The GDP per capita of Taiwan is higher than France. It's not the place you move jobs to to optimize for labor costs.
Again, there's a pretty racist subtext here that because it's in Asia, you assume that must be cheap labor, not innovation. Would you have the same argument if the fabs were in France or Spain, both of which have lower GDPs per capita than Taiwan?
Calling this racist seems applicable but quite a stretch to me.
From the article is seems workers in Taiwan work 12 hour days as normal. Couple that with the fact that manufacturing used by primarily US being done outside US borders is generally some for cost saving reasons and it seems to make sense to assume that Taiwan IS doing this cheaper somehow. If it were a matter of innovation wouldn't the same innovation hold in their new plant in Arizona?
The article is about engineers, not factory workers. Are you really telling me there's no culture of overworking for engineers in Silicon Valley? It's contrasting Arizona with Taiwan; I don't think this same article would be written about Silicon Valley vs. Taiwan.
There's also a difference between what you're saying and what the great-grandparent said: being cheaper can be because they have better processes or are more innovative, or have shorter supply lines, or better access to mainland China or whatever.
But the great-grandparent both (a) assumed that tech fundamentally belongs to the US, and if it's being done somewhere else, it's in service to the US, and (b) that the primary reason someone would produce things outside of the US is labor costs.
Labor costs are no longer the primary reason things are produced outside of the US. At this point, it's primarily industrial capacity and know-how.
Salary info I'm finding on google suggest that electrical engineers still get paid less in Taiwan than in the US. I'd also be very curious what those numbers looked like over the decades when offshoring really ramped up.
Not "10x less" or anything incredibly dramatic, but for a business, money saved is money saved.
It's silly to have a whole thread of back and forth responses on "is it racist to say cost of labor is cheaper somewhere else" without looking at the numbers to see if it actually is. GDP per capita is very much not the same as salary.
Personally I'm waiting for engineering salaries in the non-US to catch up to the US because it'll make it easier for me to leave the US if I choose to do so but it doesn't look like it's happened yet.
Engineers in virtually every country in the world make less money than in the US. But the reason people have jobs in the rest of the world isn't because everyone wants to make things in the US, but it's just too expensive, so they'll settle for somewhere else. That's pretty heavy-handed American exceptionalism.
TSCM has the best fabs in the world. This article literally mentions them having to build the factory in the US and send people over to teach the Americans how to run it. They're just better at it. To keep insisting that that's not the case, and that this is really all about their lower salaries is, in fact, racist.
Here we're looking at an industry where the US used to be dominant. So it's not a question of "how did another country beat the US to this sort of industry despite having less money floating around than the US?" It's specifically "how did this industry leave the US and why is it non-trivial to rebuild some of it?"
I'm talking about the how of them becoming the best in the world, not arguing that they aren't the best now. As money for semiconductor manufacturing moved to overseas companies, initially driven by costs, those companies ended up with the money to invest in getting good at it.
But that money was directed there as a result of specific actions by people in the US. So yes, all the conversation about immediate-cost-focused decisions, and the difference in the labor costs, are relevant.
It's not "American exceptionalism" to be aware of this history, it's "American exceptionalism" that caused this and that drives the laissez faire attitude that there wouldn't be domestic impact like loss of expertise and reliance on overseas producer from a focus on immediate cost over all else. The idea that if we wanted to, we could simply build the industry back up. Because we're America! Same as all the rest of "it can't happen here" BS that people use to excuse ignoring various domestic issues.
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To frame the labor cost issue a different way, let's look at what the reverse process, bringing that expertise back to the US, would look like: let's say tomorrow the US wanted to build up a domestic best-in-the-world alternative company. They'd have to hire a bunch of engineers! Even best-case, it would take those engineers quite a while to reproduce all the earned knowledge and expertise of TSMC's engineers. All the while you're gonna have to pay those engineers more than TSMC's engineers are making, because it's a more expensive labor market. And then even if they do produce equally high levels of output after a while, all those higher costs are going to put them at a competitive disadvantage. So if you want to be good at it domestically, and you live in a country with more competition for labor, you really have to commit to spending extra to do it. (Getting TSMC to build some plants domestically is a way of short-cutting the knowledge acquisition step, but it's just a small step towards really rebuilding the industry.)
Except that your history is wrong in this case. It's more about politics and Intel's failure, and Taiwan and TSMC's capitalization on that than it is about salaries.
A lot of manufacturing did move to Taiwan in the 70s and 80s because labor costs were lower there then, and because the US was investing a lot in Taiwan because of its strategic role vis-a-vis mainland China. But that wasn't especially high tech, and was decades before TSMC became relevant on the global market for anything but very low-end chips.
The way that TSMC ended up on top was by beating Intel at its own game. It did that at a time where Taiwan was already rich, and the US wasn't actively subsidizing the semi-conductor industry, whereas Taiwan's government was. It seems naive to assume that Intel wouldn't have had a decade of missed deadlines if it'd just thrown more money at the problem. In that this article started off about corporate culture, it's not hard to argue that much of what killed US chip fabrication dominance was Intel's corporate culture (as opposed to cheap Asian labor).
Basically there was a lot of consolidation in fabrication in the US, then with all of the eggs in a couple of baskets, the US-based fabs dropped the ball, and TSMC and Samsung smelled blood and stepped up their game.
Ah, I see we're talking across each other some actually because of talking about different timeframes. I was confused by comments about Taiwan being rich when I was thinking about a story starting in the late 80s, not just the last decade.
I'm not particularly focused on Intel at the very top-end here. TSMC capitalizing on Intel dropping the ball in the 2010s doesn't happen if there wasn't a trend that continued through the 90s and 2000s that helps them get in the position to capitalize. Labor costs then were part of the equation - after all, they still haven't fully caught up.
The US being down to essentially one player that made their living focusing on just the top of the market is because of that process that hollowed out the US-based industry.
The alternative scenario I'm pitching isn't "Intel doesn't screw up cause they throw even more money at it" it's "the US semiconductor industry has multiple big players so that the are more domestic players to try to pounce on Intel's mistakes." But, because of cost pressure, including cost of labor, I believe that would take specific action and policy choices.
(This also isn't just a "US vs Asia" thing - Japanese companies have lost business to other more recent Asian entrants in the electronics and related manufacturing space as well.)
> Personally I'm waiting for engineering salaries in the non-US to catch up to the US because it'll make it easier for me to leave the US if I choose to do so but it doesn't look like it's happened yet.
Let me chime in to say that salary isn't everything in life, or the key to live a good, fulfilling life. I'd even argue that socialized healthcare and worker's rights, ensured in numerous European countries, do far more to achieve good life than, say, an absurdly high salary.
I would imagine there comes a point where an "absurdly" high salary can more than compensate for deficiencies in the US healthcare system. Sacrificing some work-life balance as well.
In the latter case, that point is different for different people, but if you're making FAANG seniorSWE+ level compensation (especially if it's at one of the easier FAANGs), I would think the options to optimize your quality of life is probably higher in the US than in the hypothetical more socialistic European countries you mention.
> Personally I'm waiting for engineering salaries in the non-US to catch up to the US because it'll make it easier for me to leave the US if I choose to do so but it doesn't look like it's happened yet.
What difference would it make to your quality of life if you made $60k in Europe instead of $150k in America? Sure, your net worth wouldn't increase at the same rate, but should we define our lives around our net worth?
It would primary affect both the specific city/location and quality of housing my family was in as well as our long-term economic security and flexibility. The latter is the most important part, but the former is important to me as well.
Having money in the bank is basically the same as having choices.
This implies that someone making $60k in Europe is living in poorer quality housing and/or living in a poorer location compared to someone making $150k in America, which I do believe to be the case.
>as well as our long-term economic security and flexibility >Having money in the bank is basically the same as having choices.
Do people in Europe not have long-term economic security and flexibility? Do they not have choices?
Again, there's a pretty racist subtext here that because it's in Asia, you assume that must be cheap labor, not innovation. Would you have the same argument if the fabs were in France or Spain, both of which have lower GDPs per capita than Taiwan?