How Organizations Can Overcome Challenges Caused by the Labor Shortage

As the semiconductor industry pushes toward a rebound, gaps in skilled labor are impacting companies and countries globally. Educational pipelines will take months, if not years, to train the next workforce. Luckily there are resources to help organizations struggling with the lack of talent.

After the last few years, resources have been stretched thin. The electronic component shortage, inflation, rising excess inventory, energy crises, and other supply chain disruptions have significantly impacted dozens of companies. From start-ups to Tier 1 manufacturers, supply constraints and lost sales have greatly influenced the resources available for many original equipment manufacturers (OEMs), contract manufacturers (CMs), and electronic manufacturing service (EMS) providers.  

For small and mid-sized OEMs, CMs, and EMS providers, the last few years have left many with limited component supply or purchasing power. Another rising problem is the need for more skilled labor in many countries where new facilities are being established. According to a report from The Semiconductor Industry Association (SIA), the chip industry will see a shortfall of 67,000 workers by 2030 in the United States alone. A more significant gap of 1.4 million workers will exist throughout the broader U.S. economy.  

Leaders in the electronic component industry and education are working together to fill these growing gaps. Well-known chip designer ARM is working overtime to form collaboration projects with other chipmakers, universities, and researchers known as the Semiconductor Education Alliance (SEA). This initiative aims to “improve access to resources and career opportunities for those interested in the chip sector.”  

Overall, interest in the semiconductor industry and the electronic component supply chain at large has diminished, not just in the United States. Even manufacturing hub China is facing a talent shortage. In 2023, China saw an estimated workforce shortage of 200,000, according to the China Center for Information Industry Development and the China Semiconductor Industry Association (CSIA).  

Prospective countries, such as Vietnam, courting semiconductor giants as they establish new domestic lines need technicians and other skilled labor. It’s why ARM’s SEA initiative and engineering boot camps are increasing in use and development. A report by Deloitte estimates that by 2030, the industry will have grown a whopping 80% and will need more than one million additional skilled workers to meet demand.  

Over 100,000 new skilled employees must join the workforce annually to reach that number. In the U.S., less than 100,000 graduate students are enrolled in electrical engineering and computer science. Original component manufacturers (OCMs), foundries, and component designers are doing what they can to establish programs alongside education leaders to develop a talent pipeline that can aid everyone. Interest in the study, however, is low.  

For OEMs, CMs, and EMS providers that utilize components, prospective engineering talent pools are not much fuller. It will grow shallower with rising demand for greater device connectivity, customization, and intelligent operations. While immensely beneficial and vital in building a solid foundation that will be imperative in the future, educational efforts can’t solve current problems. It will take time for these efforts to produce any noticeable effects.  

So, where does that leave the industry, from OCMs to OEMs? What can be done to secure engineering expertise on projects when there are limited resources and time? Thankfully, teams of engineers are ready and available to lend their knowledge to companies that need more qualified staff, time, knowledge, or any other impeding factor. Companies can combine the aid of experienced engineers alongside digital tools to overcome technical challenges, can increase productivity lost to labor shortages.

Help From Field Application Engineering Expertise

Field Application Engineers (FAE) provide technical expertise to help clients find the best component and service solutions for their projects. In contrast to other engineering positions, such as mechanical design, FAEs focus on the practical use and application of specific products or technologies, which can include clients' training on the technical specifications, installation, and use of equipment. An FAE team can help clients troubleshoot, learning what issue a design engineering team might have with a component, and helping them optimize a part’s performance or selecting a more complementary component.  

An FAE is a client’s greatest advocate on a project. They help resolve issues should a part not perform within conformity and lead technical discussions by presenting components that best fit the customer’s desired application. With an FAE team, the product development period can be accelerated, no matter what stage a product is in. Depending on the capabilities and resources of an FAE team, there could be connections with contract manufacturers, designers, and other engineers ready to lend their skills and knowledge to aid in product development. With these teams of wide-ranging expertise, innovative solutions for hardware and software applications are readily available to clients.  

This is especially beneficial for manufacturers suffering from mid-cycle priority shifts, limited financial resources, component constraints, and other unforeseen circumstances. The global semiconductor shortage of 2020-2022 left many OEMs, CMs, and EMS providers without stock of their much-needed components. Even in late 2023, with excess electronic component inventory causing warehouse challenges, some components have still been unable to reach demand-supply stability. Over the last few years, ongoing raw material shortages and logistics challenges have plagued the industry, and geopolitical volatility could prolong them further.  

If a constrained component has active alternates, an FAE team can help design engineers discover suitable form-fit-function (FFF) alternates, drop-in replacements (DIRs), or functional equivalents. The FAE team will then work with design engineers to quickly redesign around the alternative part, kickstarting the reapproval process before the product can be reintroduced to the market–if required–faster. A great FAE team will offer end-to-end aid to help clients at any stage of their product development cycle. Support doesn’t disappear once a project is completed.  

Digital Tools Optimize Workflows and Reveal Errors

Beyond help from experienced FAEs, digital tools that leverage quality data and artificial intelligence can help fill the gaps left behind by labor shortages. Companies that digitize, or transform analog information and workflows digitally, gain many benefits from reduction in engineering costs and maintenance to increase productivity and time optimization.

In a 2023 report by CNBC, "greater efficiency can be achieved through integrated and connected technologies such as sensors, app-based controls, analytics, edge computing, and smart machinery. Collectively, they provide intelligent automation and data insights that greatly impact overall performance.”

Digital tools can provide organizations with critical insights from collected data quickly, such as showing organizations where funds can be allocated or cut to protect a company’s bottom line. Intelligent applications can analyze gathered information more accurately than human staff, eliminating the possibility of inaccurate data from manual data entry or other human errors. This prevents operational slowdowns or production delays from occurring as errors in anything from procurement to product design can be efficiently detected early on by artificial intelligence.  

Similarly, digital tools can consolidate dozens of manual processes and reduce overhead costs, aiding existing staff in maintaining an efficient and tight production process. Multi-step processes that previously required large teams can be streamlined effectively, letting staff prioritize other innovative tasks for new opportunities. Automation and predictive analytics can also forecast future machine downtime, helping organizations determine how long a line might be down.  

Digitalization and practical AI applications can foster more communication and collaboration across internal teams, leading to faster response times and efficient idea-sharing. This increases employee productivity, accountability, and creativity and improves customer satisfaction.

Transforming a business through digital tools can also create a strong foundation for future growth. Manual processes are not competitively effective in rapidly evolving and highly competitive markets. This is especially true in the electronic components industry, where rapid market shifts can cause wide disruptions across the entire supply chain.

Proactive strategies created from data-driven insights derived from market intelligence tools can help circumvent all types of component unavailability. This includes supply chain threats like component obsolescence. Even with an entire team, component obsolescence can cost organizations millions in redesigns and months of retesting, depending on the industry. That’s if a company doesn’t first proactively prepare by using market intelligence tools to identify risky components and leverage the capabilities of FAE teams to find a more sustainable alternative.

Sourceability Can Help Your Organization Combat Labor Shortages

According to experts, the labor shortage will be one of the main challenges the semiconductor industry will contend with in 2024 and beyond. Alongside rising geopolitical volatility and climate change concerns, insufficient labor has already contributed to delays within the burgeoning U.S. domestic semiconductor revitalization.  

Lacking laborers with the skilled expertise to operate a semiconductor fabrication plant and facility construction, TSMC had to bring in Taiwanese workers to train new local employees for its two Arizona facilities. Previously, TSMC had expected its first plant to begin operations in late 2024 but is now looking at a start date of 2025, partially due to the labor shortage.  

The semiconductor industry needs help attracting new talent due to various issues, primarily, according to respondents, a lack of career advancement options. In the United States, the European Union, and even China, many have seen a decrease in domestic semiconductor manufacturing by the government. After decades of deterioration in domestic semiconductor ecosystems, bringing in new talent is challenging when the industry faces an oncoming wave of retirements.  

Semiconductor giants are doing their best to compensate for the growing labor gap, but it will take months, if not years, to train the next generation of skilled experts. Organizations must find solutions to bridge the gap and remain competitive to keep up with the market without suffering from insufficient labor.  

Leveraging aid from FAE teams and utilizing digital tools can help improve and streamline workflows for big and small companies, including those needing more workers. Sourceability offers FAE expertise for its numerous franchised partners with intelligent digital tools that can provide decisive data to help manage your supply chain.

Contact our team here to kick off your next project.  

Author of article
Kathryn Ackerman
Kathryn Ackerman is a senior copywriter with experience in the electronic components and tech industry. She works alongside Sourcengine's experts and engineers to provide the latest and most accurate updates within the electronic components industry.
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