Even in the digital age, it is people that are essential to manufacturing. However, demand is far outstripping supply. A shortage of qualified semiconductor engineers is proving to be a systematic constraint on the industry’s growth, compounding supply chain issues caused by the global pandemic.
A Recent History of the Semiconductor Labor Shortage
The semiconductor skills shortage is no new thing. A 2017 study reported that 77 percent of U.S. semiconductor manufacturers thought there was a talent deficit within the industry. Not only this, but they anticipated it would get worse, leading to a peak in 2020. And these predictions seem to have been fairly accurate. The effects of this labor shortage have only been compounded by a global pandemic and other supply chain problems.
As digital transformation has shifted the industry landscape, few executives have built a responsive talent strategy and invested sufficiently in advanced skill development.
According to a 2017 Deloitte-SEMI Workforce Development Survey, the top recruiting challenge in the semiconductor industry is attracting millennials and recent graduates. Image used courtesy of Semi
As such, companies that have relied on importing chips have found themselves struggling to fill jobs requiring expertise in artificial intelligence, quantum computing, and other cutting-edge technologies.
And the growing talent gap is a global issue. China reportedly needs 400,000 more semiconductor employees to meet its targets, and the U.S. can’t recruit talented engineers quickly enough to meet the demand for microelectronics.
How the Skills Shortage Affects the Supply Chain
As economies recover and businesses work to address supply chain issues, it is the skills shortage that threatens to stand in the way of meeting demand. The result is even longer lead times for semiconductors in a time of huge demand. This is especially true as higher commodity items hike up prices. Transportation costs and shipping delays also encourage distributors to hoard production inputs.
Lead times between chip order and delivery have spiked in 2021. Image used courtesy of Bloomberg
Hiring managers were already struggling to keep pace with industry growth before the pandemic accelerated end-user chip demand. Reports from 2018 showed thousands of semiconductor manufacturing jobs going unfulfilled in the U.S. Now, the labor market remains extremely tight with 80 percent of manufacturers indicating that it’s difficult to find qualified workers.
On top of this, the cost of labor is high. Over two-thirds of firms report rising labor costs, and many predict this to continue, increasing the troubles of recruiters and talent acquisitionists.
It is a vicious circle. Lead times have risen, material and labor costs have risen due to a shortage of both, and finding talent remains a challenge.
Chipmakers Try to Compensate for the Labor Shortage
Leading nations are actively setting aside funds to address the labor shortage.
For example, the Taiwanese government and local chip manufacturers, led by TSMC, are investing hundreds of millions in feeder universities. The EU is addressing the shortage by subsidizing regional chip makers. The U.S. has passed a bill that includes $5.22 billion worth of STEM scholarships, $8.43 billion for STEM workforce programs, and $9.57 for university technology centers and innovation institutes.
However, spending more money alone won’t close the talent gap, at least not in the short term.
Samsung Electronics semiconductor operations in Giheung and Hwasung, Korea. Image used courtesy of Samsung
The semiconductor industry provides opportunities across a range of skill levels. However, 20 percent of semiconductor workers don’t hold a university degree. This leaves shortages most hard felt at the high-skill end of the process. These jobs require years of specialized training.
Top talent is often lured by consulting and investment firms, unable to see the opportunities within semiconductor manufacturing. To try to change this, chipmakers in Oregon, such as Intel, are hiring college students to plug the labor shortage and show that jobs are still accessible.
Recruiting Challenges May Fuel the Talent Gap
Data from the Bureau of Labor Statistics show that employment in chip manufacturing remained steady during the pandemic and has risen every month in 2021 so far. The fact is that demand for semiconductors has soared, which provides a huge opportunity for the electrical engineering industry to innovate and thrive.
In 2021, employment in the electronic manufacturing industry has steadily climbed every month. Image (modified) used courtesy of the Bureau of Labor Statistics
However, more needs to be done to attract qualified workers. STEM graduates want to be on the cutting edge of technology, which means they are drawn to big hardware and software companies. Currently, the semiconductor career path isn’t as attractive, and there is a high level of turnover—with 60 percent leaving their jobs within three to five years.
In spite of the chip shortage, global industry revenues are expected to reach a trillion dollars by 2030. Companies and governments will need to build a roadmap that supports long-term solutions for building a talent pipeline.
To date, the industry isn’t taking proactive steps to address the issue. If the semiconductor industry were to approach talent acquisition retention and skills development with the same focus that it applies to solving complex tech and operational challenges, however, the story could well change.
For lighting, electrical, signage, and technology solutions that allow you to do more call Sverige Energy today at +4(670) 4122522.