Why the semiconductor talent shortage threatens the industry’s future

The semiconductor industry sits at the heart of every modern technology, from smartphones to AI servers to electric vehicles. Governments are investing billions into domestic chip production to secure supply chains and reduce geopolitical dependence. But while money can build fabs, it cannot produce experienced engineers overnight.

Thanks to years of neglecting the semiconductor training pipeline, the industry now faces a talent crisis. Retirements are also accelerating as fewer new workers enter the field, leaving a significant gap in their wake even as the chip industry struggles to lure top graduates away from “sexier” software jobs.  

According to SEMI, the industry will need more than one million additional workers globally by 2030 to meet demand, but the current pipeline falls far short. If unaddressed, this shortage could derail the trillion-dollar growth trajectory predicted for semiconductors over the next decade.

How the semiconductor talent shortage began

The workforce challenges of the semiconductor industry aren’t the result of a single event but a convergence of long-brewing structural issues developing behind the scenes. As the fallout becomes visible, the industry is left playing catch-up.  

1. Retirement wave

A third of the U.S. chip sector’s most experienced engineers, process technicians, and managers are reaching retirement age. While this trend affects many industries, its impact on semiconductors is particularly damaging. Decades of tacit knowledge are walking out the door without replacement.

Training new engineers to tweak lithography tools for yield improvement or debug anomalies in the production line isn’t as simple as sending them through a course. This type of knowledge is often undocumented and highly contextual. Without structured knowledge transfer plans, companies risk repeating mistakes, especially in legacy and specialty nodes where expertise is concentrated among a shrinking group of veterans.  

2. Weak talent pipeline

Today, fewer students are entering fields related to semiconductors. While science and software engineering programs have seen booming enrollment, electrical engineering, materials science, and semiconductor physics programs are experiencing stagnation or decline in most developed economies.  

In the U.S., the problem is compounded by immigration dynamics. Some 50% to 60% of students with advanced degrees in semiconductor-relevant disciplines are foreign born, and over 80% of them leave the country after graduation.  

3. Perception gap

Despite the foundational importance of the semiconductor industry, it lacks the brand appeal offered by software giants with broader name recognition and more mainstream products. Many young engineers gravitate toward companies like Google, Meta, or AI startups, perceiving them as more exciting and often lucrative opportunities. Semiconductor careers are often seen as labor-intensive and slow-moving by comparison. Those tech firms are claiming the lion’s share of graduating talent as a result.

By contrast, there are fewer visible “icons” in the chip sector with the power to lure prospective talent away from these flashier destinations. A perceived lack of career advancement also deters many prospective hires.  

4. Global competition

The CHIPS Act in the U.S., the European Chips Act, and similar investments in Taiwan, Japan, and Korea have triggered a wave of new fab builds. However, with many of these projects launching simultaneously, the result is a fierce global bidding war for a limited pool of qualified personnel.

In some regions, retention has become as hard as recruitment as local industries cannibalize each other’s talent. As companies poach from one another, it drives up wages and increases churn. For markets where fab construction is outpacing workforce development, all the power lies with the talent, putting chipmakers in a difficult position as they try to staff new operations.

How the talent shortage is slowing innovation

The consequences of this labor imbalance are already materializing across the semiconductor value chain. Without workers to fill openings, many new fab projects open under capacity or sit idle altogether. Those, of course, are the lucky locations able to hire enough talent to open on time in the first place.  

In 2023, a McKinsey report projected that the U.S. could face a shortage of up to 300,000 skilled semiconductor workers by the end of the decade. If that number is anywhere near reality, the industry’s expansion will slow despite extraordinary stimulus from public and private policymakers alike.  

Knowledge loss

Meanwhile, teams are fighting to retain vital knowledge as the old guard transitions out of the workforce. Analog, mature-node, and high-reliability sectors (aerospace, defense, automotive, medical) are particularly vulnerable. These fields often rely on veteran engineers who have spent decades mastering niche manufacturing processes or product qualifications. Retirements without proper knowledge transfer leave teams reinventing processes, slowing yield improvement, and creating costly mistakes.

Innovation delays

Next-gen chip design requires specialized skill sets that are currently in short supply. Design engineers, especially those with experience in sub-3nm process nodes and advanced packaging, are among the most sought after and hardest to find talent. Without them, progress in bleeding edge architectures risks falling behind schedule and undermining competitiveness in key areas like AI and high-performance compute (HPC).  

Cost inflation

As demand for talent now vastly outweighs supply, hiring and retention costs are ballooning. Senior design engineers now command salaries on par with high-level software engineers, and technician-level roles require expensive training and retention packages. These cost increases flow downstream, affecting chip prices and squeezing margins as they make their way down the supply chain.

Strategic risk

Perhaps most ironically, the labor shortage risks undermining the goals of the very onshoring initiatives helping create it. A fab in the U.S. or EU that must rely on foreign engineers to operate is still geopolitically vulnerable—just in a different way. Visa delays, immigration restrictions, or rising geopolitical tensions could easily disrupt the flow of skilled workers needed to keep critical facilities running. Without a robust, homegrown workforce, even the most state-of-the-art fabs risk becoming hollow infrastructure.

The effort to build the talent pipeline

Solving the semiconductor talent shortage requires a coordinated, multi-level approach. Industry, academia, and government will all have a part to play, and collaboration will be essential to success.  

The model pioneered in Taiwan, where TSMC and other chip firms co-develop training programs with leading universities, offers a blueprint. Beyond such training, apprenticeships, internships, and work-study co-op programs can also expose students to the field earlier and demystify potential career paths.  

Of course, this can only happen if students are interested in the first place. The chip industry must do a better job of telling its story. The best way to promote semiconductor careers is with stronger branding and outreach, emphasizing the sector’s impact on AI, green energy, and global technology security.  

It’s also important to create structured mentorship programs to connect retiring engineers with younger staff to facilitate knowledge transfer. Digital knowledge capture platforms can help by preserving institutional expertise in the form of documentation, video walkthroughs, and custom AI tools. To that end, automation and AI are well positioned to have an even bigger impact in the years ahead. As these tools take on routine tasks, engineers will be free to focus on the tasks that matter, allowing companies to stretch the talent of their team further while simultaneously improving productivity.  

Lastly, existing staff in adjacent careers shouldn’t be ignored. Manufacturing technicians, mechanical engineers, and software engineers are valuable resources. By offering ongoing training and targeted certifications, it’s possible to expand the talent pool for chip-centric roles without starting from scratch.  

The future of the semiconductor industry

The semiconductor industry’s talent shortage is a structural issue that, if unaddressed, could be the primary roadblock to achieving the projected $1 trillion in annual revenue by 2030. With demand for chips expected to double in that timeframe, the time to act is now.  

Proactive companies are already investing in workforce development, forming regional partnerships, and deploying automation. Governments, too, must move beyond just funding fabs and address the labor needed to run them.  

The semiconductor industry has never lacked innovation. If it’s used to address the shortage alongside adequate pipeline investment, the industry can sustain its trillion-dollar future for many decades to come.  

Companies that succeed in this area will both protect their operations and maintain a much-needed competitive edge in what has quickly become the most consequential industry of our lifetime.