Facing the global financial crisis of 2008-2009 and the economic downturn, many companies began to practice unpaid leaves and layoffs one after another. In order to reduce costs, TSMC (Taiwan Semiconductor Manufacturing Company) dismissed 5% of its employees with the lowest performance evaluation scores under PMD (Performance Management and Development system) in the end of 2008. This action resulted in a labor-management controversy. This paper investigates whether TSMC has achieved its goal of cost reduction by layoffs. Other than layoffs, are there better alternatives which could help TSMC reduce costs to confront the dramatic change to business environment? How can TSMC, the model of corporate governance, reduce the impact of layoffs?