Findings from the 2022 Managing Pay to Compete in the Semiconductor Industry Survey
According to the latest Managing Pay to Compete in the Semiconductor Industry Survey Report released by WTW, the salary increase rate in the semiconductor industry will continue to outgrow the rate in all other industries in the High Tech sector across Asia Pacific. Most semiconductor companies intend to focus their compensation resources on their top performers, key functions such as research and development (R&D), and fresh graduates. Notably, all companies surveyed are trying to leverage diversified ways to attract and retain workers to respond to the fierce competition for talent, while cash compensation is still the most prevalent tool used. Here are some insights from the survey.
01
In Asia Pacific for two years in a row, the salary increase rate in the semiconductor industry is higher than that in other High Tech industries. We expect this trend to continue based on a positive industry outlook.
According to 2021 Salary Budget Planning Survey Report – Asia Pacific December edition, Taiwan's salary increase rate in the semiconductor industry is expected to reach 5% in 2022 (Figure 1). China’s 2021 semiconductor salary increase rate was 9.7%, which was 3.7% higher than the rest of the High Tech industry; however, the most significant difference is in India, where the 2022 semiconductor industry expected salary increase rate is 14%, which is 4.2% higher than the salary increase rate in the High Tech sector (9.8%).
02
In 2021, more than 40% of the semiconductor companies in Taiwan and China reported higher salary increases than were originally planned, and although we are only midway through 2022, we are seeing a similar percentage (40%) of companies reporting having higher actual salary increases than their original budgets. We expect the trend to continue in the second half of 2022, when more semiconductor companies will adjust their salary budgets upward in response to the pressures of talent competition (Figure 2).
03
In the semiconductor industry across Asia Pacific, it is a common practice to see companies differentiating pay toward high-performing employees. The pay difference between an outstanding performer and a target performer could range from 2.64 to 4.85 times. In Taiwan, it is possible for an outstanding performer to receive a salary increase rate as high as 15.10%, which is 3.79 times the average employee salary. The most significant differential is in Malaysia, where the highest salary increase rate can be as high as 32.6%, which is 4.85 times the average salary increase rate of 5.35%.
04
Semiconductor companies tend to invest more into talent and bolstering their companies’ R&D to ensure continued growth. In China, 52% of semiconductor companies allocate more compensation resources to the R&D function, while in Taiwan about 30% of semiconductor companies choose to do so.
For example, in the Chinese market, the highest salary increase rate for R&D employees is 29.83%, which is almost three times higher than that of the overall salary increase rate of 9.36%.
05
In 2022, 77% of semiconductor companies increased the starting salary of fresh graduates. Among those, the starting salary of master's and doctoral graduates in China went up by 10%, which is higher than the salary increase rate of the overall market. The starting salary of graduates with university degrees increased by 8%. Semiconductor companies in Taiwan have reportedly hiked the starting salary for fresh graduates by 6.3% to 6.8%, which is also higher than the overall market increase.
In Taiwan, about 60% of companies have a salary increase rate higher than 5% for fresh graduates with a BSc, MSc or PhD degree, which is higher than the overall industry salary increase rate. (In 2022, the projected semiconductor industry salary increase rate is 5%). And in China, about 30% to 40% of companies adopted a higher starting salary increase rate (over 11%) for graduates with a BSc, MSc or PhD degree, while the 2022 projected salary increase rate for the overall semiconductor industry is 9.9% (Figure 3).
06
All participating companies are taking action in a variety of ways to cope with the fierce talent competition in the semiconductor market. The most common way to attract and retain talent is providing retention or sign-on bonuses (75.4%), followed by higher salary increases (70.5%) and special/off-cycle salary increases (54.1%).
75.4% Leverage retention or sign-on bonuses for talent attraction and retention
While monetary compensation is a critical factor in competing for talent, it is also equally important for employers to have a holistic talent strategy other than pay. This might include reevaluating the benefit program for different employee groups as well as providing a clearer picture of the career path internally and the corresponding development framework. Offering long-term incentives for the executive team and key talent is also a good way to connect and align employees’ compensation value with the long-term value creation of a company and to support the achievement of a company’s long-term strategic targets.
*This article is adapted from a Chinese language article dated June 8, 2022.
