CHIPMAKER VYING FOR US FUNDS PLEDGES TO HIRE UNIONIZED WORKERS

(Bloomberg) -- A California semiconductor company plans to hire hundreds of employees exclusively from local unions, a rare move in an industry historically averse to organized labor and one that could boost its bid for US funds.

Akash Systems has entered formal labor agreements with the industrial division of the Communications Workers of America and the Alameda County Building Trades Council, covering some 250 production-line workers and dozens of construction workers who will build a $62 million semiconductor facility in West Oakland.

The company says the union agreement will allow it to more rapidly hire and train skilled workers. But it also has the added political benefit of appealing to President Joe Biden, who has worked in recent months to burnish his union bonafides.

Akash is one of hundreds of firms vying for money from last year’s Chips Act, which set aside federal grants and loans valued at $100 billion for chipmakers and their suppliers. The law aims to bring semiconductor manufacturing back to the US and reduce reliance on Asian supply chains — while contributing to a broader manufacturing revival that Biden has promised will be a boon to organized labor.

“Historically, semiconductor tech companies in general are not excited about unions,” said Akash Systems co-founder and CEO Felix Ejeckam. “We are aware that the Biden administration’s excited about this and so we’re certainly leaning into that.”

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White House spokesperson Robyn Patterson said Biden and his administration “welcome partnerships between the semiconductor industry and labor unions.”

Acting Labor Secretary Julie Su hosted Ejeckam and several union leaders at an event Tuesday on empowering workers, according to a press release. The Commerce Department declined to comment on any potential applicant, but pointed to the administration’s so-called “good jobs principles,” which include workers’ right to organize.

Those principles are part of the guidelines for applicants seeking Chips Act funds, along with a preference for labor agreements between chipmakers and construction unions. Projects that receive government support are also covered by updated federal wage rules, which increase pay for more than a million construction workers.

But labor deals are rare in the semiconductor sector. Only one US chip production facility — ON Semiconductor Corp.’s plant in Mountain Top, Pennsylvania — has a unionized workforce, according to the CWA. And the tension is already playing out in the US chips push, as Arizona unions clash with the world’s leading chipmaker, Taiwan Semiconductor Manufacturing Co., over safety and management issues at their $40 billion Phoenix site.

The CWA hopes its agreement with Akash will set a precedent for similar deals with other semiconductor companies, said industrial division president Carl Kennebrew, although no conversations are currently underway. The union is part of a new coalition of labor and environmental groups that’s pushing the biggest chip manufacturers to enter formal agreements that cover organized labor, sustainability and broader community impact.

Kennebrew said it is crucial the Chips Act produces “good union jobs, and that they pay living wages, provide comprehensive benefits and keep workers safe on the job.”