The Labor Shortage is the Biggest Problem for the Semiconductor Industry

After the global semiconductor shortage, government incentives paved the way for new domestic semiconductor facilities to be constructed. However, more facilities won't be enough to solve the supply issues if there isn't enough staff to operate them.

Domestic semiconductor manufacturing resiliency has been the hot topic of the year for countries and companies alike. Instigated by the global semiconductor shortage, accessibility to these microscopic electronic components has become paramount to the stability of a modern-day economy. Governments worldwide have spent the last two years drafting incentive packages and formulating subsidies to entice chipmakers to construct fabrication plants within their country’s borders.  

Government incentive programs have successfully drawn original component manufacturers (OCMs) stateside. One of the most notable examples is the U.S. CHIPS and Science Act. Since the passage of the CHIPS Act, the U.S. has garnered over $200 billion in investments toward domestic semiconductor manufacturing. States have pushed additional incentive plans forward to entice chip manufacturers to build within their borders.  

New York, California, Oregon, and Ohio are a few states that have passed tax breaks or other subsidies for chipmakers ranging within the millions or billions. The boom of a semiconductor fabrication plant within a state is beneficial not only to the broader federal economy but also to local and state economies. Local and state leaders know that the incentive plans, while costly, are worth it in the long run.  

New York Governor Kathy Hochul said regarding the $5.5 billion incentive plan that successfully courted memory giant Micron Technology, the monetary loss is worth everything it will gain.  

“Fifty-thousand jobs…I cannot tell you the supply chain opportunities,” Hochul said in July. These development plans for semiconductor manufacturing will help replace the empty gap in the local economy that emerged after the loss of major manufacturers in the 70s-90s. Similarly, the upcoming semiconductor projects in California and Ohio will revitalize the local economy after decades of slow losses.  

However, there are two sides to this particular coin. While there are dozens of promising job openings as these semiconductor fabs are constructed, more workers are needed.  

The Growing Problem

A growing problem is affecting countries worldwide as they try to reach domestic semiconductor goals. The challenge is the need for more skilled labor. From the U.S., a country that has slowly watched its semiconductor manufacturing prowess diminish over the last few decades, to China, a country part of the geopolitical region that has become the go-to for outsourcing manufacturing in dozens of markets, everyone struggling to find enough workers.

In the U.S., the semiconductor workforce needed nationwide is expected to grow from 30% or 345,000 jobs today to approximately 460,000 jobs by 2030, according to the Semiconductor Industry Association (SIA). Furthermore, 58%, or 67,000, of these projected new jobs are at risk of being unfilled with the current degree completion rates. If these trends stay the same, approximately 39% of chip factory technician jobs will be vacant.  

"This has been a problem that we've been facing for a long time," SIA President John Neuffer said. "But with the CHIPS Act in particular, and kind of bending the arc of history towards more manufacture here on U.S. shores, it really kind of threw this acute problem into bold relief."

“The shortage of skilled chip workers is part of a larger shortfall of science, technology, engineering, and math graduates in the U.S.,” according to the SIA. “By the end of 2023, 1.4 million positions may go unfulfilled.”

Things aren’t getting better in the geopolitical areas currently dominating semiconductor manufacturing. The China Center for Information Industry Development and the China Semiconductor Industry Association (CSIA) estimated a workforce shortage of 200,000 in the semiconductor industry. Prospective semiconductor power player Vietnam lacks the workforce necessary to achieve these goals.  

By 2030, the semiconductor industry will grow by 80%, meaning an additional one million workers will be needed to meet demand. To reach this number, over 100,000 new employees will need to join the workforce annually, but in the U.S., fewer than 100,000 graduate students are enrolled in complementary programs.  

Already, there have been complications in opening new facilities to boost domestic semiconductor manufacturing. TSMC’s Arizona plant, a massive fab that aims to produce advanced components used by Apple and artificial intelligence leader Nvidia, has delayed its start date to 2025 due to the lack of trained staff in the U.S. To push forward with the fab plans, TSMC tried to bring trained workers from Taiwan into the U.S. to help but was resisted by local labor unions.  

Without skilled staff, these attempts to kickstart the domestic semiconductor manufacturing revitalization will be null. But these things take time and a lot of effort to accomplish. This major challenge has no quick fix and might not come before the world’s next semiconductor shortage. With how artificial intelligence components are flying off the shelves, it might happen sooner than we think.  

Increasing Short-Term Educational Opportunities

The most important step is increasing educational opportunities to train a new semiconductor workforce. Over the next decade, numerous skills will now be required in the evolving semiconductor supply chain. The number of tradespeople needed to build new plants will increase, just like the demand for staff to run them. If one were to include the other plant specifications, such as capable electrical engineers and manufacturing equipment operators, that number only grows.  

Every position requires distinct training and educational needs. Over the years, the interest in semiconductor-focused programs has dwindled while the skills needed for these positions, such as AI or automation proficiency, have increased.  

Throughout the semiconductor industry’s history, chip manufacturers have partnered with universities and engineering schools. Now, leaders are extending their outreach to collaborate with more tech schools, vocational programs, community colleges, and other organizations, to obtain more future graduates to meet the growing labor demands.

Intel, a world leader in the foundry business alongside TSMC and Samsung Electronics, has relied on community college students to fill many technician positions. Over the years, companies have invested more in science, technology, engineering, and math (STEM) education, contributing to the decline of technician training. Historically, Intel has and continues to invest in regional technician programs in Arizona, Ohio, and New Mexico, with several international programs in other foreign locations.

Intel is working alongside Ohio community colleges to meet the labor demands its Ohio fabs require. The company is developing the industry’s first “stackable, shareable, and transferable one-year semiconductor technician certification program.” Knowing that financial situations and low math confidence can hinder interested students, Intel hopes this new program will encourage interested students to apply.  

Elsewhere, industry leaders are working on developing collaborative projects to share information. World-renowned chip designer Arm worked alongside universities, researchers, and other chipmakers to create the Semiconductor Education Alliance (SEA). The SEA initiative aims to help students, educators, and engineers find resources and career opportunities within the semiconductor space.  

The SEA initiative is an improvement on Arm’s already extensive education model. Members can easily share knowledge and opportunities with others within the alliance. Similarly, Arm is working alongside the Electronic Design Automation (EDA) to develop and compile resources on chip design. This is included with Arm’s provided system-on-chip (SoC) design platform for academic use. All of which is to continue improving access to resources for all organizations industry wide.  

Investing in Long-Term Education Goals

To form new educational programs and training pipelines, there needs to be investments from government bodies and industry leadership. As noted by Intel, one barrier that keeps interested students from joining a technician training program is often financial. The cost of some of the engineering boot camps can be high, and, especially over the last few years, inflation from the Covid-19 pandemic and recession fears has only contributed to raising the price. Many prospective students aren’t willing to take the chance on a costly career path they might fail in.  

There are two ways to handle this specific issue. Intel’s current development of a one-year training program, which includes other areas of needed study, such as math and science, is one solution. Consolidating skilled learning into one class can help lessen the financial impact on prospective students.  

Another significant solution is investing in education, training, and student scholarships.  

GlobalFoundries recently announced its multi-million dollar student loan repayment program to help semiconductor program students. Developed to help build a critical talent pipeline within the U.S. while decreasing employee education debt, the program will help current and new recruits pay down their student debt. The program is open to all U.S. employees with qualified student loans for the degree types and credit-based certificate programs offered by U.S. colleges and universities.  

“In the semiconductor industry, poised to double again over the next decade, the blueprint for tomorrow's innovations is directly linked to the talent we cultivate today,” said Dr. Thomas Caulfield, president and CEO of GF.  

“By enhancing our employee benefit programs, especially through our student loan assistance, GF is not only strengthening and building its talent pipeline but striving to set an industry benchmark. It's this very talent that is critical to delivering the essential semiconductors the world relies on to live, work, and connect.”

Historically, GlobalFoundries has invested in global career development programs and education assistance, like Intel. It is also not the only company utilizing new government incentive programs to invest in educational programs.  

In New York, Micron Technology and the state government are investing millions to improve educational opportunities in local universities and community colleges to train future technicians. Regarding the specific investment in SUNY Polytechnic Institute, Governor Hochul emphasized the importance of education to support future workforce growth.

“This investment is another massive step to building the best public education institution in the country and cementing New York’s leadership role in the manufacturing industry,” Hochul said. “With these important investments, students can receive an affordable and quality education.”

Across the U.S. and the world, continued public and private investments from organizations and chipmakers alike will create a more reliable system of training future employees. While training boot camps are critical to filling needed vacancies fast, the semiconductor industry is growing exponentially to include new technologies such as AI and automated manufacturing.  

Year-long boot camps and certification programs may not effectively teach the skills an evolved semiconductor industry requires. That’s why more in-depth and rigorous education systems should be equally prioritized.  

These programs will take time to develop. Further collaboration between semiconductor suppliers, engineers, and educational leaders will play a vital role in developing stable courses that can be shared with other universities, community colleges, or training organizations. However, it will not solve existing challenges with current workforce vacancies and the lack of expertise within the semiconductor industry. To fill existing gaps within an organization, companies should reach out to one another to negate each other's weaknesses while boosting their strengths.  

Collaborative Aid

The semiconductor industry lacks talent in various areas, from technicians to design engineers. Increased investments in improving education will make a difference, but it does not solve existing and ongoing challenges. The best way to resolve such issues is flexibility by seeking help from partners with the resources to spare.  

During the global semiconductor shortage, automakers faced significant struggles. Long lead times, low production capacity, and the prioritization of lucrative, advanced semiconductor lines by original component manufacturers (OCMs) left many automakers struggling to secure a fraction of the stock needed to manufacture vehicles. Consumer demand was–and still is–high without showing signs of slow growth.  

Despite the consumer downturn in 2023 for personal electronics, supply-demand stabilization is still not there in the automotive sector. McKinsey & Company said in a report at the beginning of the year it might take until 2025 at the earliest for a proper resolution to arrive. If not then, then 2030.

This occurrence cost the industry $210 billion globally in 2021 alone. Worst still were the hundreds of vehicles that sat unfinished in company parking lots for months as they waited for the parts necessary to complete them.

Automakers have been forming partnerships with chipmakers to ensure production capacity for necessary components is always assured to prevent such a crisis from occurring again. More than that, some of these partnerships include developing new automotive products that will be sold on the market at large. An example can be found with Stellantis and Foxconn’s joint venture, SiliconAuto.  

“SiliconAuto will provide customers with an auto industry-centric source of semiconductors for the growing number of computer-controlled features and modules, particularly those needed for electric vehicles,” the spokesperson said. At the same time, Stellantis benefits immensely from this collaboration through a robust supply of essential components, which it suffered from during the shortage.  

Similarly, Japan’s nascent advanced logic foundry, Rapidus Corp., working alongside the University of Tokyo and the French research institute, Leti, to develop 1nm chip tech for future applications, is another example of how collaborative partnerships help industry players excel.  

Beyond these strategic partnerships, there are other ways to fill in the gaps left by talent shortages. Facing shortfalls of engineers within the industry might not be as easily solved with a one-year technician certification program.  

So, how does the industry work with the lack of engineers? One way to solve this issue immediately is via consultation and aid from field application engineers (FAEs).

These FAE teams can provide design engineers with technical expertise to help discover the best component and service solution for a project. FAEs help an organization focus on the practical use and application of products or technologies within their repertoire, educating others on the specifications, installation, and use of equipment.  

An essential aspect of an FAE team is that they can help design engineers troubleshoot challenges to optimize a part's performance or resolve issues with part nonconformity. FAEs can lend their skills, knowledge, and connections with contract manufacturers to present innovative solutions for product development. FAE teams can benefit manufacturers with limited financial resources or mid-cycle priority shifts should they lack the appropriate staff to handle such significant changes. FAEs can quickly identify solutions that might only have been available with their aid.  

Current education and investment goals in growing the workforce are needed. Still, for those who need solutions now, FAE teams can help solve existing challenges and be helpful once the labor shortage has been successfully mitigated. Suppose components become unavailable due to natural disasters, lockdowns, or a lack of technicians. In that case, FAEs can help find alternate parts and aid in product redesign if necessary.

The labor shortage is not a sudden and unforeseen challenge. After years of growing disinterest in STEM fields and the outsourcing of semiconductor manufacturing, many countries are forced to rebuild their domestic semiconductor ecosystem. It will take time, but the world will get there with continued cooperation between chip makers and educational leaders.  

Sourceability’s Surcle Team

Global semiconductor shortage or insufficient workforce numbers can challenge any manufacturer. Lacking components or the staff to make them can affect overall supply chain health for dozens, if not hundreds, of companies. Thankfully, with the collaborative efforts of governments, chip leaders, and education systems alike, the world is on its way to building a new foundation of an intelligent and grand workforce.  

However, these steps will take time before noticeable results of these efforts. No matter how many one-year certification programs are developed, it will still take a year to see the desired outcome. Investments are imperative to formulating the future educational system for the semiconductor industry, but solutions are needed now.

That’s where Sourceability’s Surcle team steps in.

As discussed, field application engineering teams can help manufacturers design, develop, and manufacture products faster. Sourceability’s Surcle team is comprised of industry experts and FAEs with decades of experience. Combined with Sourceability’s 40 franchised suppliers, Surcle can provide component critical information to help design engineers best leverage the parts needed for a project.  

Surcle can help provide numerous engineering solutions in dozens of market sectors, from automotive telematics and industrial automation to edge computing. With the rising demand for generative artificial intelligence, device connectivity, and electric vehicles, Surcle can help you get your innovative solutions to market quickly.  

The labor shortage is expected to remain a concern over the next decade as semiconductor demand increases. Educational programs will make the difference in securing a steady pipeline of new talent to operate the upcoming semiconductor facilities to power domestic chip ecosystems. In the interim, FAE teams will help lessen the load on engineers at original equipment manufacturers (OEMs), contract manufacturers (CMs), and electronic manufacturing service (EMS) providers.

Ready to get started on your next product design leveraging Surcle’s services? Whether you have a product design in development or prepared for the production line, you can contact Sourceability’s experts and gain design-in services, technical support, and more anytime.

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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