Shortage of skilled workers could affect the deployment of AI, which depends on chip innovation and semiconductor availability to thrive.
The semiconductor industry could be facing a major labor shortage as industry growth has outpaced the availability of skilled workers in the US. This potential crisis could delay the deployment of artificial intelligence (AI), which depends on chip innovation to thrive fully, new research suggests.
A recent report by McKinsey & Company found that public and private investment in the semiconductor industry in the US will expand to more than $250 billion by 2032 and will bring more than 160,000 new job openings in engineering and technical support to the industry.
This coupled with the steep decline of the US domestic semiconductor manufacturing workforce – which has dropped 43% from its peak employment levels in 2000 – means the industry will struggle to fill those jobs, given the need for skilled workers that it will take time to train and develop. At the current rate, the shortage of engineers and technicians could reach as high as 146,000 workers by 2029, according to the report.
This will require the semiconductor sector to make significant changes as it continues to try to shore up domestic production of semiconductors, according to McKinsey. One major aspect of this plan is the construction of new domestic fabrication plants to avoid dependency on foreign products and compete more effectively with manufacturers in Taiwan and South Korea, which still have the bulk of the market. The US also is trying to stay on pace with China and keep the rival nation from getting its hands on advanced chips.
“Bridging the considerable talent gaps expected will require the American semiconductor industry to confront the problem directly and embrace a sea change in its approach to cultivating, sourcing, and retaining talent,” according to the report.
Effect on AI’s evolution
As the industry ponders how to find skilled workers, the talent shortage has the immediate potential to affect the production of silicon chips, which are at a crucial turning point in the industry as the rapid growth of AI is demanding more and more computing power – which innovation in semiconductor technology is poised to provide.
“The lack of specialized personnel can really impact silicon production, since skilled workers are essential for the intricate processes involved in chip manufacturing,” noted Beatriz Valle, senior analyst, enterprise technology & services, at GlobalData. “A lack of qualified personnel can lead to delays in production schedules in what already are extremely long production lifecycles, affecting the supply chain and leading to shortages of chips.”
Indeed, shortages in the availability of semiconductors capable of running generative AI models in hyperscale computing scenarios already have forced cloud service providers like Amazon and Google to build their own in-house technology to meet growing processor demands, according to research from GlobalData. Now AI could now face a similar crossroads, she said.
“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.”
Labor challenges extend to construction of chipmaking facilities
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.
Measures already in place to dodge labor shortage
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 can not be improvised,” Valle said.
For its part, the Biden administration signed into law the CHIPS Act in 2022 to boost semiconductor manufacturing in the US. One key aspect of the act is to set up a Workforce Partner Alliance with a focus on closing the skills gap for researchers, engineers, and technicians across semiconductor design, manufacturing, and production in the hopes of dodging a semiconductor labor crisis altogether.
