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Talent Hunt in China's Memory Triangle

Battles among Xi'an, Wuhan and Nanjing
1/26/2017 11:27 AM EST
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DMcCunney
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Re: Do not under-estimate these people
DMcCunney   2/4/2017 8:52:12 AM
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@photonic: The Chinese salaries will rise due to competition with Chinese Semi hiring Chinese engineering. In the meantime, the Engineering talent pool in the US has been diminished.

No, I think I get your point.  What I don't get is what you think might be done about it.

US Semi isn't hiring cheap engineers - they are shifting production to China, and cheap engineers are only one part of the cost savings they seek.

And yes, Chinese engineer salaries will rise as competition for talent takes place.  That's already occurred elsewhere in China  - it's no longer the low cost producer because it's running out of peasants to move from the farm to the cities to be the base of an industrial labor force, and manfacturers are competing for workers with rising salaries in consequence.  At least one large Chinese manufacturer has already announced a full court press into robotics in consequence.  Those pressures will simply move up the value chain.

What would you have US Semi do?  Shift production to China, but have engineering done in the US?  There's a limit to how far you can take that.  Have US engineers relocate to China and pay them at US pay scales?  I think of lot of folks might balk at relocating, and I think China would object to the notion.  They will strongly demand "Hire locally", and not just for cheap low skilled labor.

There will still be engineering jobs in the US in Semi, but I expect pressure on salaries because an increasing amount ot it can be done elsewhere. A bigger question is how much of a role salary plays in choosing engineering as a career, and whether the number of new semi engineers will drop because salaries won't be as high as they once were. 

One thing I might do as a US Semi company is rethink where I located my engineering teams.  A lot of high salaries in computer related fields are that high because it costs so much to live where those jobs are, and employers have to offer that much so people can afford to live there and work for them.  If I could find lower cost areas to live that offered a reasonable quality of life for employees, I'd think hard about relocating there.  They might get paid less than peers elsewhere, but might be doing better relatively speaking because a lot less of their salary would go to basic living costs.

>Dennis

 

photonic
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Re: Do not under-estimate these people
photonic   2/3/2017 8:30:35 PM
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@DMcCunney: Yes.  So?  That will happen in any case.  US policies might slow but cannot stop it.

You missed my point again. Yes I agree global competition is a fact and that it cannot be stopped. Yes I pat China on the back for their great engineering. I admire and respect that. What I am saying is that US Semi seems a bit stupid to think that hiring China engineers only because they are cheap isn't going to come back to bite them in the ass. The Chinese salaries will rise due to competition with Chinese Semi hiring Chinese engineering. In the meantime, the Engineering talent pool in the US has been diminished. 

 

DMcCunney
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Re: Do not under-estimate these people
DMcCunney   2/3/2017 7:34:38 PM
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@photonic: But globalization works both ways. US Semi, by employing cheaper engineering labor from China, may save money, but it is growing the talent pool in China.

Yes.  So?  That will happen in any case.  US policies might slow but cannot stop it.

The problem is that we are all in favor of competition when it benefits us, in terms of lower prices and better choice.  We are far less happy when we have to compete.

I don't see any dearth of engineering talent here in the US.  But such things are the Red Queen's Race from Alice in Wonderland: "Now, here, you see, it takes all the running you can do, to keep in the same place. If you want to get somewhere else, you must run at least twice as fast as that!"

The challenge for any skilled worker facing competition from foreign labor is to either be doing work that must be performed here and can't be done by foreign workers, or be able to do things the foreign labor can't do or do it sufficiently better to justify a higher rate of pay.

Value is relative.  Something is worth what someone else will pay for it.  That includes the worker's labor.  Increasing numbers of folks whose work has been outsourced are being told "What you do isn't worth what you were being paid to do it."

Ultimately, the market decides.  One question I've asked elsewhere of folks wanting to protect US jobs is how much more they would be willing to pay for what they buy to insure it was made here, but I don't get meaningful answers.  What is certain is that it will cost more because US wage scales are a lot higher.

>Dennis

photonic
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Re: Do not under-estimate these people
photonic   1/31/2017 10:33:36 PM
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@DMcCunney

I agree with everything you say. But globalization works both ways. US Semi, by employing cheaper engineering labor from China, may save money, but it is growing the talent pool in China. China is using globalization by selling their engineering labor cheaply in order to build up their engineering talent from which the next generation will create world class Semi companies. These Semi companies will compete and put out of bussiness those companies who are today taking advantage of cheap engineering. My thesis is, long term, Tech Companies will thrive where the Engineering Talent is. 

DMcCunney
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Re: Do not under-estimate these people
DMcCunney   1/31/2017 8:39:25 PM
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@photonic: Really, treating engineering as unskilled labor.

Hardly. Unskilled/low skilled labor may be the first to go elsewhere, but will be far from the last.


Work flows to where it can be done cheapest, and always has. Government efforts to stop it at best delay the inevitable.

Consider the outcry that went up back when when software development started to be outsourced to India.  The Indian developers were highly capable, could be working on development while folks in the US were asleep, and would charge perhaps half of what a US developer wanted because it was a lot cheaper to live in India.  That goes back a couple of decades at this point.  That hardware engineering should migrate as well should be no surprise.  What's significant now is that highly skilled labor like that can be outsourced overseas.

And from a production viewpoint, it makes sense to have the engineers located where the hardware is being made.

We live in a market economy.  One of the things people will consider when making a purchase decision is price, and producers all want to lower costs to provide better pricing.  If a way they can do that is to move production to where it is less expensive, that's what will be (and is) happening.

>Dennis

dt_hayden
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Re: non-compete agreements?
dt_hayden   1/31/2017 4:41:14 PM
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I guess the rumors are just reaching Idaho!  Thanks for the clarification.

junko.yoshida
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Re: non-compete agreements?
junko.yoshida   1/31/2017 4:35:33 PM
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Of course, there are non-compete agreements. It is illegal. But this was done all in secret. While this has been rumored for years, few publicly acknowledged the practice.

dt_hayden
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non-compete agreements?
dt_hayden   1/31/2017 3:06:28 PM
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"In the 1990s, Samsung heavily recruited Japanese DRAM engineers. These engineers kept their day jobs in Japan, but worked for Samsung, earning big money, on weekends. Weekend flights between Seoul and Tokyo were jammed with Japanese engineers."

Were there no non-compete agreements with these employees, or even morals?  For a western environment, it is strange to contemplate moonlighting for a competitor.

photonic
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Re: Do not under-estimate these people
photonic   1/30/2017 10:31:52 PM
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The reason is that US Semi management has become non-technical. They have moved technical management to China and India because they cannot do this task themselves. And, of course, technical management will hire the "real" (ie technical) contributors locally.

photonic
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Re: Do not under-estimate these people
photonic   1/30/2017 10:19:17 PM
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Agreed. All the while US Semi companies training China R&D by outsourcing their engineering to China and India to "grow" their profits using cheaper labor. Really, do you think this is sustainable. Really, treating engineering as unskilled labor.

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