TSMC negative corp culture and management style are detrimental to its future and growth

You are recommeded to read my post of “TSMC risks and disadvantages in Taiwan” as well.

Table of Contents

TSMC discussion in my books

I have discussed the company Nvidia (ticker:NVDA) in two recent books; including:

In my book “The Rules of Super Growth Stocks Investing“:

Sections 2-4, the entire section is dedicated to introducing the company TSMC
Section 3-3, analyze the business development of technology companies to grasp the pulse of key industries

In my book “The Rules of 10 Baggers“:

Section 3-2, the entire section is dedicated to introducing TSMC and the global semiconductor supply chain.

TSMC negative corp culture

This article is a major supplement to my previous post”TSMC gets emerging and serious challenges“. It is recommended that investors read this previous post.

It is difficult for Taiwanese investors to accept the concept that “Negative message is part of investment“, especially for TSMC, which has been deified.

This post is intended to discuss TSMC’s negative corporate culture and management style from the perspective of investors in TSMC in the US stock market. This is to discuss TSMC’s substantial competitiveness from the perspective of investors outside Taiwan.

Problems with American factories

Class action lawsuit by U.S. factory employees

Deborah Howington, a recruitment manager for TSMC’s North American subsidiary, filed a lawsuit in the U.S. District Court for the Northern District of California in August 2024, alleging discrimination against “non-East Asian” employees, sexual harassment and other misconduct. The number of plaintiffs has also increased from the original 13 to nearly 30.

Of the nearly 30 plaintiffs, 16 live in Arizona and their ethnic backgrounds include white, Latino, African American, and Asian, including Korean and Iranian.

The indictment alleges that TSMC often puts non-East Asian employees in a harsh working environment, saying that management often insults non-East Asian employees in public and labels them as “lazy” and “stupid” simply because they are Americans; in addition, TSMC gives priority to East Asians, Taiwanese and Chinese in the recruitment process.

In addition, it was reported in November 2024 that the plaintiff mentioned in the lawsuit that “TSMC prefers employees who can speak and write Chinese” and accused meetings and business materials of usually communicating only in Chinese, hindering the work of English users and forcing them to use translations to interpret teaching texts.

Please note: This employee class action lawsuit was filed by TSMC’s North American subsidiary “recruitment manager” Hao Wendun.

Constant negative press

In addition to the uncertainty about the subsidy amount, which triggered a group of TSMC’s US peers to oppose substantial subsidies to TSMC, TSMC has been reported by the mainstream media in the United States, and there is almost no positive news. The New York Times also conducted a large-scale special report on this matter, and even interviewed Americans and Taiwanese employees currently working in American factories. The content was very convincing and convincing. Investors who are concerned about this issue are advised to You should read it carefully.

Contrary to mainstream values

In a word, TSMC’s management methods in Taiwan cannot be applied to the United States, but I personally think that TSMC’s management, and even most Taiwanese people, believe that it is Americans, not TSMC, who should change. In June 2023, TSMC Chairman Mark Liu made it clear that “TSMC has only one corporate culture, and core values need to be observed. People who are not willing to be on duty should not join this industry.”

Employees themselves deny it

TSMC’s various ratings on Glassdoor, a well-known website where entrepreneurs evaluate their own companies: the overall rating is only 3.1, the benefits and benefits are 3.6, and the possibility of life and work balance is only 2.1. This statistic shows that TSMC’s scores have not improved much since setting up factories in the United States.

Note: For all Glassdoor ratings, 5.0 is a perfect score. TSMC’s rating is considered low on Glassdoor, especially in the technology industry.

Discord between labor and management

In August 2023, TSMC delayed the mass production of its U.S. factory on the grounds of “lack of sufficient skilled workers.” The union in Arizona was bombarded by a letter from the media, questioning TSMC’s intention to bring in cheap manpower. Subsequently, many U.S. Workers or contractors went online to complain about TSMC’s faults. Negative reports flooded the media, and labor relations were quite tense.

Quench a thirst with poison

This explains why TSMC wants to quench its thirst by importing employees from Taiwan to its U.S. factories (which already accounts for more than half of its U.S. factories), triggering more than one continuous loud protest from related industrial unions in the United States.

What TSMC should solve is the problem itself, not the problem, let alone the person who raised the problem. If you have a headache, treat your head, if you have a foot pain, treat your feet, it is impossible to solve the problem.

What about the German factory?

After talking about the US factory, what about TSMC’s German factory? German unions are stronger and more united than those in the United States, and German laws protect union employees in every possible way. TSMC can’t even handle the United States. Do investors think the prospects of TSMC’s German factory will be better than those of its American factory?

What does a century-old enterprise rely on?

There are many companies in the world that have existed for hundreds of years, and there are also many companies in the United States that have been listed for hundreds of years; please refer to the statistics in my previous post “Average lifespan of companies“. There is only one common feature that continues the lifeline of their enterprises- corporate culture. The survival of an enterprise for a hundred years does not depend on leading technology and scale (You read it correctly), nor high-pressure management. These things are only short-term catalysts in the history of enterprise development, and it is impossible to shape an enterprise that lasts for a hundred years.

Only a good corporate culture can sustain a company and bring talents. Only excellent employees can bring leading technology. Only when a company makes money can it win the market. Only by having markets and customers can it create scale.

Conclusion

There is only one problem with all the doubts — the militarized management of Taiwan’s foundry industry does not apply to the high-tech industry; but the statements made by TSMC’s management over the years have made it clear — TSMC does not seem to agree with this view.

Please note that I am not looking at this solely from the perspective of Taiwan’s technology industry. If TSMC claims to be a global company, it should be measured by the standards of the global technology industry, rather than being complacent about being Taiwan’s largest company.

Why is this so? because:

The semiconductor industry is currently Taiwan’s only relatively competitive industry and a major contributor to Taiwan’s economy and foreign trade. It is the apple of the eye of all Taiwanese people and an industry that cannot be offended. Because of this, it conceals the bitterness of many employees who have been ignored, as well as the abnormal and unreasonable working environment – for example, employees need to be on call 24 hours standby all day long to take a break, and it is simply unreasonable to be available at any time, two wrongs make a right. However, most Taiwanese have a narrow vision and feel good about themselves, take this as Taiwan’s key competitiveness. They do not think that this kind of unreasonable requirement is generally accepted in Taiwan violates universal values and the basic rights of workers──this is the real scary part.
TSMC is currently almost a monopoly in the chip foundry industry, especially in high-end processes. Success makes people complacent, which will blind the leadership team. Potential internal problems and external challenges will be ignored. Losing the courage to review will hinder the possibility of future development. Of all the great companies in history, which one failed because of this?
I mentioned in my article “Taiwan vs US stock market – For Taiwanese stock investors investing in US stocks” : In Taiwan, there is almost no negative report on TSMC in the mainstream media, the government, and the private sector, not even rational expressions. TSMC has been deified into the light of Taiwan. This is obviously a Boxer-style, and the icing on the cake is the unenlightened and mental retardation of the most Taiwanese. As long as it is a request made by TSMC, a law that hinders TSMC, or even an opinion on the Internet that is unfavorable to TSMC, it will be automatically eliminated and attacked by groups because of badmouthing (who invented these two offensive words?) .
Taiwan’s large and successful companies, including TSMC, are all hardware OEMs without exception. They advocate militarized management, have voiceless employees, and encourage almost no life other than working and going home to sleep. The corporate culture does not tolerate any questioning or challenge. Please note that this is not a problem only for TSMC. All companies in Taiwan have this problem. For details, please refer to my previous post “Failed Taiwan Software Industry Policy“.

If TSMC is complacent as Taiwan’s largest listed company, of course there will be no problem, but the possibility of growing further or becoming a “truly great multinational company” will not exist.

It is the problem that should be reviewed, not the person who raised the problem; but in Taiwan, this possibility does not exist.

TSMC is actually spoiled in Taiwan!

Postscript

Three weeks after this article was published, TSMC Chairman Mark Liu stepped down and retired without warning. Media reports that Mark Liu’s retirement is also related to TSMC’s progress in the United States. To me, I am not surprised at all.

Note: TSMC founder Morris Chang revealed in an exclusive interview with the US media that TSMC went to Arizona to set up a new factory at the urging of the US government. He had retired at the time, and the decision was made by current TSMC Chairman Mark Liu.

TSMC negative corp culture — credit: PingWest

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