We pay junior engineers who work at social media companies six figures so why cant we pay taiwanese fab engineers enough?

The risk model is different. The cost of setting up an gorgeous tech company office in pre-Covid San Francisco is trivial compared to setting up even poor-quality fab. Not that we (the US) should shy away from doing it - the Silicon Valley is called that because semiconductors are made out of silicon, but SV is also full of Superfund sites (for many reasons, but IC manufacturing isn't a light industrial process, and is ridiculously capital intensive. A few million dollars, and a few months, and that social media company will have an MVP and started proving traction in their chosen niche. (It'll take closer to a decade to actually get somewhere with it eg tiktok, but MVP can be demoed to investors far sooner.) A few years, and closer to a billion dollars, and you might have broken ground on the fab.

We do pay them "enough." They do the job for that price. Why are they not payed more? Consumers care more about price, and capitalism cares more about the bottom line, than the ethical treatment of workers.

I agree with your points, but poaching talent is just fine in my book. And profitability should be considered, but not required. Most national defense programs are ``profitable'' in that they are paid by us. Chips are a cheap strategic win in the scope of things. TSMC's entire operating budget is a miniscule line item next to the cost of threatening supply chain to downstream industries, or strategic loss from TSMC being nationalized by China (or ... going to war to defend against that)

Do you have a source for the best Taiwan engineers working for minimum wage?

Monthly salary for a TSMC fab engineer is about NTD$48,000/month [1]; I saw another source on the web that listed NTD$612K/year, which is consistent. The exchange rate is 1 USD ~= 28 NTD, so that about USD$1700/month or about USD$10.50/hour, which is pretty close to what McDonald's pays these days.

Prices in many foreign countries are wonky though, because of different cultural & economic systems. You can have a good lunch out (the equivalent of fast-casual; most eateries are like that) in Taiwan for about USD$2-4, and because the expectation is that you live with your parents until you get married, housing expenses are minimal. There's also a big oversupply of 20-30something labor, because the older engineers who built the company (and get paid significantly more) aren't retiring and so those skilled jobs aren't opening up. That's behind both the low prices for food (many young Taiwanese open small restaurants) and for entry-level fab engineer jobs.

[1] https://www.glassdoor.com/Monthly-Pay/TSMC-Process-Engineer-...

> Prices in many foreign countries are wonky though, because of different cultural & economic systems.

You should just adjust for PPP. The world bank estimates taiwan's GDP (nominal) to be 759M, but adjusted for PPP it's 1,403B. If we do the same adjustment for wages, we get $3165 per month, or $18.19/hr.

Even adjusting for PPP is complex though, because different goods have different cost adjustments. Actually buying a condo in Taiwan isn't cheap - I think my in-laws said it was around USD$500K for a 3BR/2BA in one of the Taipei exurbs, and can go up past $1M for luxury condos near a city center. That's close to Bay Area prices on McDonalds wages. A lot of Taiwanese youth are pretty much priced out of many markers of adulthood (not unlike many American Millennials), and can't do much other than eat, work, and play videogames. To have a house of their own and a job with the potential for career advancement, they basically need to wait for their parents to die. That's not really captured in PPP numbers, the same way that rampant asset inflation hasn't been captured in the American CPI.

+1 to these Taipei real estate price estimates. Note that TSMC is headquartered in Hsinchu County, and I think real estate is much cheaper there (please fact check me on this though).

source: Parents are from Taiwan, and I have relatives in Taiwan who tell me similar price estimates.

McDonald's is paying $15 where I am now, and begging for applications.

McDonald’s is also forcing noncompetes on new hires. Nobody should work for them

Edit: my source (potus) was mistaken apparently. A better source is below and involves non poaching and different restaurants (not McDonald’s as far as I can tell)

> About 80 percent of fast-food workers are constricted by no-poaching clauses, according to Healey's office. The other fast-food chains targeted by the states' investigation are Arby's, Five Guys, Little Caesars and Popeyes Louisiana Kitchen.

https://www.washingtonpost.com/news/wonk/wp/2018/07/09/11-st...

That was a bogus claim made by Biden. Looks like hourly employees don't sign non-competes.

See:

https://www.factcheck.org/2020/07/bidens-false-claim-about-m...

https://www.politifact.com/factchecks/2020/jul/28/joe-biden/...

Not minimum wage certainly, but less. Not sure how significant an expense salary is for the TSMC though as a fab is very capital intensive.

https://focustaiwan.tw/business/202106300017

"The median employee salary at Taiwan Semiconductor Manufacturing Co. (TSMC), the world's largest contract chipmaker, reached NT$1.81 million (US$64,874) in 2020, up from NT$1.63 million a year earlier."

https://www.glassdoor.com/Salary/TSMC-Salaries-E4130.htm

Process engineer is like $73K/yr

So these, very skilled, employees probably get like ~15% less in Taiwan. No idea what Taiwan's employer tax situation looks like.

The US has a bunch of fab engineers as well. The problem isn't having the engineers, it's having the actual higher tech fabs.

With respect, we don’t have that many fab engineers any more. At least, not of that quality. And most of the ones we do have are already locked up by other employers, like Intel, IBM, and the other companies that still have some fabs here in the US.

Sure, we can do small scale cutting edge prototype fabs, but the few production fabs we have here are not TSMC quality (go ask Intel), and they are already fully allocated. Many of those might not exist here in the country at all, if it weren’t for the requirements from the US military and certain other classified customers to have certain types of chips made here domestically.

We used to have a lot more fab engineers here in the US, but we outsourced those jobs and sent them overseas. And the people who used to do that work have moved on to other careers, or retired.

And the reason why Silicon Valley has so many EPA disaster area cleanup sites is because of the fabs(and related businesses) that used to be endemic in that part of the country. Fabs aren’t clean businesses to run. You’re going to have to find a place where you can run those dirty kinds of businesses, and that’s either going to be extraordinarily expensive, or even impossible, due to legal restrictions on the use of toxic chemicals, etc….

There’s a reason why those fabs are overseas. And all those reasons are why it’s going to be extraordinarily hard for us to pull that work back. There’s a reason why Steve Jobs and Tim Cook have both said “those jobs aren’t coming back”.

Surely that depends on the staffing costs versus the overall costs (interest/financing cost I would be the largest cost?).

If staffing costs are 5% of of marginal costs, then making them 10% is fine if your residual income/profit is high enough.

I suspect you put a fab in Asia because you get higher profitability, not necessarily because you wouldn’t make a profit at all in the US.

Can anyone comment on what percentage of costs for say TSMC go on staffing?

dont worry - we print USD locally

So few people realize the untapped, and unique, power this provides the US.

for now. wait for food and housing prices ...

The US isn't Venezuela, and the USD isn't the Bolivar.