The Challenges of the Semiconductor Labor Shortage and its Solutions

Over the past year, the semiconductor industry has seen a flurry of interest from countries eager to invest in expanding domestic manufacturing. Numerous incentive programs have been developed in months since the tail end of the semiconductor shortage ranging from the United States CHIPS and Science Act to India’s $10 billion attention-grabbing plan. As countries race to grow their domestic ecosystems, many are hitting a wall before new facilities even get off the ground. The problem? The lack of a large talent pool of engineers, technicians, and even construction staff with the experience to build hundreds of feet of vital clean rooms.  

The labor shortage has become a significant challenge for the semiconductor industry. The proliferation of advanced technologies in various market sectors, such as artificial intelligence (AI), 5G, and Internet of Things (IoT), is majorly contributing to the growing demand for electronic components. By 2030, the semiconductor industry is expected to reach $2 trillion in market value, further exemplifying the explosive demand for components.  

The lack of skilled workers threatens to slow down operations across the entire global supply chain, stifling already strained production capacity. To tackle this issue, original component manufacturers (OCMs), governments, universities, and community colleges are collaborating to address this crisis before it grows into an even larger problem.

The Roots of the Labor Shortage

There is no singular cause for the labor shortage in the semiconductor industry. Various factors have compounded over many years, leading to the current severity of this bottleneck. For example, over 35 years of outsourcing semiconductor manufacturing by prioritizing cheaper labor costs has contributed to the significant gaps in the U.S. talent pool.

The United States changed its business model regarding the semiconductor industry decades ago. The country kept a stronghold on semiconductor design, but as manufacturing became more complex, it outsourced it to countries with companies that specialized in production, like Taiwan.  

Similarly, a decline in graduates specializing in semiconductor production areas has only compounded this problem. As the country moved away from manufacturing, there was an emphasis on advanced STEM degrees, especially when there seemed to be no great income incentive, and the subject matter was perceived as complex.  

In a report on the semiconductor labor shortage, Intel explained that the emphasis on technician training over the years has waned as companies invested more in “science, technology, engineering, and math education and research funding for bachelor, master, and Ph.D. programs.”

An article by Fortune states, “In recent decades, schools have poured money into advanced STEM education–and pushed students away from the more skills-based, technical education required in the semiconductor sector.”

This is why the United States will face a labor shortage of 59,000 to 146,000 workers across the engineer and technician labor pools by 2029. According to McKinsey, the lower number (59,030) represents the best-case scenario if the CHIPS Program Office’s supported programs are fully utilized. The higher number reflects “what the situation may be if the programs or funding levels fall short of estimates.”

The labor shortage extends far beyond the United States and Europe. The latter requires 400,000 additional professionals to achieve European semiconductor industry ambitions by 2030, as set forth by the European Chips Act. This semiconductor labor shortage is even impacting geopolitical areas that have dominated semiconductor manufacturing due to outsourcing by the US and EU.  

“Taiwan had a shortfall of over 30,000 semiconductor workers in late 2021. South Korea and Japan are projected to face a similar shortfall in the coming decade,” reports CSIS. “China’s drive to become a major competitive force in the global semiconductor industry is being hamstrung by an extreme shortage of skilled semiconductor workers; a recent university study found that the worker shortfall exceeded 300,000 and was getting worse.”

The ongoing labor shortage is only intensifying global competition for existing semiconductor engineers and technicians. TSMC is scouring job markets worldwide but has found that what works in Taiwan does not work in other countries. TSMC has dealt with a different working culture in the United States, where employee disagreements have contributed to some staff leaving.  

Rapid technological advancement will further outstrip the available talent pool, especially with explosive demand for AI and semiconductor manufacturing ambitions. If no steps are taken to ensure workforce growth, by 2030, the semiconductor industry will require an additional one million workers to meet demand. In response, OCMs, governments, and educational bodies must work together to train the next generation of semiconductor talent.

Innovative Solutions from Chip Manufacturers

To combat the labor shortage within their industry, OCMs are leading the charge. From chip designers, such as Arm, to foundry leaders like TSMC and Intel, OCMs are investing heavily in workforce development. One of the more straightforward ways OCMs attract semiconductor talent, from technicians to construction workers, is through increased wages or apprenticeship programs.

GlobalFoundries offers apprenticeships completed in two years or less, paying prospective talent with benefits and full-time work. It recruits graduates with technical associate degrees from regional community colleges or veterans transitioning from the military.

Likewise, semiconductor titan Intel has historically relied on community college students to fill large portions of its technician jobs at fabs. Still, recent training has waned due to an emphasis on STEM degrees. To address these issues, Intel has collaborated with community colleges, specifically those in Ohio led by the Columbus State Community College, to create the industry’s “first stackable, shareable, and transferable one-year semiconductor technician certificate program. The program launches in 2023-24 to help build the talent pipeline.”

Chip designer Arm has also thrown its chips into the pile with its 2023 announcement of its global initiative, the Semiconductor Education Alliance (SEA), with support from numerous OCMs and universities. The initiative addresses growing challenges in finding talent and training the existing workforce.  

To help support their cultivated staff, OCMs are turning to AI to fill in the gaps. AI can keep production running, quickly scaling up or down depending on capacity needs, making the production process more efficient and less labor-intensive. The technicians can then focus on running these advanced systems, leaving repetitive tasks to AI. While this doesn’t directly solve the labor shortage, it helps lessen the current industry pressure.

Governments Invest in Solutions

Since the global semiconductor shortage, governments have realized the strategic importance of having access to domestically produced semiconductors economically and for national security. This includes having the workforce to operate these new facilities.  

In the U.S., the CHIPS Act invested billions in the development of semiconductor facilities, allocating funds to support semiconductor research and workforce training. The EU’s Chips Act also includes a significant investment in education and training programs to reach its ambitious goal of increasing its share of global semiconductor production to 20% by 2030.  

South Korea is working with industry giants like Samsung Electronics to offer enticing incentives for students pursuing semiconductor careers. Japan, likewise, is focusing on collaborations with universities to develop cutting-edge research facilities to attract top talent worldwide. Malaysia, which is also working on improving its semiconductor ambitions, is creating a strategic task force to allow foreign graduates to come and work within the country to help fill its shortage of engineers.  

Universities and Colleges are Building Talent Pipelines

Universities and community colleges are the cornerstones of supporting the upcoming generation of semiconductor engineers and technicians. To meet the growing demand for labor, colleges worldwide are partnering with industry leaders to expand their engineering and computer science programs with an emphasis on semiconductor technology.

Purdue University in the United States is prolific for collaborating with chip giants, including Intel and SkyWater Technology. This collaboration has led to a new semiconductor degree program to provide students with hands-on experience and direct pathways into the semiconductor industry upon graduation.

OCMs expanding their global footprint are investing in local colleges and universities to train native talent to fill the job openings in their area. TSMC in Arizona has made sizeable donations to ASU, while Micron in New York has brought together over twenty universities, including Harvard and MIT, under the Northeast University Semiconductor Network.

Globally, universities in Japan, India, and across the U.S. are investing in cutting-edge research by becoming training grounds for prospective semiconductor talent. These initiatives are critical in ensuring a steady talent pipeline going forward.  

The Most Important Step Forward: Collaboration

As technology advances, the need for electronic components grows, requiring more skilled workers. If steps aren’t taken now, the global semiconductor industry will fall short of one million workers by 2030. It will take a combined effort by OCMs, governments, and colleges to reinvigorate interest in the semiconductor industry.

Leveraging automation and using advanced technologies can help boost efficiency and fill in the gaps from talent shortage. To create automated solutions, organizations will require robust sourcing tools to obtain components despite labor shortage conditions. Sourceability’s global team of experts and e-commerce platform, Sourcengine, can help buyers obtain the necessary parts to support these efforts.  

The semiconductor industry can overcome the labor challenge through collaboration and innovation while driving progress despite the hiccups. Sourceability is here to help support you at any stage of the process.