Taiwan Semiconductor Manufacturing Company (TSMC), the world’s leading chipmaker, announced that it would be expanding its operations to the United States. The announcement promised a wave of job creation and a significant boost to the U.S. semiconductor industry. More importantly, the move promised to revitalize American manufacturing by providing services to tech giants who relied on these semiconductor chips.

However, the welcomed announcement by TSMC is now facing backlash including a class-action lawsuit that accuses the company of “anti-American” discrimination that has displaced U.S. workers in favor of Taiwanese hires.

The lawsuit, which was originally filed in August by Deborah Howington, a talent acquisition executive, has grown to include a group of 12 former employees. The suit, currently being heard in California's Northern District Court, accuses TSMC of unlawful hiring practices, workplace discrimination, and violations of U.S. labor laws.

The plaintiffs argue that TSMC, which has received $6.6 billion in federal funding through the CHIPS Act, has systematically favored Taiwanese workers over U.S. workers. The claims of discrimination are stark and include allegations that TSMC confidentially engaged an “Asian headhunter” in which they targeted Taiwanese candidates for positions that were meant for U.S.-based roles.

The lawsuit also details that there were intentional language barriers designed to deter U.S. workers. Meetings, training, and materials were allegedly conducted primarily in Mandarin, making it difficult for English-speaking employees to perform their jobs effectively.

There were also accusations of unequal treatment among workers. Plaintiffs allege that Taiwanese workers, often employed on expensive visas, received preferential treatment in job assignments and performance reviews. One plaintiff even reported that TSMC hired a worker’s unqualified girlfriend to secure his continued employment in the U.S.

The lawsuit explains that the U.S. workers were exposed to a "hostile work environment where verbal abuse, gaslighting, isolation, and humiliation is common, and oftentimes leads to the constructive discharge of these employees."

There were also alleged exclusive benefits for Taiwanese employees. They reportedly enjoyed special perks, including a wellness center operated by an unlicensed Taiwanese doctor and access to housing and medical services that were unavailable to other staff.

The lawsuit further highlights biases in the company’s internal culture. The complaint details that TSMC’s leadership, many of whom were predominantly Taiwanese, created an environment that reinforced discriminatory practices while dismissing concerns from the U.S.-based employees.

TSMC is a prominent figure in the tech industry. Known for manufacturing high-performance computing chips for giants like Apple and Nvidia, their expansion into the U.S. was seen as a critical step toward reducing reliance on foreign chipmakers.

Reports suggest that more than half of TSMC’s Arizona workforce is from Taiwan, fueling tensions between local hires and overseas employees.

While the company has not yet filed a formal rebuttal to the lawsuit, it denies the allegations. A spokesperson for the company shared in part, “TSMC believes strongly in the value of a diverse workforce and we hire and promote without regard to gender, religion, race, nationality, or political affiliation. We provide various channels for employees to raise concerns and strive to address them constructively.”

Despite the company’s assurances, the lawsuit paints a picture of a workplace divided along cultural and national lines, with plaintiffs claiming that U.S. labor laws were ignored in favor of practices benefiting Taiwanese staff.

Attorney for the plaintiffs, Daniel Kotchen, emphasized the importance of holding TSMC accountable. “Having accepted billions in U.S. federal funding, it’s imperative that TSMC comply with federal discrimination laws and treat all races, national origins, and citizens equally.”