Mainland lures Taiwan’s chip talent
Engineers attracted by fat salaries in bid to reduce reliance on foreign firms
Ahuge pay rise, eight free trips home a year and a subsidized apartment. It was a dream job offer that an engineer from Taiwan island, China simply could not refuse.
A veteran of Taiwan’s top-tier chipmakers, including United Microelectronics Corp (UMC), the engineer took up the offer from a Chinese mainland chipmaker last year and now oversees a small team at a wafer foundry.
The engineer joined a growing band of senior Taiwan professionals working in the Chinese mainland’s booming and fast-developing semiconductor industry.
Attracting such talent from the island has become a key part of an effort by the mainland to put the industry into overdrive and reduce its dependence on overseas firms for the prized chips that power everything from smartphones to military satellites.
That drive, which started in 2014, intensified this year as China-US trade tensions escalated, according to recruiters and industry insiders.
China imported $260 billion worth of semiconductors in 2017, more than its imports of crude oil. Home-made chips made up about 20 percent of domestic demand in the same year, according to the China Semiconductor Industry Association.
More than 300 senior engineers from Taiwan have moved to chipmakers on the Chinese mainland so far this year, joining nearly 1,000 others who have relocated since Beijing set up a $22 billion fund to develop the chip industry in 2014, according to estimates from H&L Management Consultants, a Taipei-based recruitment firm.
China’s semiconductor plans accelerated this year after the US banned sales of chips to telecommunications equipment provider ZTE.
Tariffs imposed by the US on $16 billion worth of China’s imports have hit Chinese semiconductors, which are now subject to tariff rates of 25 percent.
That will make Chinese chips less competitive compared to those from other countries such as South Korea, and could disrupt China’s semiconductor ambitions.
Two state-run institutions said in a report in August that about 400,000 professionals were working in the mainland’s integrated circuit sector at the end of 2017, far short of the estimated 720,000 workers needed by 2020.
While the Chinese mainland has also tried to attract engineers from South Korea and Japan to address that shortage, it has had the most success in Taiwan thanks to a common language and culture, recruiters say.
Lin Yu-Hsuan, a manager at recruitment firm H&L, said engineers from Taiwan were lured by high pay, perks and more senior positions at mainland chipmakers like Semiconductor Manufacturing International Corp that are flush with cash.
“Many of them said: ‘the money I will earn on the mainland in three years is equivalent to what I could get in Taiwan in 10 years. I could retire earlier’,” Lin said.
Steve Wang, vice chairman and president of Novatek Microelectronics, Taiwan’s integrated chip designer, said a small percentage of its employees had left for the mainland over the past two years, and acknowledged that it would be difficult to match offers from those industry players.
The engineer at the wafer foundry, who declined to be named as the details of his contract were not public, said his mainland employer offered him a new three-bedroom apartment with a 40 percent discount provided that he worked for the company for more than five years, in addition to a 50 percent pay rise. He declined to give the exact figure.
Counter-offer
A senior executive at a newlyestablished chipmaker in Northeast China, SIEN (QINGDAO) Integrated Circuits Co, said about one-third of its recently recruited 120 engineers are from Taiwan.
The company, led by Richard Chang, founder of SMIC, the mainland’s leading chipmaker, offers new hires discounted property and attractive subsidies for bilingual schools in the port city of Qingdao, East China’s Shandong Province, said the person, who declined to be named as he was not authorized to speak to the media.
“Engineers from Taiwan are most experienced and could help us cultivate local talent,” the executive said. “The movement will continue to escalate.”
Industry watchers said Taiwan’s widely respected chip design houses and foundries have been among the hardest hit by the outflow of engineers, and have been forced to ramp up spending to lure workers.
The island’s leading integrated c circuit designers and chipmakers have seen a 35 percent jump in labor costs, including salary and benefits fr from two years ago, compared with a 21 percent hike in revenue, according to Reuters calculations based on corp porate filings from Taiwan’s 10 largest li listed companies by market value.
The Chinese mainland’s integrated circuit design firms have already surpassed their Taiwan counterparts in terms of revenue, with $31 billion in 2017, compared with Taiwan’s $22 billion, according to Mark Li, an analyst at Bernstein.
In a move to retain top talent, companies in Taiwan are also trying to offer their own incentives.
Antonio Yu, spokesman for Taiwan-based chip design house Phison Electronics Corp, said that the company has tried to create a “reassuring environment” for its employees.
He cited long-standing cash bonuses and programs such as free legal counseling, as well as monthly town hall meetings with Phison’s chairman, Khein-Seng Pua.
Despite such efforts, Taiwan’s engineers are finding incentives from the mainland hard to resist.
Tommy Huang, a 37-year-old Taiwan chip engineer who in 2016 joined United Semiconductor – a joint venture between Taiwan’s UMC and the mainland’s partners – said the island’s efforts to retain talent did not work for him.
“You don’t have any chance if you stay in Taiwan,” said Huang, whose mainland employer offered him an annual school subsidy of up to 60,000 yuan ($8,689) for his five-year-old child and a salary of more than double what he earned in Taiwan.
“We are buying hope by coming to the mainland,” Huang noted.