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The Taiwan Semiconductor Manufacturing Company (TSMC) raised its employees' salaries by up to 5% earlier today in Taiwan and the result left workers unhappy as some complained that last year's increments were higher. TSMC, like other firms in the semiconductor industry, is facing an industry downturn that is expected to continue during the first half of this year. This has reduced the demand for the firm's product and led to reports that its customers are also reducing their orders. In response to the complaints, the firm responded that previous increments were higher due to dividends being adjusted into salary and a growing chip sector.

TSMC Employees Divided Over Lower Than Usual Pay Raise

TSMC's annual employee salary increases are based on several conditions, such as seniority and performance. The latest of these came out at a 5% maximum, indicating that not all employees would see a pay raise this year, and those that would have to contend themselves with a much lower raise than they had previously gotten.

Naturally, the news generated a mixed reaction from the employees, reports the United Daily News (UDN). Some of them were disappointed particularly due to the high inflation in Taiwan and the rate of previous upgrades. Inflation in Taiwan crossed 3% in January after being on a consistent downtrend since the latter half of 2022.

However, some employees saw their pay increase by as much as 10% last year, so they could better bear the inflationary pressures. Taiwan's inflation peaked at 3.6% in June 2022, a level it had previously crossed only during the aftermath of the 2008 global financial crisis and the Great Recession.

The division among the employees appears to be based on the levels of seniority, as those at junior levels bemoaned that workers for TSMC's rivals Intel and Samsung were not used to such 'stinginess' and that while the firm had chosen to keep capital expenditure mostly intact, it had decided to save on costs by reducing salaries instead.

The Taiwan Semiconductor Manufacturing Company (TSMC) held a beam lifting ceremony for the expansion of its Fab 18 in Tainan, Taiwan to also produce 3-nanomter chips. Image: Yin Huizhong/UDN

These complaints from the junior employees were countered by the senior ones, who explained that capital expenditure is necessary for TSMC's growth, especially during today's highly competitive environment. Not only does TSMC have Samsung breathing down its neck for process node leadership, but its larger rival, Intel, has also undertaken ambitious plans to set up its own contract chip manufacturing division.

The seniors added that top management has to focus on the future, while grassroots workers are concerned primarily with their well being, and that they should work hard to make TSMC succeed and reap the benefits in the future.

In a statement, TSMC explained that last year employees had gotten a 10% raise because of the hot semiconductor market. Fresh off of the highs of the coronavirus pandemic, chip designers had made optimistic demand forecasts for their products and over-ordered - a miscalculation that led them to reduce their orders later in the year as inflation hit and demand dropped. The firm added that in 2021, some employees had also asked that their dividends be made a part of their salary, which led to some employees receiving massive 20% pay raises.

Itself facing an industry downturn, Intel was widely reported in February to have cut salaries for employees at and higher than grade 7. The pay cuts were staggered, as those in grade 7 saw a 5% reduction while vice presidents and senior executives took 15% and 10% pay cuts. At the same time, the chip giant had also suspended pay raises and bonuses. TSMC had also reduced its capital expenditure for 2023 to range between $32 billion and $36 billion in January after it stood at $46 billion last year.