A new "crisis" for semiconductors is coming quietly

Although the semiconductor industry has historically been one of the most profitable and fastest-growing industries in the world, it now faces unprecedented challenges.

According to the latest reports, the U.S. semiconductor industry is facing a severe worker shortage. This shortage is expected to become a tech worker crisis by 2030, with a shortage of 1 million workers.

The estimated skilled worker supply gap could extend from the semiconductor industry to the entire U.S. economy. Image courtesy of Semiconductor Industry Association

Shortages span a variety of occupations, including electrical engineers, technicians and production workers, but are particularly short in very large scale integration (VLSI) design. Now, as the growing crisis threatens to derail the industry, many leaders in the field are coming together to educate and train a new wave of professionals.

Since the 1960s, the semiconductor industry and its workforce have grown steadily with new technologies and consumer demand. While the current worker shortage is likely due to many intersecting socioeconomic variables, some factors play a greater role than others.

The rise of big data technologies such as machine learning has increased the demand for next-generation computing platforms. A McKinsey report shows that semiconductor industry sales will increase by 20% in 2021 alone. However, manufacturing plants have struggled to expand their supply of workers at the same rate.

Enrollment in electrical engineering is trending downward, while enrollment in computer science is trending upward. Image provided by 2022 IEEE VLSI Technology and Circuits Symposium/Semi Wiki

The rigor of semiconductor engineering compared to other engineering pipelines also prevents many future talents from pursuing careers in the field. Semiconductor design requires a deep understanding of physics, statistics, and electrical engineering and often requires higher education and extensive field training experience to master. By contrast, software engineering, for example, offers a lucrative career that requires a four-year degree and, in some cases, only a three-month "boot camp." With less education and training, one can become a software engineer and potentially earn a higher salary - which is what many people are doing.

As the U.S. workforce turns its attention to software-centric fields like artificial intelligence and machine learning, regions like Taiwan are also doubling down on semiconductor engineering. The result: The United States leads in software, but lags badly in hardware.

Although reports predict a semiconductor labor crisis will occur in 2030, the impact of worker shortages is already being felt in the United States today.

Recently, TSMC announced plans to significantly delay the opening of its Arizona chip factory, pushing the completion date from the end of 2024 to 2025. The company attributed the delay to a lack of skilled workers who know how to install and operate the specialized equipment in semiconductor-grade facilities.

TSMC's factory in Arizona.

Image courtesy of TSMC and CNBC

To meet the new opening deadline, TSMC has brought skilled workers from Taiwan to the United States. Exact numbers are unclear, but reports suggest TSMC may have brought more than 500 workers to the factory, a decision that some U.S. workers have condemned.

In response to the education shortage, Arm and other industry leaders recently launched the Semiconductor Education Alliance.

By bringing together key stakeholders from industry, academia and government, the alliance seeks to create region-specific competency frameworks and develop education and training pathways. This initiative provides teachers, researchers, and future or practicing engineers with access to educational resources and semiconductor projects.

Part of the program is the opportunity to create practical experience through internships, apprenticeships and co-ops. In addition, the group will develop educational opportunities through Massive Open Online Courses (MOOC) platforms. The alliance hopes to help find more talent to join the workforce while upskilling the existing workforce.

Some notable members of the consortium include Arduino, Cadence, Cornell University, Semiconductor Research Corporation, STMicroelectronics, and Synopsys.

According to a report by Deloitte, the United States will need to add 1 million skilled workers to the semiconductor industry by 2030 to avert a crisis—the equivalent of 100,000 additional workers per year. The same report also noted that fewer than 100,000 graduate students in electrical engineering and computer science are currently enrolled in the United States each year.

Based on these numbers, the chances of averting a crisis appear slim. However, with new initiatives from industry leaders like Arm and the right amount of government incentives, the U.S. may be able to rise to the challenge and meet the demands of new fabs emerging.

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