[java-man]

Underpaying your critical employees is not a good strategy long term, even though it might look good on the balance sheet short term.

Let the free market decide. At some point, other, less tangible factors would start playing, such as individual freedoms, quality of the environment, family friednliness, etc.

[simonh]

It’s not a matter of under paying them. There isn’t a market for thousands of TSMC engineers at 2x or 3x salary in China so that really isn’t the market rate. There’s only a market for 100 of them, but it mostly doesn’t matter so much which 100.

TSMC wouldn’t have to just offer say 4x salary to 100 of their engineers to prevent the brain drain, they have to give it to several thousand engineers, and then a China would just up their offer to 5x because their ability to pick off a subset of people gives them 10x or even 100x leverage over TSMC. There’s just no way for TSMC to compete on salary like that. The most they could do is make it costly enough that the Chinese only hire away fewer engineers, at crippling cost to themselves, but they can never cut it down to zero.

[java-man]

There are other factors for these engineers to consider. This outflow may be temporary: once the Chinese side decides that their immediate goals have been met, they either force the Taiwanese engineers to leave, or accept Chinese citizenship, or some other unpleasant thing.

What I am saying is that the "free market" is not always limited to money. There are other things that play the role. TSMC must find ways to keep the essential engineers, or they are going to lose. This applies to anyone: you have to adjust to the changing environment, or die. Find something that will keep the best ones that other companies can't offer. Or die, like the rest of the manufacturing industry (look, American manufacturing is too expensive, let's make it in China! look, American programmers are too expensive, let's open a dev center in Bangalore!).

On the other hand, I think this is a welcome outcome - the knowledge spreads out and levels the playing field. From a very simplistic and idealistic view, it is better to have multiple industrial and knowledge centers than have everything concentrated in one place or country.

[coreblocks]

Semiconductor technology are like the new nuclear weapons, of the upmost importance to national security. Not having access to this technology will greatly affect the economy of a nation. The sooner everyone plays nice, the better it is for everybody. The Huawei ban is dumb and actually hurts Taiwan's leverage over China in the long term.

[java-man]

I would probably disagree on nuclear weapons: the lack of access to the latest semiconductors cannot wipe the humanity out, it merely retards the development of indigenous industries (other than semiconductor).

Huawei ban is a message to the Chinese government about explicit spying - and will probably get reversed pretty soon. You can spy, but don't make it so obvious.

Interestingly, I think these bans might have another, unintended, consequence: they might trigger acceleration of locally developed alternatives. We might see more of the Chinese-developed processors and IP in general in the future.

But I do agree that the sooner everyone plays nice, the better it is for everybody. The problem is that there are plenty of forces that benefit from chaos and suffering.