Huawei goes ‘007’ and TSMC gets a grant

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Hi everyone, This is Cheng Ting-Fang, your #techAsia host for the week saying hello from Taipei!

Roughly a week ago, I was hiding under the big dining table in my apartment. Taiwan had just been struck by its largest earthquake since 1999, and with trembling hands the first thing I did was send a message to Nikkei Asia’s editors via Slack: “Taiwan just had a big quake and I think we might need a story!” (We did.)

The second thing I did was try to check with Taiwan’s two largest chipmakers, TSMC and UMC, to see if their production had been affected.

One of my friends working in Hsinchu Science Park, Taiwan’s tech hub, told me he was on a conference call with clients on the US west coast when the earthquake hit at 7:58am on April 3. After being evacuated, many employees were back at work within 20 minutes, despite some damage to meeting rooms and ceilings.

Another friend described the strict protocols at chip factories. After a quake or other similar event, facility and equipment engineers are expected to be at their workplace within an hour. This urgency is how chipmakers like TSMC rescue precious wafers and minimise disruption to their operations. The Taiwanese chip giant reported 70 per cent recovery of its most critical equipment within 10 hours of the recent earthquake. The response highlighted the intense — some might say excessive — work ethic that has helped Taiwan secure its position as the world’s most efficient chip producer.

Speaking of brutal work cultures, I remember tech industry insiders always talking about Huawei’s “996” protocol — working from 9am to 9pm, six days a week. Now, as the Chinese titan battles a US crackdown, 996 has become 007, some industry managers say, meaning working hours are from midnight to midnight, seven days a week. It’s hard to tell how much they mean this as a joke.

Tools for success

Huawei may have a brutally demanding working culture, but the company is offering highly competitive salaries — up to double what most local chipmakers pay — to attract top talent. It is looking for candidates with experience working with leading western chip equipment manufacturers like Applied Materials, Lam Research, KLA and ASML, as well as chip industry veterans with over 15 years of experience at TSMC, Intel or Micron.

Such efforts underline how Huawei is trying to build up its own chip supply chain and prove to the world it can withstand a US clampdown. After getting into the chip production business, the company is now moving upstream, building a massive semiconductor equipment R&D centre in western Shanghai, Nikkei Asia’s Cheng Ting-Fang writes.

The centre is being built at its biggest-ever research and development base, and its mission is to develop lithography machines, critical equipment targeted by US export controls.

Share shock

While TikTok’s fate in the US hangs in the balance as the Senate weighs a bill that would force its sale or have it banned, the video-sharing app faces another battle, this time against its own employees.

Thousands of US TikTok workers and former workers have been saddled with eye-watering tax liabilities — totalling more than $100,000 in some individual cases — on shares in the company that they were awarded as part of their pay packages but have been unable to sell, write the Financial Times’ Tabby Kinder and Hannah Murphy. The issue relates to the awarding of restricted stock units, or RSUs, which can result in hefty tax liabilities when they vest.

Worse still, some former employees have even been told their stock is worth about 20 per cent less than that held by current staff, but they still owe tax based on the higher price.

TikTok has promised to address liquidity issues and provide “significant buyback opportunities”. But disgruntled staffers are exploring legal options and, in some cases, reporting the situation to authorities.

Sharing the wealth

After the US government said it would offer lucrative incentives for chipmakers under the Chips Act, there were persistent rumours that the largesse would go only to domestic companies. Those rumours intensified after it granted Intel $8.5bn to beef up chip manufacturing in the country.

But the Biden administration has now confirmed it will offer Taiwan Semiconductor Manufacturing Co, the chip powerhouse making key AI chips and processors for Nvidia, Apple and AMD, some $6.6bn in grants, Nikkei Asia’s Ken Moriyasu, Cheng Ting-Fang and Lauly Li write.

TSMC, in turn, announced it will start making the world’s most advanced 2-nanometre chips on American soil around 2028 and build a third plant in Arizona that will go into operation before the end of the decade. Its total investment is now planned to top $65bn, up from an earlier plan of $40bn.

Between them, Intel and TSMC have already taken nearly 40 per cent of the total $39bn that is available from Washington to support onshoring vital semiconductor production.

Time to strike?

It’s rare in much of Asia, particularly in the tech industry, for employees to go on strike. But workers at one of the region’s most valuable companies, Samsung Electronics, could soon break the mould.

Five unions at the world’s biggest smartphone and memory chipmaker have voted to strike over working conditions, writes Nikkei Asia’s Kim Jaewon. If that happens, it would be the first strike ever against the company, which employs 124,800 people in South Korea.

The key aims are to seek higher pay, additional paid days off and heftier bonuses. Unions say they are hopeful of an amicable resolution, but a rally is planned for April 17.

Suggested reads

1. Chinese fintech Ant Group targets global growth after Jack Ma’s exit (FT)

2. Japan outspends US, Germany on chip subsidies as share of GDP (Nikkei Asia)

3. The Steve Jobs of China turns car salesman in Xiaomi’s EV evolution (FT)

4. Samsung signals end to chip downturn with forecast 10-fold jump in profit (FT)

5. Singapore Reits snap up Japan data centres amid AI boom (Nikkei Asia)

6. South Korea stocks see record foreign buying on appetite for chips (Nikkei Asia)

7. Chinese robot maker says protectionism will not stop its march (FT)

8. Japan Inc races to join US, UK, China in nuclear fusion race (Nikkei Asia)

9. Microsoft to invest $2.9bn in Japan data centres amid AI boom (Nikkei Asia)

10. TSMC boosts Joe Biden’s AI chip ambitions with $11.6bn US production deal (FT)