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Top technical talent scarcity and cost. In Silicon Valley, you can find a dozen 600k$ engineers relatively quickly to scale up a random startup. In Germany...

Top technical talent scarcity and cost. In Silicon Valley, you can find a dozen 600k$ engineers relatively quickly to scale up a random startup. In Germany... the salaries these people would be making would be < 100k$ because they are engineers, not managers. For some reason the only way to slightly increase your salary in Germany is to become a manager, but good luck with scaling up a start up by hiring 12 managers that don't have anybody to manage. This disparity in the valuation of top engineers cause many to emigrate, and once you are in the US, it is impossible to financially justify taking a 5x pay cut to go back to Germany. (You can justify it "non-financially", but these other justifications would need to offset the 500k$ yearly that you are leaving behind). So... finding top talent in Germany is hard. If you were to find them, hiring them would be 2x more expensive than in the US. Which makes a good that's very expensive, twice as expensive. This is one of the many reasons why the startup scene in Germany is poor. Nobody wants to be the engineer that actually builds the stuff, everybody wants to be a "manager". It turns out that many of the engineers that get to build the stuff become excellent managers once the company grows because they know it inside out. --- TL;DR: if you are a tech company that needs top engineering talent to grow a super high tech facility up, you can't find enough talent there, and the one you find is twice as expensive as somewhere else. As others have mentioned, the price of talent is insignificant for TSMC compared to the price of their machinery, so they can afford the 2x increased costs, but the lack of talent is harder to offset.

FabHK 5y ago
You're saying in SV, they're 600k$, but in Germany they're only 100k$, but it would be 2x expensive to hire them? Why don't you pay 600k$ gross then, they get 300k$ net, and thus 3x what they'd get otherwise in Germany, but don't have to move to the US? Seems like a feasible strategy to me.
- volta83 5y ago
  Paying somebody 300k/year doesn't make them "top talent". The top talent is in the US, Taiwan, etc. designing the 3nm plants, operating the 5nm plants, doing research, etc. Why would a 600k$/year engineer relocate from the US to Germany for a 300k$ salary pay cut ? I've always made more money at my next job than the previous one. If a company wants me to leave my life here behind and move 15000km, they better offer me more, like 700k$ or 800k$. In Germany, that would cost the company 1.6 million $ yearly.
  - bserge 5y ago
    I mean, it's not like it's impossible to assemble a team that can become top talent. But they need the ability to "level up" (by working with already existing high tech). And then they leave for the US anyway heh.
    - volta83 5y ago
      This is a bit of a doubled-edged sword for German companies actually. For example, Bosch has a research campus in california to try to achieve this. The problem is, that after being 2 years in the US "becoming top talent", you now have the option of staying there making $$$ or coming back to germany. Even companies like Bosch that invest a lot of money in these types of systems, have huge problems making competitive offers for the people that consider going back.
  - raverbashing 5y ago
    Do you think they're not paying any tax in the US? That 600k gross is at most 500k net (probably less) Also you assume they are a) happy to stay in the US b) have no immigration issues to deal with c) don't have a crazy CoL on SV that eats most of that 500k... Yes, it's not a clear-cut move, but not too bad neither. Salary is not everything.
    - stackbutterflow 5y ago
      For reference: 600k USD is 508k euros. 500k USD is 423k euros. We're already down a notch. People tend to assume $1 = 1€ in this thread.
    - volta83 5y ago
      When you are making 600k$ a big part of your compensation is stocks. There are lots of ways to pay fewer taxes in the US when holding stocks. Plus you have 401k, backdoor Roth, etc. retirement saving plans that are non-existent in Germany.
      - GoOnThenDoTell 5y ago
wasmitnetzen 5y ago
I don't know of a single person in my Master's degree class in Computer Science in one of Germany's top tech universities who went to the US. And I have most of them as contacts on LinkedIn. I'm not buying your premise.
- ahartmetz 5y ago
  The thing about not coming back is probably true (30% the salary?!), but yeah, not many leave in the first place.
  - SiempreViernes 5y ago
    Adding to that, is there any general reason for a German, besides money, to go to the US? So if the ones that go mostly do it for the money, they'll most likely stay gone.
    - est31 5y ago
      I know people who came back after having worked a few years in the USA. Seems like a smart move to me, considering how large bay area home prices are compared to home prices in Germany. From my limited point of view, Germany is a way better and way less expensive place to raise your child than the USA. There is way more social peace. You don't have massive gun violence. Etc. I know people who emigrated to the USA decades ago, and now send their children to German colleges because those are practically tuition free for EU citizens (you need to pay rent tho). If you want to move back more early on, you can use your savings from your time in the USA to get the bulk cost of buying a house in one of the regions with good tech jobs like Munich out of the way. Then you can live a great life in Germany even with the limited German tech salaries. Note that I'm not saying that you shouldn't go to the the USA in the first place. In fact, I'm still strongly considering it myself. But the less healthy, young, single, and childless you are, the more advantages does Germany have for you.
    - volta83 5y ago
      Personal development. Working with people that are much smarter than you generally makes you better at your work. So from that point of view, going to the places where the concentration of super smart people is the "highest" makes sense.
bserge 5y ago
> the startup scene in Germany is poor. Nobody wants to be the engineer that actually builds the stuff And nobody wants to fund a startup run by engineers. Double whammy
- volta83 5y ago
  This is funny, because the most successful startups i know in SV where all founded and run by engineers early on.
sveme 5y ago
So you're living in SV now?
_ph_ 5y ago
If you would offer $600k for an engineering position, there would be no problem finding any numbers of engineers in Germany. They all would have to line up behind me of course :). Yes, to quickly ramp up, you would have to pay more than teh average market salary, but as you pointed out, engineering positions are not as highly paid in Germany as in the silicon valley. There is nothing preventing you from paying good salaries though. Europe has a great supply of electronic engineers and physicists. The only challenge would be that currently a lot of semiconductor investments happen in Europe, but these investments don't happen because Europe is such a bad place to invest in. Including a great supply of engineers.
- volta83 5y ago
  > If you would offer $600k for an engineering position, there would be no problem finding any numbers of engineers in Germany. I'm baffled at some of the answers. Paying somebody 600k$ does not make that person a good engineer. You could pick an undergrad, offer them 600k$, and they could take the job, but that won't make them top talent. No company out there paying their engineers 600k$ is going to give an engineer 600k$ if they are not worth each $ of those 600k$. --- It's not about finding engineers that are willing to have a 600k$ salary (who wouldn't if someone offers it to you?), but about attracting the best of the best engineers of a particular field, many of which already do have that salary. Why should they move to Germany?
  - _ph_ 5y ago
    I think there are plenty of engineers in Europe and Germany to find. Europe has a healthy semiconductor industry, just not so many fabs. And why wouldn't a lot of people want to move to Germany? Considering how many of my colleagues have moved to Germany for the job, I don't see a special obstacle there. Also: wherever they build their new fab, if it is outside of Taiwan, they probably have attract the engineers to move there, which place would be better suited at the moment?
  - stackbutterflow 5y ago
    > You could pick an undergrad, offer them 600k$, and they could take the job, but that won't make them top talent. But that's exactly what is happening. People are paid these insane salaries because they're either born American or got a green card. Do you think the 20 something hired at $200k+ in the Silicon Valley are worth 5 times the seniors devs at $40k in Thailand, Spain, Poland? The only difference between a 5 digits salary engineer and a 6 digits salary engineer is a green card.

FabHK 5y ago

You're saying in SV, they're 600k$, but in Germany they're only 100k$, but it would be 2x expensive to hire them? Why don't you pay 600k$ gross then, they get 300k$ net, and thus 3x what they'd get otherwise in Germany, but don't have to move to the US? Seems like a feasible strategy to me.

volta83 5y ago
Paying somebody 300k/year doesn't make them "top talent". The top talent is in the US, Taiwan, etc. designing the 3nm plants, operating the 5nm plants, doing research, etc. Why would a 600k$/year engineer relocate from the US to Germany for a 300k$ salary pay cut ? I've always made more money at my next job than the previous one. If a company wants me to leave my life here behind and move 15000km, they better offer me more, like 700k$ or 800k$. In Germany, that would cost the company 1.6 million $ yearly.
- bserge 5y ago
  I mean, it's not like it's impossible to assemble a team that can become top talent. But they need the ability to "level up" (by working with already existing high tech). And then they leave for the US anyway heh.
  - volta83 5y ago
    This is a bit of a doubled-edged sword for German companies actually. For example, Bosch has a research campus in california to try to achieve this. The problem is, that after being 2 years in the US "becoming top talent", you now have the option of staying there making $$$ or coming back to germany. Even companies like Bosch that invest a lot of money in these types of systems, have huge problems making competitive offers for the people that consider going back.
- raverbashing 5y ago
  Do you think they're not paying any tax in the US? That 600k gross is at most 500k net (probably less) Also you assume they are a) happy to stay in the US b) have no immigration issues to deal with c) don't have a crazy CoL on SV that eats most of that 500k... Yes, it's not a clear-cut move, but not too bad neither. Salary is not everything.
  - stackbutterflow 5y ago
    For reference: 600k USD is 508k euros. 500k USD is 423k euros. We're already down a notch. People tend to assume $1 = 1€ in this thread.
  - volta83 5y ago
    When you are making 600k$ a big part of your compensation is stocks. There are lots of ways to pay fewer taxes in the US when holding stocks. Plus you have 401k, backdoor Roth, etc. retirement saving plans that are non-existent in Germany.
    - GoOnThenDoTell 5y ago

wasmitnetzen 5y ago

I don't know of a single person in my Master's degree class in Computer Science in one of Germany's top tech universities who went to the US. And I have most of them as contacts on LinkedIn. I'm not buying your premise.

ahartmetz 5y ago
The thing about not coming back is probably true (30% the salary?!), but yeah, not many leave in the first place.
- SiempreViernes 5y ago
  Adding to that, is there any general reason for a German, besides money, to go to the US? So if the ones that go mostly do it for the money, they'll most likely stay gone.
  - est31 5y ago
    I know people who came back after having worked a few years in the USA. Seems like a smart move to me, considering how large bay area home prices are compared to home prices in Germany. From my limited point of view, Germany is a way better and way less expensive place to raise your child than the USA. There is way more social peace. You don't have massive gun violence. Etc. I know people who emigrated to the USA decades ago, and now send their children to German colleges because those are practically tuition free for EU citizens (you need to pay rent tho). If you want to move back more early on, you can use your savings from your time in the USA to get the bulk cost of buying a house in one of the regions with good tech jobs like Munich out of the way. Then you can live a great life in Germany even with the limited German tech salaries. Note that I'm not saying that you shouldn't go to the the USA in the first place. In fact, I'm still strongly considering it myself. But the less healthy, young, single, and childless you are, the more advantages does Germany have for you.
  - volta83 5y ago
    Personal development. Working with people that are much smarter than you generally makes you better at your work. So from that point of view, going to the places where the concentration of super smart people is the "highest" makes sense.

bserge 5y ago

> the startup scene in Germany is poor. Nobody wants to be the engineer that actually builds the stuff And nobody wants to fund a startup run by engineers. Double whammy

volta83 5y ago
This is funny, because the most successful startups i know in SV where all founded and run by engineers early on.

sveme 5y ago

So you're living in SV now?

_ph_ 5y ago

If you would offer $600k for an engineering position, there would be no problem finding any numbers of engineers in Germany. They all would have to line up behind me of course :). Yes, to quickly ramp up, you would have to pay more than teh average market salary, but as you pointed out, engineering positions are not as highly paid in Germany as in the silicon valley. There is nothing preventing you from paying good salaries though. Europe has a great supply of electronic engineers and physicists. The only challenge would be that currently a lot of semiconductor investments happen in Europe, but these investments don't happen because Europe is such a bad place to invest in. Including a great supply of engineers.

volta83 5y ago
> If you would offer $600k for an engineering position, there would be no problem finding any numbers of engineers in Germany. I'm baffled at some of the answers. Paying somebody 600k$ does not make that person a good engineer. You could pick an undergrad, offer them 600k$, and they could take the job, but that won't make them top talent. No company out there paying their engineers 600k$ is going to give an engineer 600k$ if they are not worth each $ of those 600k$. --- It's not about finding engineers that are willing to have a 600k$ salary (who wouldn't if someone offers it to you?), but about attracting the best of the best engineers of a particular field, many of which already do have that salary. Why should they move to Germany?
- _ph_ 5y ago
  I think there are plenty of engineers in Europe and Germany to find. Europe has a healthy semiconductor industry, just not so many fabs. And why wouldn't a lot of people want to move to Germany? Considering how many of my colleagues have moved to Germany for the job, I don't see a special obstacle there. Also: wherever they build their new fab, if it is outside of Taiwan, they probably have attract the engineers to move there, which place would be better suited at the moment?
- stackbutterflow 5y ago
  > You could pick an undergrad, offer them 600k$, and they could take the job, but that won't make them top talent. But that's exactly what is happening. People are paid these insane salaries because they're either born American or got a green card. Do you think the 20 something hired at $200k+ in the Silicon Valley are worth 5 times the seniors devs at $40k in Thailand, Spain, Poland? The only difference between a 5 digits salary engineer and a 6 digits salary engineer is a green card.