The Changing Landscape of the Semiconductor Industry: An Urgent Call to Prioritize Talent

The semiconductor industry, known as the driving force behind technological growth and innovation, is currently in a high-stakes race. Companies around the world, from South Korea to Germany to the United States, have announced plans to build massive new factories, with an expected investment close to $1 trillion from 2023 to 2030. This global expansion frenzy has the potential to completely reshape the industry and shift the balance of power worldwide.

While manufacturing capacity is crucial, another critical factor in the equation is talent. The semiconductor companies of today and tomorrow must ensure they can attract and retain a skilled workforce to fully utilize the new capacity being constructed. However, the industry is facing significant challenges in this area. The convergence of an insufficient number of graduates, an aging workforce, and a poor perception of the industry among candidates poses a threat to these upcoming capital projects.

To overcome these challenges, semiconductor companies must prioritize talent as a top strategic objective. Business leaders can take several actions to ensure they make the most of their existing workforce, tap into previously untapped talent pools, and fill the remaining gaps with contingent labor.

The demand for qualified candidates in the semiconductor industry has been growing exponentially even before the recent wave of investment. Job postings for semiconductor technical roles in the European Union and the United States have seen a compound annual growth rate of over 75 percent from 2018 to 2022. Failure to make the semiconductor sector more attractive could result in a massive talent gap, with over 100,000 unfilled engineering positions in the United States and Europe, and over 200,000 in Asia-Pacific (excluding China).

This talent challenge extends beyond semiconductor companies to the broader ecosystem of value chain players. Companies involved in designing and manufacturing the complex, capital-intensive equipment required for chip production are also struggling to fill the talent gap. Additionally, suppliers of individual parts for these machines, typically located outside talent hubs, face similar challenges.

Siting new construction projects far from existing talent pools is one of the major hurdles companies face. While talent is concentrated in existing semiconductor hubs like Silicon Valley and Taiwan, regions without established ecosystems may need to develop their own semiconductor ecosystems to attract and retain skilled workers. A robust ecosystem not only provides employment opportunities but also facilitates cross-pollination among companies, fostering teamwork, shared practices, and culture.

The required skills in the semiconductor industry are also evolving. The push for more powerful chips and the quest for new materials have changed the talent profile. Skills in artificial intelligence, machine learning, and knowledge of applications and new materials have become increasingly critical. In 2022, the software engineer role, especially in embedded software programming, took the spot as the most critical occupation in the European semiconductor industry, replacing the design engineer role.

Attraction and retention of top talent have been persistent issues in the industry. The imminent wave of retirements among semiconductor employees, coupled with a shortage of STEM graduates to replace them, poses a significant challenge. Additionally, the industry struggles with branding and marketing, as semiconductor companies have a weaker brand image and recognition compared to higher-profile tech companies. Moreover, employees in the industry increasingly express a desire to leave their current jobs, citing a lack of career development, advancement opportunities, and workplace flexibility as the primary reasons.

In summary, the semiconductor industry is experiencing a transformative period, driven by massive investments and global expansion. However, to fully leverage this growth, companies must prioritize talent acquisition and retention. Strategic actions, such as tapping into untapped talent pools and addressing perception issues, are crucial for the industry to thrive in the face of evolving technological demands. By embracing talent as a top strategic objective, semiconductor companies can position themselves for success in the changing landscape of the industry.

FAQ:
1. What is the semiconductor industry?
The semiconductor industry is known as the driving force behind technological growth and innovation. It involves the manufacturing and production of semiconductor devices, including integrated circuits, which are used in electronic devices such as computers, smartphones, and smart appliances.

2. What is the current state of the semiconductor industry?
The semiconductor industry is currently experiencing a high-stakes race, with companies around the world announcing plans to build massive new factories. This global expansion frenzy has the potential to reshape the industry and shift the balance of power worldwide.

3. What are the challenges faced by the semiconductor industry in terms of talent?
The semiconductor industry is facing significant challenges in attracting and retaining a skilled workforce. These challenges include an insufficient number of graduates, an aging workforce, and a poor perception of the industry among candidates.

4. How can semiconductor companies overcome these talent challenges?
Semiconductor companies can prioritize talent as a top strategic objective by taking several actions. These include making the most of their existing workforce, tapping into untapped talent pools, and filling the remaining gaps with contingent labor.

5. What is the current demand for qualified candidates in the semiconductor industry?
The demand for qualified candidates in the semiconductor industry has been growing exponentially even before the recent wave of investment. Job postings for semiconductor technical roles have seen significant growth rates in the European Union, the United States, and the Asia-Pacific region.

6. What are the challenges faced by the broader ecosystem of value chain players in the semiconductor industry?
Companies involved in designing and manufacturing the complex equipment required for chip production, as well as suppliers of individual parts, are also struggling to fill the talent gap.

7. What are some of the major hurdles companies face in attracting talent?
Siting new construction projects far from existing talent pools is one of the major hurdles faced by companies. Regions without established semiconductor ecosystems may need to develop their own ecosystems to attract and retain skilled workers.

8. How are the required skills in the semiconductor industry evolving?
The required skills in the semiconductor industry are evolving due to the push for more powerful chips and the quest for new materials. Skills in artificial intelligence, machine learning, and knowledge of applications and new materials have become increasingly critical.

9. What are the challenges in attracting and retaining top talent in the semiconductor industry?
Attraction and retention of top talent have been persistent issues in the industry. The impending wave of retirements among semiconductor employees, coupled with a shortage of STEM graduates, poses a significant challenge. Additionally, branding and marketing issues and a lack of career development and advancement opportunities are factors that contribute to talent retention issues.

10. How can semiconductor companies position themselves for success in the changing landscape of the industry?
Semiconductor companies can position themselves for success by prioritizing talent acquisition and retention. This includes tapping into untapped talent pools and addressing perception issues to make the industry more attractive.

Definitions:
Semiconductor industry: The industry involved in the manufacturing and production of semiconductor devices, such as integrated circuits, used in electronic devices.
Integrated circuits: Electronic components made up of several semiconductor devices, such as transistors and diodes, integrated onto a single chip.
STEM: An acronym for Science, Technology, Engineering, and Mathematics, which refers to academic disciplines in those fields.

Related links:
Semi.org (SEMI – Semiconductor Equipment and Materials International)
SIA-Global.org (Semiconductor Industry Association)