CONNECT WITH US

Investing in talent in the short term and for the long game

News highlights 0

Investing in talent in the short term and for the long game

The word "shortage" has figured prominently in the semiconductor industry over the past several years. From automotive to industrial, very few businesses found themselves with enough chips to keep up regular production. Alongside the chip shortage, an even larger scarcity looms – a rapidly shrinking workforce.

As competition for talent intensifies, the US' government and manufacturers with plans to expand domestic semiconductor production are looking for creative ways to close the employment gap. The solution they are pursuing is to invest in programs now to pave the way to the future. 

How We Got Here and Where We Are Going

In the 1960s, the US semiconductor industry was bolstered by fiscal spending and contracts from the Department of Defense (DoD). The DoD enforced open communication, which meant technology was shared by large and small firms alike — enabling rapid, cost-effective innovation. This created a healthy labor market responsible for producing groundbreaking technologies.

The industry eventually grew beyond a point where the government could regulate firms' agreements and government contracts dropped dramatically in the 1970s. But technology was swiftly integrating into businesses globally, so there was no lack of profit for the semiconductor enterprise.

As policies shifted, "champion" and asset-light design firms took over, favoring larger companies. This created supply bottlenecks for those who lacked funds for substantial orders. As global competition increased, fabless firms, which concentrated on design and sale while outsourcing fabrication to semiconductor foundries, were born, and supply chains became further dedicated to aiding more well-funded companies.

Other countries increased their design capabilities, and gradually the US market share of electronic component production dropped to today's level of just 12%.

However, expansion plans and changes in US policy are shifting the tides yet again.

Some of the biggest developments include:

Intel pledging upwards of US$20 billion in fabrication plant construction. Micron announcing plans to finance US$40 billion for memory chips. Samsung, Texas Instruments and GlobalFoundries revealing domestic expansion plans for the next 3-5 years. Qualcomm improving domestic production by upwards of 50% over the next five years.

The Stats Stacked Against Us

These developments are exciting, but questions remain about where to find employees. Reports from talent management company Eightfold.ai project that the US semiconductor industry needs between 70,000 - 90,000 new workers by 2025. These numbers only satisfy the most critical workforce needs.

These positions require highly skilled and trained talent. The semiconductor electrical engineer workforce has grown three times faster than electrical engineering overall, with 78% more job posts in 2021 compared to 2020.

The competition from companies both in the US and abroad makes finding trained individuals daunting. The question is, how does the US bring the global talent closer to home and expand the number of candidates to fit the industry's needs?

How to Invest in the Future Workforce

On August 9th, 2022 President Biden signed the CHIPS and Science Act into law, allocating US$52.7 billion in federal subsidies to domestic chip manufacturing, with funds earmarked to upskill and expand the industry's workforce.

Incentives include US$39 billion for manufacturing and US$13.2 billion for R&D and workforce development. Additional allocations are earmarked to create regional innovation and technology hubs, with the goal of increasing private investment and providing country-wide job opportunities.

The burden of investing in education also falls on the manufacturers; Intel has joined with universities and community colleges to devote around US$100 million over the next 10 years for science, technology, engineering and mathematics (STEM) programs.

If companies hope to encourage students to pursue a career in the industry and work for them over the competition, they should invest in work training programs, and where possible, allocate charitable giving to education programs.

Bridging the Talent Gap

There are no quick-fix solutions to the semiconductor and manufacturing workforce shortage. It will take a significant investment of time, money and patience to bridge the gap between demand and personnel availability. If the US hopes to reinvigorate the industry, the government and manufacturing companies will need to work together to build a strong future.