TSMC staff depart for higher salaries with rival Chinese chip foundries

Chinese chip producers are tempting employees from Apple chip partner TSMC to jump ship, with more than 100 engineers and managers said to have taken the bait of higher wages as rival foundries attempt to shift away from relying on external suppliers.

Companies including Quanxin Integrated Circuit Manufacturing (QXIC) and Wuhan Hongxin Semiconductor Manufacturing Co (HSMC) are chip producers based in China that are said to have hired more than 50 former TSMC employees. The firms, which were founded in 2019 and 2017 respectively, are headed up by ex-TSMC executives, and are pushing to develop their own 14-nanometer and 12-nanometer processes.

Sources of Nikkei Asian Review suggest it is an attempt to foster a chip industry for domestic China that operates without any reliance on foreign firms. Newer companies like QXIC and HSMC are trying to catch up with TSMC's technology with the support of local governments, with a view to showing the national government they are contributing to make China competitive in chip technology.

In terms of what the TSMC employees are being offered, one source claimed HSMC offered "some amazing packages," some as high as 2.5 times an employee's total annual salary and bonuses for their equivalent roles in TSMC. Meanwhile other firms such as the state-backed Semiconductor Manufacturing International Co. has raised its capital spending to $6.7 billion for 2020 and announced a $7.6 billion joint-venture facility, which would signal another hiring spree that could draw more staff from TSMC.

TSMC is said to be concerned about the loss of its talent, sources suggest, as while it is unlikely to mean TSMC will lose its industry-leading position, the potential transfer of trade secrets could be a problem. TSMC has also reportedly asked equipment providers to sign a pledge to not sell tools customized for TSMC's usage to any Chinese projects.

TSMC has a low turnover rate and a commitment to fostering workforce talent, the firm told the report in a statement. "Employees are TSMC's most important assets. We are committed to offering employees a challenging and positive work environment, and long-term career development."

On the prospect of a possible loss of trade secrets, TSMC claimed it would take "appropriate actions" to secure its intellectual property.

To Apple, the staff exodus from TSMC isn't likely to be an issue for quite a few years, as it is likely to continue to use TSMC's fine processes to create chips like its A-series and Apple Silicon for quite some time, such as its 3nm mass production set to commence in 2022. Down the line, Apple may review its partnerships if another rival offers a better deal than TSMC, but that would take considerable investment and effort for another firm to reach that stage.