Deloitte says the chip industry will hit $1T in 2030, but a huge talent shortage looms across the entire world.
In 2022, Deloitte expected that the global semiconductor industry would need to add a million skilled workers by 2030, or more than 100,000 annually. Two years later, that forecast still holds.
But key industry trends continue to compound the talent challenge as the industry races toward $1 trillion in revenue by 2030, according to a new report by Deloitte, the accounting and consulting giant.
The company said that advanced skills driven by demand for Generative AI (GenAI) mean that the talent needed for advancing technologies is often in high demand and can be difficult to attract and retain in a competitive talent market.
The semiconductor industry is facing an aging workforce without a clear plan for succession, which may be further exacerbated by low industry appeal compared to the broader tech industry. I suppose this is because the chip industry isn’t as sexy as working for AI or social media companies. Global solutions needed for a global challenge
Localization of manufacturing, as well as overall global demand trends, is contributing to a talent and skills shortage that spans the globe. Semiconductor companies are often left competing over the same insufficient pool of existing talent.
And talent outcomes are tied to global chips laws. Both the U.S. and European chips legislation include specific objectives and grant application requirements regarding workforce development that companies should commit to in order to receive funding, remain in compliance, and achieve growth objectives.
Geopolitical concerns and supply chain fragility continue to contribute to the onshoring of manufacturing (advanced node, trailing node, memory) and back-end ATP (assembly, test, and packaging) processes. A history of cycles
The cyclical chips industry experienced its seventh downturn since 1990, with revenues declining 9% to $520 billion for 2023. As a result, development of some new fabrication capacity has been extended, which has also likely delayed some of the immediate, short-term need for talent.
This downturn is expected to be temporary, with revenue set to grow by 16% in 2024 to an all-time high of $611 billion. With the industry back on track to reach the $1 trillion figure for 2030, talent will be needed to fuel that growth. But now there’s more time to optimize talent forecasts, mix, pipeline, skills and capabilities, and development plans.
A richer understanding of the challenges driving the semiconductor talent shortages can enable semiconductor leaders to deploy targeted strategies to help address their looming talent needs.Advanced skills being driven by demand for GenAI
According to Deloitte’s 2023 Smart Manufacturing: Generative AI for Semiconductors Survey, 72% of industry leaders surveyed predict that GenAI’s impact on the semiconductor industry will be “high to transformative.”
Respondents saw high potential for Generative AI’s use throughout their business, with heavier value realization expectations within core engineering, chip design and manufacturing, operations, and maintenance.
Although GenAI may help alleviate some engineering talent shortages by addressing routine tasks and giving engineers more time to perform their core jobs better and faster, the GenAI skill set scarcity remains.
The semiconductor workforce is expected to need to exponentially grow its GenAI skill sets due to their shortage in the market. And leaders in the field are often in high demand across most sectors of
the economy. Semiconductor companies should consider offering more novel benefits beyond competitive compensation, such as having a seat at the table, to better attract AI talent and leadership.
Having proficient GenAI talent is key in driving the industry’s ability to innovate and reap the benefits of this transformative technology.
Looming talent cliff and low industry appeal
An aging workforce, regulatory changes, newly required skill sets, and shifting employee expectations are changing the landscape of semiconductor talent. The lack of brand awareness and appeal in the semiconductor industry compared to better-known technology brands can make addressing these challenges more difficult for the industry.
Semiconductor companies seem to recognize that attracting and retaining new and diverse talent is more important than ever, yet it continues to be a challenge for many organizations. Building diversity can be difficult; currently only one-third of the U.S. semiconductor industry employees identify as female and less than 6% as Black or African American.
The U.S. semiconductor workforce is also older than other technology industries: As of July 2024, 55% of the U.S. semiconductor workforce is 45 or older, with less than 25% under the age of 35.11 In Europe, 20% of the industry is 55 or older, with Germany expecting about 30% of their workforce to retire over the next decade.
Inconsistent knowledge management, and the lack of new talent to adopt institutional knowledge, presents an additional workforce barrier for many semiconductor companies.
Relative to other sectors of the technology industry, semiconductor organizations can offer a sense of trust, stability, and projected market growth—attractive qualities to the most recent college entrants.
While semiconductor companies may have struggled with brand recognition and a competitive employee value proposition, investing in recent high school graduates could help reinvigorate talent pipelines that may be more attracted to stability and flexibility over rapid advancement.A global shortage
The need for semiconductor talent is a global issue. Countries are not producing enough skilled talent to meet their workforce needs. And companies can’t continue to tussle over the same finite talent pool while still expecting to successfully grow the industry, launch new (and expand existing) fabs, and keep up with rapid technological advances.
In the United States, where the majority of annual graduates with a master’s degree in semiconductor-related engineering fields are foreign students, 80% of those graduates do not stay in the United States post-graduation.
According to Deloitte China and Asia Pacific’s most recent APAC Semiconductor Industry Trends Survey, 90% of companies surveyed highlighted talent acquisition and development as a top priority to sustain industry growth and competitiveness, while 63.3% highlighted talent capability and retention as major industry risks.18 As Asia looks to expand its semiconductor industry beyond key historical players, significant shortages can also be expected.
For example, India’s semiconductor industry is looking at a potential deficit of 250,000 to 300,000 professionals by 2027.
