TSMC employees consider strikes, unionization over bonus cuts despite record AI-driven profits

At a glance:

• TSMC workers protest rumored 15% bonus cut amid record AI-driven profits.
• Employees cite Samsung's recent union agreement as a model for collective action.
• Company cites $52-56 billion annual capex on new fabs as reason for tighter compensation funds.

Employee backlash grows over rumored bonus cuts

TSMC employees are openly discussing forming a union and staging a strike after rumors spread that the company plans to cut performance bonuses by approximately 15%, according to a DigiTimes report. The unrest comes despite TSMC posting a record first-quarter net profit of NT$572.5 billion ($17.9 billion), a 58% year-over-year increase driven by surging AI chip demand. Workers argue that the company's historical practice of returning roughly 13% of retained earnings as employee bonuses has been cut, even as profits climb, and they’re pointing to Samsung’s recent union deal as a template for action.

Frustration has spilled onto Dcard, a Taiwanese workplace community, and dedicated TSMC Facebook pages, where workers have posted complaints ahead of TSMC's shareholder meeting scheduled for May 28th at the company's Hsinchu headquarters. Some have asked whether forming a union would violate Taiwanese law, and others argue that the company prioritizes shareholder returns and overseas expansion over its workforce. The rumors have gained enough traction that TSMC felt compelled to respond, highlighting the growing tension between the tech giant and its employees.

Company response and historical context

TSMC responded by saying it expects employee profit-sharing bonuses to grow faster in 2026 than in 2025, and that it is "fully aware of its growing corporate social responsibility in Taiwan," Digitimes reported. The company has operated without a labor union since its founding in 1987, which workers say leaves them without a formal mechanism to negotiate collectively. This lack of union representation contrasts sharply with recent developments at competitors like Samsung and SK hynix, which have agreed to profit-sharing structures with their employees.

Historically, TSMC has been known for generous compensation, with the average employee bonus reaching approximately NT$2.64 million (roughly $87,000) based on 2025 earnings, and the total bonus pool hitting around NT$206.1 billion, according to Taiwan’s Liberty Times. The rumored cut would significantly impact these payouts, especially as the company benefits from the AI boom. Employees feel that the reduction is unjustified given the record profits, leading to increased calls for unionization.

Capex spending pressures and financial strategy

The most likely explanation for the rumored cut, according to analysts cited by South Korean and Taiwanese media, is TSMC’s massive capital expenditure program. The company is spending $52 billion to $56 billion annually while constructing 12 new fabs across the U.S., Japan, Germany, and Taiwan to secure its lead in 2nm and 1.4nm manufacturing. This outlay appears to be tightening the cash available for employee compensation, as TSMC invests heavily to maintain its technological edge and expand globally.

TSMC's strategy involves significant upfront costs to build advanced fabrication facilities, which are essential for producing cutting-edge chips used in AI and other high-performance applications. While these investments are crucial for long-term growth, they are also straining short-term financials, leading to difficult decisions about resource allocation. The company must balance shareholder expectations, employee satisfaction, and the need to outspend rivals in the semiconductor race.

Industry comparisons: Samsung and SK hynix deals

The unrest at TSMC has intensified in the wake of Samsung’s landmark union deal last week. Samsung narrowly avoided an 18-day factory shutdown by agreeing to allocate 10.5% of its semiconductor division's operating profit as stock-based bonuses, plus another 1.5% in cash, over a 10-year period. That deal translates to projected average payouts of roughly $340,000 per chip division employee in 2026, based on recent estimates of Samsung's operating profit. SK hynix agreed to a similar structure last September, setting aside 10% of operating profit for employee bonuses.

For TSMC workers, these comparisons are undoubtedly painful. They have no union and no formal mechanism to negotiate collectively, while Samsung and SK hynix employees secured lucrative profit-sharing agreements. The disparity highlights the growing trend of labor activism in the semiconductor industry, particularly in response to the massive profits generated by the AI surge. TSMC's traditional approach of high compensation without unions is being challenged as employees seek similar benefits.

Legal challenges and shareholder dynamics

Samsung's deal, meanwhile, is already facing legal pushback. A shareholder lawsuit challenges the agreement on the grounds that committing a fixed percentage of operating profit to employee payouts over a decade conflicts with the capital demands of chipmaking at scale. This legal uncertainty adds another layer to the situation, as TSMC employees consider their own actions. The upcoming shareholder meeting on May 28th in Hsinchu will be a key moment for TSMC to address these concerns and outline its compensation philosophy.

Doris Hsu, chairperson of silicon wafer manufacturer GlobalWafers, has weighed in on the broader debate, saying that across GlobalWafers' 18 factories in nine countries, some have unions and some don’t, and that the key factor in business performance is whether a company shares profits with workers, not whether a union exists. Her comments underscore the industry-wide focus on profit-sharing as a tool for employee retention and motivation, especially in high-growth sectors like semiconductors.

Implications for labor relations and future outlook

The situation at TSMC reflects a broader shift in the tech manufacturing landscape, where employees are increasingly vocal about compensation amid record corporate profits. As AI continues to drive demand for advanced chips, companies like TSMC face pressure to balance reinvestment in capacity with rewarding their workforce. The potential for strikes or unionization could disrupt operations and impact TSMC's ability to meet customer demand, particularly for high-value clients like Apple and NVIDIA.

Looking ahead, TSMC must navigate these labor challenges while executing its aggressive expansion plans. The outcome of the shareholder meeting and any further employee actions will be closely watched by investors and industry peers. If TSMC concedes to demands for higher bonuses or recognizes a union, it could set a precedent for labor relations in the semiconductor sector. Conversely, if the company maintains its stance, it may face prolonged unrest or even production disruptions.