the environmental impacts will be for nearby communities.
• Although TSMC has promised “near zero liquid discharge,” its own reporting documents an increase in company-wide water use and discharge in recent years. In the last five years, according to TSMC’s most recent sustainability report, water consumption per wafer layer has increased 32% while wastewater discharge has grown 48%. 
• Despite a binding commitment to install some solar panels on site, the fab will not be powered by renewable energy. 
• Though TSMC claims it will offset its greenhouse gas emissions, its strategy for doing so (buying unbundled Renewable Energy Credits or RECs) is widely understood to do little to expand renewable energy capacity. TSMC might purchase renewable energy credits from sub-Saharan Africa, for example, but the facility’s massive energy use will increase the need for fossil fuels in Arizona. Only 3% of the electricity in Maricopa County comes from renewables, while the rest comes from polluting coal and gas plants, mostly located in low-income communities of color. 
• In addition, the company expects to emit significant quantities of fluorinated gasses, which are highly potent, persistent greenhouse gasses. Its promise to abate 90% is vague and insufficient.
• It is not clear if TSMC will be held to rigorous chemical monitoring, toxics-reduction, and emission-control technologies as they become available, or if discussion with government and industry-leaders alone is enough to meet its contractual obligation. 
• The contract does not require TSMC to use low-carbon domestic-building materials.

Concerns about Enforcement:

• It appears the contract lacks penalties or clawbacks for failing to meet workforce, health and safety, and environmental milestones and metrics. 
• There is no clarity on the conditions under which TSMC would incur penalties for non-compliance with workforce or environmental commitments or if the company violates federal law.

This press release was approved by CCU members IUE-CWA, Good Jobs First, International Campaign for Responsible Technology, International Federation of Professional and Technical Employees, International Union of Painters and Allied Trades, Jobs to Move America, Jobs with Justice, Sierra Club, and the United Auto Workers.