Yeah, but the key difference is that Taiwan is under direct threat from China. Mr. Xi openly said that he will take back Taiwan by force if necessary. Weakening the Taiwan semiconductor industry is certainly part of this playbook, too.

Imagine if the US would consider India to be part of its territory and asking for a "re-unification". I am sure that in this case India would try to prevent key software engineers from leaving, too. Actually, I am surprised that Taiwan has done so little so far.

All that may be true, but the net effect of this policy is to artificially depress wages of people working in Taiwan. Even if one buys into the "existential threat" model, it seems like forcing that burden onto the backs of your most important competitive asset is... sort of horrifyingly counterproductive.

Presumably they would be poached to work in China and not Taiwan.

That's the policy. But the effect is that TSMC doesn't need to raise salaries to retain workers, they can rely on the government to prevent the workers from being recruited in the first place.

(edit: Can I say how amazingly hilarious it is watching all these notionally free-marketeer libertarians who believe in just compensation rush in to explain why it's totally OK for the Taiwanese government to shamelessly restrain trade as long as they're trying to stick it to the PRC?)

TSMC will always lose that bid against a hostile state actor (the PRC) which can totally ignore market value in pursuit of strategic goals.

It’s absurd people dumping on Taiwan don’t realise this. There is no way for Taiwan to compete with CCPs deep pockets if the CCP has decided it needs these engineers at all costs.

But again, TSMC not only isn't trying to compete with "CCPs deep pockets", they're not even trying to compete with Apple or Intel! The time for that complaint is if they're still seeing poaching despite paying FAANG-scale salaries commensurate with their now-FAANG-scale revenue.

To wit: TSMC is one of the big boys now, it's time to act like it and pay their workers. What they're doing right now is trying to cheat by using their government as a weapon against their own employees.

It doesn't aritificially depress wages if China was offering artificially high wages in the first place.

If these people really are critical to the survival and future of your country, how can any wage be too high?

You're thinking in absolutes. We would both agree that a billion dollars a month is too high.

And I don't see how what you've said is related to what I said, which was a critique of the idea that this move is artificially depressing wages when allegedly it's an attempt to stop poaching of key talent at artificially high non market rates.

>We would both agree that a billion dollars a month is too high.

I would not necessarily agree. There are CEOs who make around that amount, why shouldn't an engineer make that much if they're equally important to the organization?

From what I could gather from Google, TSMC engineers make far less than I do as a FAANG engineer, and TSMC posted a ~$14 billion profit last year. If these employees are so important to Taiwan's future, why can't they at least pay them FAANG-level salaries? It's not that they don't have the money.

Because they're not equally important. Most engineers don't add billions of dollars of value. If a miscellaneous engineer resigns, it will have in most cases little impact on the prospects of the company. Most add only incremental value. The superstar seven figure ICs do get paid as such but they're rare, most people aren't that capable of that much value add as an IC.

The company made billions in profits. That could be due to a number of reasons. IP, relationships, network effects, scale economies, regulatory capture, brand equity, etc.

If the workers aren't important, then they don't need laws to stop them from looking for jobs elsewhere. Are us software engineers more important than those in other countries with comparable costs of living? That's hard to answer in general, but software engineers in the US are paid much better on average than in most European countries. Of course there are exceptions but hacker news is full of stories talking about this issue (many euro engineers come to the us bc we pay so much more).

It's very hard to overcome economics. If they don't pay their engineers at TSMC something approaching alternatives, they will start to leave. It doesn't matter whether the company made billions of dollars because of a few people - the company will struggle if they start losing their engineering talent. So that kind of sets their value.

What I'm arguing is that they'll need to pay better wages, otherwise people will leave, regardless of this law about advertising jobs.

>Because they're not equally important. Most engineers don't add billions of dollars of value.

Let the market decide that.

>The company made billions in profits. That could be due to a number of reasons. IP, relationships, network effects, etc.

That's not the point. The point is they're using the government to make it harder for their engineers to find other work, rather than just pay them higher wages so they'll stay on their own accord.

Taiwanese workers may find their wages lowered due to lack of China bidding on their salaries, but there's still the rest of the world.

The vast majority of the pressure comes from China.

There are other places in the world Taiwanese talent can work. And other sources of FDI in Taiwan that can create wage competition -- see other comments about Google.

China is uniquely and specifically trying to destroy Taiwan. The exception makes sense and doesn't have a totalizing effect.

This is kind of an anti-dumping measure by Taiwan.

It's not an anti-dumping measure. TSMC would be profitable paying their workers that much and so will be SMIC.

Most Indians would be thrilled to become US citizens.

So this is not a good analogy.

TSMC pays very well compared to other companies in the same market. I'm guessing you are hearing from people who've never worked for UMC or PowerChip!

Of course, the other fun fact: ANY TSMC employees who went to China will never get jobs in Hsinchu et al. ever again. One-way decision only. Burned bridge.

What? No they don't. TSMC starting wages [1] for a Masters degree candidate is $19,500 USD per year, for a bachelor's degree is $13,000 USD per year. Their median salary is less than $60K USD (which includes US engineers who are paid much more).

They were finally shamed into a 20% above the board wage hike last November [2] but before then, they went a solid 10 years of 3 - 5% COL adjustments.

They might pay well compared to other Taiwanese semi companies but that's only an indictment over how dismal the Taiwanese employment situation is. They're not lacking money, they're just cheap because the executive team culturally does not believe in rewarding talent.

[1] https://www.taiwannews.com.tw/en/news/3925769 [2] https://www.taiwannews.com.tw/en/news/4052667

> TSMC pays very well

Many big companies indeed pay relatively well in comparison to other professions, but workers are heavily underpaid. You can't justify the fact that companies have multi-billion profits and they pay "market rate" salaries at the same time. This is exploitation of workers, but because the amount they are being paid seems to be big, nobody seems to be protesting. Most tech workers should be earning in seven digits.

Compensation isn’t dependent upon value added. That simply indicates a soft ceiling to compensation. It’s all about supply and demand. If there is a supply of skilled people will to work for $X, that’s the comp.

I wonder how companies marketing their roles at "market rates" does not amount to wage-fixing? If every company agrees that work should cost them $x at most, then you don't really have supply and demand principle. I think this is only legal because because it is hard to prove within current legal framework. I think we should have a regulation that will make employers redistribute 30% of profits among workers as a bonus. That may of course lead to companies making artificial loses (as they do to avoid paying corporation tax) and ultimately a cat and mouse game.

Well, unless companies collude (tech is a good example a while back), they compete for labor so you’d assume they arrive at the market rate eventually.

As you said, mandating they distribute profits will just result in gaming the system.

> Most tech workers should be earning in seven digits

According to which metric?

1 million Taiwan dollars is 30k USD

I think it's more akin to sanctions on doing business in Iran.

The CCP is a direct hostile threat to Taiwan, I can understand why they're doing this.

Wouldn't they do the same if it was France poaching them? The language and cultural barrier make it harder for European or American countries to recruit them, but I have no doubt they'd react similarly if they saw significant numbers leaving for Europe.

They might and I'd argue that would be wrong.

In the case of the CCP though, I understand it.

why the double standard?

France isn’t planning to invade Taiwan.

Then just do a sanction on business with mainland like U.S. did with Iran. As it is, these are very targeted moves. Taiwan to decoupling from China would only be good for them.

The labor market, just like any market, prices goods according to supply and demand, not value.

UMC and PowerChip are not remotely "in the same market", unless you define market to mean "China".

TSMC competes with Samsung and Intel. If they don't compensate their engineers accordingly they can expect to lose them.

TSMC here is really a placeholder for Taiwanese companies.

China is offering triple the salary to those people.It's impossible to keep up for a country as small as Taiwan. The end goal for China is not to immediately outcompete TSMC but make Taiwan beg to be integrated into China.

TSMC had 17 billion USD profit last year, right? How come they are unable to triple or in fact pay 10 times they already pay? It's simple greed in my book. It's always CEO cry that they cannot find talent while flying a private jet and offering 5 digit salary.

Also note that 3x is not only for TSMC employees. Even for fresh CS graduates, China mainland pays way more than taiwan.

https://www.payscale.com/research/CN/Job=Software_Engineer/S...

https://www.payscale.com/research/TW/Job=Software_Engineer/S...

It's about 1/3 more, if we only consider big cities like Beijing / Shanghai / Taipei, the difference is just larger. SWE is almost the best paid job kind there. Hardware is similar.

I have to say the best way is to pay more. They deserve it. Just blaming the other side doesn't help.

Very similar to how the US used military spending to cause the USSR to exhaust its resources.

That’s a popular thought in the US, in particular among political activists, but from what I understand, economists dismiss Reagan’s unprecedented peacetime deficit spending on the military, and rather point to internal inefficiencies in the Soviet economy, and critically the global price of oil.

Like Russia today, the Soviet Union’s economy was centered on exports of raw materials, in particular oil and gas. Wells were needing to be recapitalized, but with low prices the money wasn’t available to revitalize the economic engine of the country. Luckily for the Soviet Union, the oil crises of the 1970s jacked up the price of oil, thus allowing them to stave off collapse until prices fell back to their historical average. In other words, if it wasn’t for OPEC, the Soviet Union would have collapsed under Nixon or Carter.

https://www.aei.org/wp-content/uploads/2011/10/20070419_Gaid...

https://www.rbth.com/history/331825-saudi-arabia-oil-crisis-...

https://carnegieendowment.org/2017/03/29/formation-and-evolu...

So if I remember correctly Soviet military spending reached 10% of their GDP which was unsustainable.

I wonder if that was due to GDP falling with weak oil prices, or just rising military budget with a stagnant economy.

Probably all of the above.

Fun fact: No one knows how percentage of GDP the Soviets were spending on their military, but 10% is the low estimate. (See second figure.)

The fifth figure should put to rest the idea that the Soviets tried to meet an increase in US military spending in the 80s. They didn’t. In fact, the president exact opposite is true. The US increased spending due to an increase by the Soviets in the mid 1970s. Soviet spending didn’t really increase at all in the 1980s.

https://nintil.com/the-soviet-union-military-spending/

What's your take on the future of China, Taiwan, Asia, and the US?

China - https://www.youtube.com/watch?v=KY_zsc0wf1Y

I am not an expert on geopolitics and when it come to CCP's data. I'll always assumed false/fake then verify but one thing is real is the One Child Policy. Xi want dual circulation economy but I highly doubt that's going to happen with its population decline. China going to deal with labors, support older population, long term impact on economy...etc.

if Peter is correct, China is becoming another old folks home like Japan. China's birth rate is already approaching Japan's level.

Africa and India have young populations, they’ll be the powerhouses of the second half of this century.

Similar to the US poaching Canadian software folks.

The Chinese companies are owned or funded by the government, they don't have to worry about profit. It is geopolitical economic warfare. A company cannot compete against that without government help.

I could see apple or Google outspendimg the chinese government.

Not worrying about profit is a function of wealth rather than government in particular

capitalism does not work any more since we have unlimited money supply, efficiency is not an issue any more. What you are suggesting is that to let the market work, which is a very conservative idea now.

But, that's now how capitalism works. Capitalism is workers must compete for jobs, services and goods. Capitalism for companies and rich are how to buy off the right people and laws to prevent competition.

I remember in business school how it drilled into us that there are only two important numbers in a company. The price of your product, and the cost of your product. "You can only dictate your cost of your product because your market dictates what you can sell it for." Every time I hear things like "we can't find enough people" or "yeah, but then we'll just pass it along in our cost to customers," I know how much we don't have capitalism.

From your comment I am not sure that I understand if you agree of disagree with the move.

Capitalism here is not the issue. If China pays more they get the workers. That's capitalism as its core. If TSMC wants to retain their workers they have to dig in their 40% profit margins and increase salaries to compete for talent. If they want to increase the price of their chips to account for that payroll increase that will make Samsung (or whoever else) more competitive and that's capitalism as well.

> Every time I hear things like "we can't find enough people" or "yeah, but then we'll just pass it along in our cost to customers," I know how much we don't have capitalism.

I agree and it makes me angry, individual freedoms are and should stay a thing. If you can't pay your employees a salary that makes them want to work for you, they are not the problem and your competitors are not the problem.

> If TSMC wants to retain their workers they have to dig in their 40% profit margins and increase salaries to compete for talent.

I agree completely. I was trying to comment on the Western narrative about capitalism: "Capitalism is all fine and dandy unless it impacts me negatively."

If you're competing with the government of China, then capitalism isn't really the rules of the competition.

Why not? Globally, they're a corporation like any other

It hits at a flaw in capitalism where rich people get to dictate what poor people do, but we generally don't mind that

By "they", I presume you mean the PRC. But there's more to capitalism than just the existence of corporations. The PRC is not responding to market forces like price signals.

The market doesn't really dictate your sales price. The market may dictate the price vs sales curve.

If you raise prices, usually unit sales will fall (although, not always) and sometimes there's a big cliff as you approach (or surpass) competitors' prices.

Try and increase prices by 1,000,000,000x and say the market doesn’t set prices. Markets give you wiggle room, but maximum profit is the goal not simply moving some units.

For those to don’t understand.

Your unit cost is some function based on the number of units produced. f(x)

The market will buy some number of units at any price point. S(P). Now you have two functions and you want the maximum of [ S(P) * (P - f( S(P) )) ]. Thus the market determines both the number of units sold and the price.

Of course that’s assuming you’re not selling a finite supply of something like say oil etc. And of course advertising and segmenting the market can further boost profits etc.