3,000 Taiwanese Chip Engineers Flee To Mainland For "Made in China 2025"

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by Tyler Durden
Monday, Dec 09, 2019 - 07:10 AM

The trade war between the US and China has morphed into a tech war where both countries are rapidly decoupling their economies from one another, but at the same time, advancing technologies as the artificial intelligence (AI) arms race will heat up by the mid-2020s.

China, which we reported last night has ordered all government offices and public companies to replace foreign PCs and software with domestic made alternatives within three years, wants to dominate the world through its military power and AI, along with advanced weaponry like hypersonic missiles, fifth-generation fighters, and laser weapons. To do this, President Xi Jinping has already launched huge initiatives, such as state-funded programs to spur innovation in AI.

One such development in the tech war turned AI arms race between the US, is that China is now attracting semiconductor engineers from Taiwan to further 'Made in China 2025' initiative, reported Nikkei Asian Review.

More than 3,000 semiconductor engineers have left Taiwan for new jobs on the mainland. The recent departure was so significant that it's equivalent to 10% of all chip engineers on the island.

The Nikkei notes that cash-strapped mainland companies are offering engineers in Taiwan, double the pay and extra benefits.

One engineer told Nikkei that he left a top Taiwanese semiconductor firm in late 2018 for a job in China.

"It's only natural to want to launch a big project and increase my value as an engineer," he said.

He said his salary doubled in China, and his new employer covered his child's private education. The man said the move was a no brainer.

The trend at play is that China could hollow out Taiwan's semiconductor industry by 2030.

Taiwan is an important ally of the US and has been used as a weapon by Washington as the trade war deepens. Beijing has stepped up reunification pressures on the island, as the US continues to supply weapons to Taipei.

Beijing's 'Made in China 2025' initiative could transform the economy into a global leader in high-tech fields, including the pharmaceutical industry, automotive industry, aerospace industry, semiconductors, IT, and robotics. The move would likely displace the US as the world's superpower by 2030.

A Taiwanese industry insider told Nikkei that mass-producing chips are both capital and talent intensive. So when China is sucking away talent from Taiwan, this could be damaging to the long term survivability of the Taiwanese chip industry.

"Chinese players are now trying to overcome the barrier by recruiting not only top executives, but entire production teams on the ground," a Taiwanese industry insider said. "They are paying two to three times as much as Taiwanese companies."

Some Taiwanese companies said it extremely hard to compete with Chinese chip manufacturers.

"We are improving our compensation, but it is difficult to compete with mainland companies," Nanya Technology President Lee Pei-ing said.

Mainland China is expected to surpass Taiwan as the largest semiconductor manufacturing equipment producer in the world. This could be setting the stage for China's rise of high-tech domestic chips.

"The goal is to bring Taiwanese talent to the mainland and hollow out Taiwan," said Meng Chih-cheng, an associate professor at Taiwan's National Cheng Kung University.

In summary, China's desire to ascend as the world's global superpower is evident through its actions today. It's the reason why Washington has launched a trade war, now turned tech war, that has also morphed into an AI arms race. The problem, as the Thucydides Trap postulates, is that a real war almost always follows.