Salary and stock are key for Taiwan's EE's

By Mark Carroll

Taiwan has one of the highest densities of electronic engineers per capita of any country in the world. Each year, this country of 21 million graduates thousands of students with EE degrees. Hundreds of others receive them abroad. Further down the academic line, hundreds of Taiwanese get their advanced MSEE and PhDs in engineering each year, usually at U.S. institutions.

For many Taiwanese, money is the incentive to become engineers. "Electronic engineers don't really have the prestige, of say, doctors here," said Carol Yu, program engineer for United Microelectronics Corp. (UMC; www.umc.com). "The general public, though, knows all the stories of how Taiwanese EEs have worked for or started their own successful electronics companies and have become quite wealthy. For that reason, having your son or daughter become an EE is seen as a very positive thing."

Paradoxically, even though the perception here is that electronic engineering is a lucrative field, wages for EEs are actually quite low. "A new EE, just out of university with no experience, can expect to make from $900 to $1,200 per month," said a project engineer for one Taiwanese mainboard company. "An MSEE with five years of industry experience will make about twice that amount."

Taiwan's IC industry has remained more profitable than its beleaguered PC industry, where profits of 5 percent are now considered good. An IC engineer's salary doesn't reflect this, however. "I recently hired several new engineers," said the vice president of R&D at one of Taiwan's fabs. "Starting salary was about $1,100 per month."

The cost of living here makes it hard to live comfortably on such a wage. A small, one-room studio runs $300 to $400 per month, and the cheapest meal is about $3. Most young engineers live with their parents, so they can save a fair amount of such a low base wage. Making life a little more affordable is the fact that health care in Taiwan is pretty much free and the tax rate is only about 6 percent.

The real money for engineers isn't in wages, though. "Recompense here is much more than just salary," the fab VP said. "Salaries are low here, but the financial impact of the Chinese New Year bonus, yearly-earnings stock bonuses and employee stock option plans can make the total package much higher than in the United States."

Figuring out which compensation mix is the best bet for both employee and employer is a big part of the hiring process. "Some fabs pay higher salaries than us," said the fab executive. "Their employees may not have a better chance at a big bonus, however. Other fabs offer lower bonuses but also have 'special' stock option plans. During an interview, you can almost see the candidates calculating the different mixes in their heads, trying to work out the total potential package."

A typical Chinese New Year bonus for a fab engineer is at least two months' salary, although mainboard makers usually give a one-month bonus. Though not a huge amount of money, the year-end bonus is an important element of Taiwan's culture.

Potentially more important financially is the annual payment of company stock to employees. Nearly all IT companies here give a percentage of their earnings to employees in the form of free stock. The percentage of profits to be given to employees is determined by each individual company's board of directors. The company gives the stock to its employees at par value (usually about 30 cents per share), but the market value is usually much more. "Some companies give a higher percentage of earnings to their employees than others," said one securities analyst. "Potential employees have to work the numbers though. I'd rather share five percent of $250 million among 1,000 employees than share 10 percent of $50 million among 500 employees."

For mainboard companies where profits are essentially nonexistent, there are other ways to reward employees. "Companies will offer individual, valuable employees special deals in order to get them to stay," the mainboard engineer said. "The main company's stock might not be too valuable, but you might get a chance to buy stock in a subsidiary that is about to go public. If an engineer gets the startup stock at a low enough price and it becomes popular, the engineer can make capital gains in the hundreds of thousands of dollars."

Startup fever

Startups can also lead to big money. AsusTek Computer Co., for example, specializes in making high-quality mainboards that it sells at some of the highest profit margins in all of Taiwan's IT industry. Two weeks after the company went public several years ago, engineers who had received stock at par had multimillion-dollar paydays as their stock rose to 28 times the par price.

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