The semiconductor industry is on the brink of a significant labor shortage as its growth has surpassed the supply of qualified workers in the USA. This shortfall could hinder the full deployment of artificial intelligence (AI), which relies heavily on advancements in chip technology, according to recent findings.
A report by McKinsey & Company indicates that both public and private sectors plan to increase their investments in the US semiconductor industry to over $250 billion by 2032, generating over 160,000 new positions in engineering and technical support.
However, the sharp reduction in the US domestic semiconductor manufacturing workforce, which has plummeted 43% since its peak in 2000, poses a significant challenge in filling these roles. The demand for skilled labor will take time to meet, and the report estimates that there could be a deficit of up to 146,000 engineers and technicians by 2029.
Significant reforms are needed within the semiconductor sector to boost domestic production, McKinsey points out. An essential strategy includes building new domestic fabrication plants to lessen reliance on overseas products and increase competitiveness against major chip manufacturers in Taiwan and South Korea, which dominate the market. The US is also aiming to match the pace with China to prevent advanced chip technologies from falling into rival hands.
“The American semiconductor industry must initiate substantial changes in how it develops, acquires, and retains skilled labor to bridge the significant talent gaps projected,” the report emphasizes.
As the sector struggles with a personnel deficit, this issue could soon disrupt silicon chip production, pivotal at a time when AI’s accelerating demand necessitates increased computing capabilities – a challenge semiconductor technology is ready to meet.
“The shortage of specialized staff could majorly hinder silicon production as complex manufacturing processes require expert handling,” said Beatriz Valle, senior analyst at GlobalData. “This scarcity can cause delays in already lengthy production cycles, impacting the supply chain and potentially leading to chip shortages.”
Certainly, the lack of semiconductors suitable for running advanced AI models in large-scale computing environments has compelled major cloud providers like Amazon and Google to develop proprietary technologies to sustain their processing needs, as reported by GlobalData. AI now might encounter similar challenges, Valle indicated.
“The scarcity of microprocessors can significantly impact the US because chips are the backbone of AI growth,” Valle said. “A shortage can slow down the development and deployment of new AI technologies, delaying innovation.”
Despite the alarm generated by the McKinsey report, another analyst believes that the situation is not as dire as some experts are predicting, and that the discussion about lack of talent in the industry is being over-hyped.
“I don’t see a crisis situation – when there will be jobs/opportunities, companies will find people,” noted Gaurav Gupta, VP analyst, emerging trends and technologies, at Gartner. “I don’t see [labor shortage] as a hurdle in ramping operations.”
What may be more difficult, he said, is to find construction workers to build a raft of new fabrication facilities that various OEMs are planning in the US. This could delay ambitious plans to expand domestic production of chips and thus create a different sort of issue for the industry.
“This could lead to higher costs of building fabs in the US, which is already a big concern,” Gupta noted.
The US currently has some measures in place to help the US labor market ramp up quickly to fill in gaps of skilled workers in the semiconductor space, Valle noted.
TSMC, for example, which is increasing chip production significantly in Arizona, already has delayed the start of production at a planned factory there from this year to next due to a shortage of skilled workers. It’s currently sending experienced technicians from Taiwan to train US workers as “a temporary measure to help bridge the skills gap,” she said.
However, there is no silver bullet to solving the issue, “since what is required is educating workers in long-term investment drives, which is something that cannot be improvised,” Valle said.
Under the CHIPS Act of 2022, the Biden administration aims to enrich semiconductor manufacturing in the US. This legislation includes the formation of a Workforce Partner Alliance, concentrating on bridging the skills gap among researchers, engineers, and technicians in the fields of semiconductor design, manufacturing, and production, to prevent a potential crisis in semiconductor labor.
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