You are TSMC and have 50k employees, of which say 5,000 are experienced engineers, the top 10%. A competitor wants to hire away 100 of them and offers them an enhanced salary. They only need to offer that to 100 people, but to stop them getting any of those 5000 employees you have to offer a competitive package to all of them. Any you don’t offer it to are vulnerable to getting hired away. So for every $1m they are willing to spend on enhanced packages, you need to spend $50m in enhanced salaries to block them. If they decide to cut it down to hiring away only 50 engineers, now for every $1m they spend you need to spend $100m.
As head of resourcing at TSMC, at what point do you stop the defensive salary inflation? Bear in mind your not competing with the financial resources of just another chip company, you’re competing with the financial resources of the Chinese state.