There is so much in the headlines about a semiconductor talent shortage, supply chain woes, the CHIPS Act, and will we ever have the chips we need (when we need them). But what is a common-sense approach to these challenges? Deloitte recently published a report, The Global Semiconductor Talent Shortage, that looks at the status of the industry today and identifies actions the industry can take to identify, recruit, and develop the necessary workforce.
What happened?
In 2021, the global industry produced approximately $275,000 in revenue/worker, in part due to the clustered nature of chip manufacturing and back-end assembly, testing, and packaging (ATP), reported Deloitte. Eighty percent of all chips were made in four countries in East Asia, and over 90% of the ATP was in those countries or in proximity.
The U.S. currently makes about 10% of all chips with a target of a 30% share by 2030. The EU makes less than 10% and aspires to a 20% share by 2030. A less concentrated chip industry, both in manufacturing and ATP, will help the U.S. and EU industries that rely on chips, reported Deloitte. Labor efficiency will decline as a result, as more people in more locations will have to make a trillion dollars’ worth of chips.
Another issue is that if those chips are sent to Asia for ATP after manufacture and then sent back for consumption, the supply chains doubled in length, said Deloitte.
The global semiconductor industry totaled $550 billion in revenues in 2021 with a projected increase of 80% (>$1 trillion) in 2030. The problem? Fewer than 100,000 graduate students enroll in electrical engineering and computer science in the U.S. annually, according to Deloitte, and more than one million additional skilled workers will be needed by 2030.
Where are we today?
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Semiconductor investment from both private and public sectors across R&D, manufacturing, and talent development is up. Two recent examples are the Creating Helpful Incentives to Produce Semiconductors (CHIPS) and Science Act and European Chips Act.
“The objective of the U.S. and EU Chips Acts are to drive more innovation and manufacturing self-sufficiency,” said Brandon Kulik, principal, Deloitte Consulting LLP’s Technology, Media, & Telecom industry practice and leader of the Semiconductor Industry segment. “That objective is already running up against fluctuations in demand and fear of a glut, which would temper an enterprise’s desire to rush into capacity that cannot be filled.”
He suggests that success will be in achieving the goals of the chips acts but at a pace that reflects not just the political climate but the business one as well.
Unfortunately, the semiconductor talent shortage shows signs of getting even tighter with the global economic environment and continuing supply chain issues. While semiconductor demand for PCs, smartphones, and crypto mining is declining, demand for chips in the automotive industry, factory equipment, and appliances remains strong, said Deloitte. Industry forecasts project global semiconductor sales to grow by almost 14% in 2022.
Tomorrow’s requirements
Deloitte estimates that one million additional skilled workers will be needed by 2030, translating into 100,000 annually, to support the global semiconductor industry. However, the number of students in semiconductor-focused programs has dwindled.
Skills are also evolving within these job groups, said Deloitte, in part due to automation and increased digitization. Digital skills, such as cloud, artificial intelligence (AI), and analytics, are needed in design and manufacturing more than ever.
Getting there
With a shortfall of workers said to be the biggest challenge to semiconductor industry growth globally, the report recommends three actions the industry can take to identify, recruit, and develop the workforce – unleash the workforce, rearchitect work, and adapt the workplace.
Unleashing the workforce
What future skills will be needed in engineering and manufacturing that will drive superior performance and value? Organizations must find innovative ways to build, buy, and/or borrow those skills, said Deloitte.
“We see companies trying to improve the way they recruit in terms of targeting and the recruiting process itself,” said Kulik. “We see select companies preparing to get very creative in the types of programmatic and experiential solutions to build new talent pools. They are seeking out-of-the box ideas to both accelerate the learning curve and get ahead of competitors who are all drawing from the same traditional talent pools.”
Rearchitect work
What future-state capabilities will be needed? Once identified, Deloitte said companies need to redesign how humans and technology interact to deliver services, outcomes, and value (e.g., digitalization, AI/machine learning).
“We see many teams back to work in the office, but these teams are often globally distributed so the way that they collaborate, allocate resources to different engineering priorities are evolving and require more automation and flexibility,” said Kulik. “There is a lot of talk of more cloud-based engineering solutions to drive that flexibility. There’s also the potential for AI and digital technologies and more to further disrupt ways of working and allow fabs to rearchitect the work and decrease reliance on humans across the manufacturing lifecycle.”
Adapt the workplace
How will an organization navigate transformative change? What new technologies, roles, ways of working, optimization of the environment to maximize worker potential will need to be implemented? Organizations will need to foster collaboration with educational and government institutions, but results won’t be immediate, said Deloitte.
For example, when asked about the CHIPS Act funds for STEM and when to expect results from the investment, Kulik said it will be a slow ramp that is based on the academic community’s ability to turn the funding into instructors and classes and then turning students into employees. He expects it will be more than two years before there is any real impact.
In addition, lackluster interest in hardware engineering and fab/manufacturing jobs, especially in the U.S. and Europe will require a fresh value proposition and targeted marketing campaign to entice workers to enter the field, Kulik added.
Overall, Deloitte finds the future of work in semiconductors has changed, which will require organizations to take the time to understand the gap between their current capabilities and future requirements. Other recommendations include building new talent pools in new locations and finding new ways to define and implement innovative talent access strategies.
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