Global Semiconductor Shortage: How the US Plans to Close the Talent G

The semiconductor industry, a cornerstone of modern technology and economic prosperity, has been grappling with a significant labor shortage. According to Deloitte, more than one million additional skilled workers will be needed by 2030 to meet the industry's demands. This issue is not confined to the US but affects key players worldwide, potentially hindering the sector’s growth and innovation.

As countries strive to expand their semiconductor capabilities to meet increasing global demand, particularly since the pandemic, the shortage of skilled workers has become a critical bottleneck. Deloitte reports that with over two million direct employees worldwide in 2021, an additional one million skilled professionals will be needed by 2030, requiring over 100,000 new hires annually.

Currently, fewer than 100,000 graduate students enroll in electrical engineering and computer science programs in the US each year, as per Deloitte’s data. Similar challenges are faced in Taiwan, South Korea, China, Japan, and Europe. For example, Taiwan had a shortfall of over 30,000 semiconductor workers in late 2021, and South Korea is projected to face a similar shortfall over the next decade. China’s shortage is even more severe, with estimates suggesting a need for over 300,000 additional workers.

The erosion of semiconductor manufacturing expertise as production moved offshore has contributed to this shortage. In the US, the industry accounts for only about 12% of global chip production, with most advanced manufacturing know-how residing in Asia. The lack of awareness about semiconductor careers among potential recruits further exacerbates the talent gap.

CHIPS Act and Workforce Development

To address this issue, the US introduced measures under the CHIPS and Science Act to boost the domestic semiconductor industry and tackle the labor shortage. The Act allocates substantial funding towards workforce development, focusing on technician roles and jobs that do not require a bachelor’s degree. About 60% of new semiconductor positions fall into these categories, according to McKinsey’s report.

The CHIPS Act, passed in 2022, promotes various initiatives to build a robust talent pipeline. A recent report by Bloomberg highlights the US government's intensified efforts to address the semiconductor labor shortage through new initiatives under the CHIPS Act, expanding educational and training programs tailored to the industry.

“The program, described as a workforce partner alliance, will use some of the $5 billion in federal funding set aside for a new National Semiconductor Technology Center. The NSTC plans to award grants to as many as 10 workforce development projects with budgets of $500,000 to $2 million,” Bloomberg noted.

The NSTC will launch additional application processes in the coming months, determining total spending levels once all proposals have been considered. All funding comes from the 2022 CHIPS and Science Act, which allocated $39 billion in grants to boost US chipmaking, plus $11 billion for semiconductor research and development, including the NSTC.

Long-term Challenges

Despite these efforts, the semiconductor industry is likely to face long-term labor shortages. McKinsey's report highlights that even with significant investments in education and training, the sector will struggle to find enough skilled workers. Issues such as lack of career advancement opportunities, workplace inflexibility, and insufficient support drive many employees to leave the industry.

Moreover, the global competition for semiconductor talent is intensifying. Companies like Taiwan’s TSMC are recruiting experienced semiconductor workers from the US, India, Canada, Japan, and Europe, underscoring the need for collaborative initiatives to attract and retain skilled workers in the semiconductor industry. The labor shortage in the semiconductor industry is a complex challenge requiring multifaceted solutions.

(Photo by Vishnu Mohanan)

See also: US clamps down on China-bound investments

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