In 2022, Deloitte projected that the global semiconductor industry would need to add one million skilled workers by 2030, averaging over 100,000 annually. Two years later, that prediction remains valid, but several key industry trends are intensifying the talent crisis as the sector races toward a staggering $1 trillion in revenue by 2030.
With the rising demand for Generative AI (GenAI), the semiconductor industry faces increased competition for advanced skills. Attracting and retaining this talent has become particularly challenging, especially in light of the U.S. contemplating restrictions on the export of AMD and Nvidia AI chips.
Deloitte's report highlights a looming shortage of chip workers amidst an aging workforce that lacks a clear succession strategy. The appeal of the semiconductor sector pales compared to the allure of AI and social media jobs, complicating talent acquisition further.
Global Solutions for a Universal Challenge
Deloitte's research indicates that localization of manufacturing and escalating global demand are contributing to a widening talent gap. Semiconductor firms often find themselves in fierce competition for a limited pool of skilled professionals.
Talent management is closely linked to legislation regarding semiconductor manufacturing. Both U.S. and European chip laws emphasize workforce development commitments for companies seeking funding, compliance, and growth.
Ongoing geopolitical tensions and fragile supply chains are pushing for the onshoring of manufacturing processes, including advanced node fabrication, memory production, and back-end assembly, test, and packaging processes.
Navigating Economic Cycles
The cyclical nature of the semiconductor industry has led to a seventh downturn since 1990, with revenues projected to decline by 9% to $520 billion in 2023. Consequently, some new fabrication projects are delayed, which may temporarily lessen immediate talent needs. Nonetheless, a rebound is anticipated, with a forecasted 16% revenue increase in 2024, reaching an all-time high of $611 billion. This growth will necessitate a robust workforce, providing an opportunity for companies to refine their talent strategies.
Understanding the factors contributing to semiconductor talent shortages is vital for industry leaders seeking effective strategies to address their impending workforce needs.
Demand for GenAI Skills
As the semiconductor sector gears up for the influence of Generative AI, an overwhelming 72% of leaders believe GenAI will have a transformative impact on their industry. Opportunities for deploying GenAI span core engineering, chip design, manufacturing, operations, and maintenance.
While GenAI can streamline routine tasks and free engineers to focus on higher-level objectives, a persistent scarcity of GenAI-skilled professionals looms large. To attract this talent, semiconductor companies must offer compelling benefits and career growth opportunities.
Addressing the Looming Talent Gap
The semiconductor workforce is aging, with significant demographic shifts leading to potential shortages. Only one-third of semiconductor employees in the U.S. identify as female, and less than 6% as Black or African American. The workforce is also older than in other tech sectors, with approximately 55% aged 45 or older as of July 2024.
Companies must enhance their appeal to younger and diverse talent, promoting stability and flexibility. Investing in high school graduates and non-traditional educational pathways can help ameliorate talent shortages.
A Global Talent Crisis
This talent deficit extends globally, with various countries struggling to cultivate sufficient skilled workers. In the U.S., only 20% of master’s degree graduates in semiconductor-related fields remain in the country post-graduation. Deloitte's survey across Asia-Pacific highlighted that 90% of companies view talent acquisition and development as critical for sustaining growth.
For India, the semiconductor sector is projected to face a deficit of up to 300,000 professionals by 2027, while the European Union anticipates needing 400,000 additional workers to reach its market share goals by 2030. In the U.S., over 67,000 of the anticipated new jobs are at risk of going unfilled.
Talent Management and Regulatory Compliance
For companies receiving funding from the U.S. CHIPS and Science Act, a robust workforce strategy is vital for compliance and growth. Plans must include training commitments and education opportunities for disadvantaged individuals.
The European Chips Act also demands transparency in education and skills development efforts, especially as fab expansions increase the demand for skilled construction and manufacturing personnel.
Revisiting Manufacturing Practices
The push for localized manufacturing and a regional supply chain is amplifying talent shortages. Despite significant investments from the U.S. and Europe to boost domestic chip production, over 80% of ATP capacity is still in Asia. Without further investments, achieving semiconductor self-sufficiency may remain a challenge.
Geopolitical Factors in Talent Supply
Geopolitical tensions are likely to disrupt global talent availability. The U.S. has restricted exports of advanced AI chips and chipmaking equipment, while China aggressively recruits foreign talent, often offering lucrative packages.
Strategic Solutions for Talent Challenges
To navigate these challenges, semiconductor companies should focus on three key areas:
1. Workforce Planning: Implement agile talent strategies that address immediate operational needs while adapting to market changes. Companies should collaborate with educational institutions and other organizations to widen their talent pipelines, particularly among underrepresented groups.
2. Skill Development and Retention: A skilled workforce pipeline is crucial. Companies should analyze their current skills, identify gaps, and create flexible upskilling programs. Promoting diversity and establishing clear career paths can enhance employee retention and attraction.
3. Technology Enablement: Integrate data-driven solutions to assess workforce supply and demand. Leveraging AI in talent acquisition processes can optimize workforce planning, enhance recruitment strategies, and streamline management.
The semiconductor industry stands at a pivotal moment. With expectations for revenue reaching $1 trillion by 2030, addressing talent challenges holistically will be key to sustaining growth and innovation.
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