A lack of key semiconductor talent and the rising cost of such talent are hot topics in the industry in China right now.

Previously, it was difficult to attract the brightest talent into the industry. There were several reasons for this, with two key factors chief among them. First, semiconductors require an insane level of detail and accuracy and any part of the semiconductor design or manufacturing process requires years of study even to get to an acceptable level. Second, and perhaps most importantly, all this studying and effort doesn’t get the student a better-paid job than simply learning to code application-level software. 


Stewart Randall is Head of Electronics and Embedded Software at Intralink, an international business development consultancy which helps western tech businesses expand in East Asia.

The brightest talent, even those that studied semiconductor design, would therefore go to the big internet companies and get much better pay than China’s struggling semiconductor companies could ever afford.

However, in the past couple of years, we have seen a huge increase in semiconductor talent demand. Companies are becoming increasingly vertically integrated, launching their own semiconductor departments, and startups are appearing everywhere. Simply having a lot of investment and demand does not mean core talent appears overnight, however. Talent takes time, meaning the best workers right now can demand high wages.

The upward trend is a good thing for the industry in China, but it needs to be managed. Ensuring the new influx of talent doesn’t all fall into the design space to the detriment of other key parts of the value chain – especially chip fabrication plants and equipment manufacturers where the country faces the strongest pressure from foreign governments – is crucial.

Skyrocketing salaries for chip engineers

Semiconductor startups face a problem: they either increase operating costs and burn more money by attracting the best talent with high wages, or ignore this trend and risk recruiting less than ideal candidates. HR personnel in the industry, including people I have spoken to myself, are even saying that the best graduates may have multiple offers and play them against one another in an attempt to get the highest salary possible. 

The best graduates – those graduating at Masters or PhD level – can demand around RMB 400,000 per year ($62,000) per year; such a figure has been touted in the media as the graduate salary Oppo has been offering to semiconductor engineers. This is an extremely high wage for someone with no actual work experience. 

Regardless, salaries still seem to be rising, with Alibaba offering up to RMB 500,000-600,000 per year to newbie chip engineers. For comparison, the average annual salary for a semiconductor engineer in the US is around $110,000 (a little over RMB 700,000).

This upwards trend in salaries is putting huge pressure not just on startups but on all traditional semiconductor companies. It is simply too hard to compete with the internet firms that have moved into this space – and on top of that, smartphone companies are poaching employees too.

There is a double whammy of increased cost and competition for talent as well as a reduction in customers: Alibaba or Oppo may have been your customer before, but now they’ve taken your employees and are making their own chips.

Remember as well that these are graduate wages. Experienced semiconductor veterans can demand much more not just for their talent but also for the simple fact there are so few of them. This situation makes it easier for them to frequently switch companies to gain higher wages or at least threaten to move as a bargaining chip for a better deal. That’s not good for the long-term development of a semiconductor company and its products, where designs can take more than 18 months from start to finish.

Structural problems in the industry

It is worth pondering the effect all this will have on chip manufacturers like SMIC and semiconductor manufacturing equipment (SME) makers like AMEC – companies propelling the twin strategic priorities of China’s chip independence plan.

New talent is attracted into the semiconductor industry due to increasing wages, but these wages are mainly focused on the chip design industry. Internet companies and handset companies are pushing salaries up, but none of these companies are developing equipment or setting up fabrication plants. New talent will want to move into design potentially at the expense of China’s key chokepoints – fabs and equipment. 

Wages here will have to keep up as well if they are to make sure they attract all the new talent they require. Of course, this adds to costs, potentially causing Chinese fabs to face the same cost problems those in Western countries face compared to the likes of Taiwan. Indeed, Chinese fabs such as SMIC have been offering much higher wages to foreign employees in order to attract them away from Taiwan or South Korea. It’s unclear whether they are willing to increase wages for local employees as well.

Naturally, foreign semiconductor companies’ China operations will not be unaffected by such trends. While Chinese companies are receiving various forms of government backing, foreign companies with design centers in China aren’t. It is hard to retain the best talent in your China operations if a startup, internet company, or phone company next door suddenly offers double the salary. China is no longer the low-cost design center it once was.

High salary doesn’t mean high quality

Not all graduates are receiving such high wages though. Some people I talked to in the industry argue that so many new graduates are entering the semiconductor industry, especially digital design, that most of them can’t demand high salaries because companies can just choose a different graduate. Indeed, companies I have spoken with have admitted there is no lack of junior engineers. 

A small percentage who are postgraduates and have real-world experience can choose between 10 or 20 different offers. But most of the new graduates have taken self-study or a training class to switch to the semiconductor industry from other majors.

Semiconductor talent on paper has increased, but most of it has limited ability and experience. There aren’t enough quality graduates in the market, and 3-6 months of crash courses is not enough to create high-quality talent. 

Wages may have increased, but the difficulty hasn’t. Once a chip is taped out, you can’t edit it like you can a piece of software – the industry has a very low tolerance for errors. HR needs to be more aware of the actual abilities of these new semiconductor engineers and stipulate appropriate wages and positions for them.


There is no denying salary increases were needed if China was to attract talent into the industry, so from this perspective, this trend is a good thing for the country.

However, the money could be flowing to the wrong places and could harm many in the sector. Startups and traditional semiconductor companies are struggling to compete as their former customers start poaching talent, and to fill the talent gap the market is now flooded with new semiconductor engineers with little real-world experience or deep enough knowledge to make sure the final product is bug-free. 

What’s more important is this increase in talent and wages doesn’t seem to be heading to where China needs it most – essentially fabs and SME companies. The heightened interest and rush to learn semiconductor design is no bad thing for China, but right now it is unbalanced and potentially detrimental to some parts of the industry.

technode contributor on chips and semiconductor, China insights, China voice

Stewart Randall

Stewart Randall is Head of Electronics and Embedded Software at Intralink, an international business development consultancy which helps western tech businesses expand in East Asia. You can connect with...