Employee Loyalty and Performance of Taiwan's Semiconductor Industry: Analysis of TSMC's Business Alliance

Abstract

Taiwan's semiconductor industry plays a critical role in the global economy with its technological innovation, efficient manufacturing, and market leadership, profoundly shaping the global semiconductor landscape. It explores whether there is a positive correlation between employee loyalty and corporate performance and further examines if the parent-subsidiary relationship or business alliance with TSMC or UMC influences the relationship between employee loyalty and corporate performance. The study compiles data from Taiwan’s semiconductor industry, with the upstream comprising IP design and IC design, the midstream including IC manufacturing, wafer fabrication, related testing equipment, reticle masks, and chemicals, and the downstream covering IC packaging and testing, IC modules, and IC distribution. Data from 2005 to 2020, comprising 1015 valid data, were used. Correlation and regression analyses were conducted to observe the relationship between employee loyalty and corporate performance. The study aims to deeply investigate the impact of employee loyalty on the performance of Taiwanese semiconductor companies, especially considering the scenarios of consortium and business alliance cooperation. Through literature review and empirical analysis, the study assesses how employee loyalty affects the performance indicators of semiconductor companies and explores the moderating role of consortium and business alliance cooperation in this impact. By delving into employee loyalty in Taiwan’s semiconductor sector, this study aims to provide practical recommendations for human resource management strategies and consortium cooperation decisions to promote the sustainable development of Taiwanese semiconductor companies. The findings reveal a negative correlation between the average seniority and turnover rate of employees and performance variables, while employee growth rate shows a positive correlation in upstream and midstream companies but a negative correlation overall. The results vary slightly across the upstream, midstream, and downstream sectors. In terms of business alliance effects, companies with business ties to TSMC exhibit a moderating effect on the relationship between employee loyalty and performance variables.