The U.S. is the semiconductor industry leader holding about half of the global market share with sales of $275 billion in 2022, with experts projecting it will be a trillion-dollar industry by 2030. Worldwide, in 2022 alone, the semiconductor market totaled $599.6 billion and is expected to reach $630.0 billion in 2024.
Semiconductors in short supply
Semiconductors are “the brains of modern electronics,” helping to power everything from cars and planes, to military technologies and medical devices. They are a bedrock of innovation. During the COVID-19 pandemic, when news of the “chip shortage” hit the headlines, many people became aware of semiconductors’ outsize role.
Demand for electronics soared as people transitioned to remote work and virtual schooling. Consumers rushed to buy new computers, phones, and smart home devices—all of which rely heavily on semiconductors. Chip manufacturers couldn’t keep up.
In response, the semiconductor industry began proposing solutions to help ensure a more robust and reliable supply of semiconductors. Countries, including the U.S. that have historically relied on chip-making facilities overseas, commonly referred to as fabrication plants or “fabs,” pushed for investments in domestic production. But a single fab requires thousands of skilled employees–and the semiconductor industry, like so many others, is already facing a labor shortage.
President Biden signed the CHIPS and Science Act of 2022, investing $280 billion to fund domestic semiconductor chip manufacturing to boost its competitiveness with China by lowering prices, creating jobs, and decreasing its reliance on imported chips. The package included:
- $52 billion in funding for U.S. companies to produce computer chips, as well as a 25 percent tax credit for companies who invest in the market
- $39 billion for chip manufacturing companies to expand and modernize their technologies
- $11 billion for the Commerce Department for research and development
- $81 billion for the National Science Foundation
In mid-2023, the worst of the chip shortage appears to be over. 51 percent of semiconductor organizational leaders think the primary impact of tech giants, platform companies, and automotive companies developing their own chips and silicon capabilities is increased competition for talent. Semiconductor employers must add at least 115,000 workers by 2030 to meet critical workforce needs. But, as many as 67,000 or 58 percent of these positions may go unfilled, including engineers (41 percent), technicians (39 percent), and computer science workers (20 percent).
The semiconductor workforce of today
The semiconductor industry directly employs an estimated 277,000 workers in the U.S., according to the Semiconductor Industry Association (SIA). However, each direct job supports 5.7 additional American jobs in other parts of the economy.
Today, the semiconductor workforce is represented in 49 states and Washington, D.C., with the highest concentrations of workers in California, Texas, Oregon, Arizona, and New York. Production and engineering jobs make up more than half of the domestic semiconductor workforce, but the industry also employs workers in management, business and financial operations, mathematics, sales, administrative support, maintenance, transportation, and more.
Nearly 40 percent of the semiconductor workforce is aged 50 and above, and less than 25 percent is under 34. The U.S. semiconductor industry also employs a greater share of non-white workers compared to the manufacturing sector as a whole and all other industries nationwide.
McKinsey & Company reports that in contrast to their competitors in the automotive and big tech industries, semiconductor companies face significant gaps in work-life balance and senior management satisfaction while also encountering challenges related to company culture, compensation and benefits, and diversity and inclusion. The only area where semiconductor companies outperform their competitors is in providing career opportunities.
Developing the semiconductor workforce of tomorrow
Recognizing the urgency of the workforce shortage, manufacturers, industry associations, universities, and state governments are working together to build and broaden talent pipelines.
- Semiconductor employers increased their internship postings by 5 percent during the 2022-2023 school year compared to the prior school year. Internship applications rose 163 percent for semiconductor companies compared to 21 percent for other industries.
- The Semiconductor Industry (SIA) and FIRST® (For Inspiration and Recognition of Science and Technology) have partnered to enhance STEM education to give students the skills needed to pursue a career in science and technology and facilitate mentorship programs.
- SEMI, the global trade association representing the electronics manufacturing and design supply chain, has an immersive program to teach high schoolers about the high-tech job opportunities available.
- In 2022, Purdue University in Indiana launched the nation’s first Semiconductor Degrees Program. Students design, fabricate, and test their own semiconductor chips and have opportunities to participate in internships or co-op experiences.
- The Michigan Economic Development Corporation (MEDC) new Semiconductor Talent Action Team (TAT) is “a collaborative, public/private partnership aimed at making Michigan a top state for semiconductor talent solutions and growth.”
- The University of Washington was awarded a $10 million grant to enhance semiconductor workforce training.
Finding and retaining semiconductor workers today
Workforce development initiatives to build talent pipelines are critical for the long-term success and sustainability of the semiconductor industry and our global economy and appear to be helping. Full-time job applications rose 79 percent compared to the prior year for semiconductor organizations and just 19 percent for other companies. But organizations still need additional workers right now.
Retention must be integral to employers’ talent strategies, as there are only so many people with the necessary skills and industry knowledge to do these jobs effectively today. McKinsey & Company states that “a key driver of weakening bonds between employers and employees is the gap between what employees want and what employers think they want. The factors cited by employees as being most important to them are “to be valued” and “to enjoy a sense of belonging.”
Many employees have grown partial to flexible work arrangements and want to work for companies that support work-life balance through remote or hybrid work, flexible hours, or alternative schedules. While not every job and task in the semiconductor industry can be performed offsite, companies must be cognizant of workers’ preferences as they seek to find and retain talent.
Upskilling semiconductor workers is crucial to keep up with the rapidly evolving semiconductor industry and to ensure a skilled and competent workforce. Strategies include identifying declining and rising skills within each role and upskilling the workers with declining skills.
Sustained success in the semiconductor industry
As the semiconductor industry rallies behind federal legislation providing $52 billion in funding that opened the door to research, manufacturing, and workforce development, addressing the talent shortage has never been more dire.
In the short term, employers must focus on retaining the talent they do have and upskilling workers, when possible, to keep them competitive. At the same time, the industry should continue exploring innovative, longer-term partnerships to get students interested and excited in STEM careers while providing hands-on training to the semiconductor workforce of tomorrow.
Regional Director of Business Development Damian Scandiffio