The semiconductor industry is on the brink of a significant labor shortage as its rapid growth surpasses the pool of qualified workers in the US. This shortage is predicted to hinder the progression of artificial intelligence (AI), which relies on advances in chip technology, according to recent studies.
A new report from McKinsey & Company indicates that US investment in semiconductors will increase to over $250 billion by 2032, creating upwards of 160,000 new engineering and technical support roles. However, the decline of the domestic semiconductor manufacturing workforce, which has decreased by 43% since 2000, poses challenges in filling these positions due to the extensive training and development required. The shortage in engineers and technicians might escalate to 146,000 by 2029.
Significant reforms are necessary within the semiconductor sector to boost domestic production, as stated by McKinsey. A key strategy involves building new domestic fabrication facilities to reduce dependence on overseas sources and to better compete with major players in Taiwan and South Korea. The US is also focused on keeping pace with China to prevent the transfer of advanced semiconductor technologies.
“Bridging the considerable talent gaps expected will require the American semiconductor industry to confront the problem directly and embrace a sea change in its approach to cultivating, sourcing, and retaining talent,” according to the report.
As the industry ponders how to find skilled workers, the talent shortage has the immediate potential to affect the production of silicon chips, which are at a crucial turning point in the industry as the rapid growth of AI is demanding more and more computing power – which innovation in semiconductor technology is poised to provide.
“The lack of specialized personnel can really impact silicon production, since skilled workers are essential for the intricate processes involved in chip manufacturing,” noted Beatriz Valle, senior analyst, enterprise technology & services, at GlobalData. “A lack of qualified personnel can lead to delays in production schedules in what already are extremely long production lifecycles, affecting the supply chain and leading to shortages of chips.”
Indeed, shortages in the availability of semiconductors capable of running generative AI models in hyperscale computing scenarios already have forced cloud service providers like Amazon and Google to build their own in-house technology to meet growing processor demands, according to research from GlobalData. Now AI could now face a similar crossroads, she said.
“The scarcity of microprocessors can significantly impact the US because chips are the backbone of AI growth,” Valle said. “A shortage can slow down the development and deployment of new AI technologies, delaying innovation.”
Despite the alarm generated by the McKinsey report, another analyst believes that the situation is not as dire as some experts are predicting, and that the discussion about lack of talent in the industry is being over-hyped.
“I don’t see a crisis situation – when there will be jobs/opportunities, companies will find people,” noted Gaurav Gupta, VP analyst, emerging trends and technologies, at Gartner. “I don’t see [labor shortage] as a hurdle in ramping operations.”
What may be more difficult, he said, is to find construction workers to build a raft of new fabrication facilities that various OEMs are planning in the US. This could delay ambitious plans to expand domestic production of chips and thus create a different sort of issue for the industry.
“This could lead to higher costs of building fabs in the US, which is already a big concern,” Gupta noted.
The US currently has some measures in place to help the US labor market ramp up quickly to fill in gaps of skilled workers in the semiconductor space, Valle noted.
TSMC, for example, which is increasing chip production significantly in Arizona, already has delayed the start of production at a planned factory there from this year to next due to a shortage of skilled workers. It’s currently sending experienced technicians from Taiwan to train US workers as “a temporary measure to help bridge the skills gap,” she said.
However, there is no silver bullet to solving the issue, “since what is required is educating workers in long-term investment drives, which is something that can not be improvised,” Valle said.
The CHIPS Act was enacted by the Biden administration in 2022 to enhance semiconductor manufacturing in the United States. A pivotal component of this act is the creation of the Workforce Partner Alliance, which aims to bridge the skills gap among researchers, engineers, and technicians in the fields of semiconductor design, manufacturing, and production, thereby averting a potential labor crisis in the semiconductor industry.
