Mar 23, 2022 - Technology

Chip makers feel labor market squeeze

Illustration: Sarah Grillo/Axios

Growing global demand for chips has semiconductor companies scrambling to hire engineers and other skilled workers in the U.S. amid a nationwide labor shortage and international supply chain disruptions.

Why it matters: A labor shortage could dampen the U.S. semiconductor industry's expected growth, just as policymakers are trying to boost funding for domestic manufacturing.

Driving the news: Intel CEO Pat Gelsinger will stress the importance of building a tech talent pipeline as part of his testimony before the the Senate Commerce Committee on Wednesday.

  • Intel has nearly 2,500 job postings for engineers in the U.S., and that need is expected to increase if Congress passes a $52 billion funding package for domestic semiconductor manufacturing.
  • "The most important, and one of the most vulnerable, supply chains the American semiconductor industry is facing today, is the supply chain of human talents," Mung Chiang, executive vice president of Purdue University for strategic initiatives and the John A. Edwardson Dean of the College of Engineering, told Axios.

By the numbers: Job postings for electrical engineers in the U.S. semiconductor industry grew 78% from 2020 to 2021, more than three times faster than growth for electrical engineers overall, according to data from Emsi Burning Glass.

  • The average salary for electrical engineers in the semiconductor industry is almost $17,000 above average for all electrical engineers, Emsi found.
  • "We really saw that there's the makings for a perfect storm of hiring difficulties," Will Markow, Emsi's vice president of applied research-talent, told Axios, pointing to increased demand and the specialized skills required.

State of play: The demand for highly skilled workers is projected to rise, but the semiconductor industry has not been the top destination for U.S. students graduating with math and science degrees.

  • "The total number of STEM-oriented students in this country is not big enough already, and the slice of that pie going into semiconductors is also not the most promising," Chiang said.

What they're saying: MediaTek, a Taiwanese company that develops chips, is trying to grow its U.S. presence, but its plans are hampered by the shortage of skilled talent, vice president of U.S. government relations Patrick Wilson told Axios.

  • More than 80% of the company's new hires have a master's degree or PhD, he noted.
  • "For that special subset of skilled technologists, there is intense competition," Wilson said. "It’s akin to the NFL or Major League Baseball."
  • Semiconductor company AMD hired roughly 1,000 engineers in the U.S. last year, and expects to hire about 1,900 this year, a company spokesperson told Axios.
  • "What we're finding is it's extremely difficult to find the skills that we need," AMD chief technology officer Mark Papermaster said during a panel for Purdue University in November. 

Competition from Big Tech companies also poses a threat, an industry official told Axios: "Everyone wants to be a software engineer — everyone wants to work for Google, Facebook or Apple. They’re not interested in the silicon side of things.”

The intrigue: Intel is investing $50 million over the next 10 years into higher education in Ohio through grant programs, including funding to create the Intel Semiconductor Education and Research Program for Ohio, to help ensure a workforce for the new manufacturing plant it will build in the state.

  • Earlier this month, the company opened enrollment for a new, two-week accelerated development program with community colleges in Arizona to train students to become semiconductor technicians.
  • "In the short term, I think we're doing OK in terms of getting technical talent, but over the next three to five years, it's going to be a priority," Al Thompson, Intel vice president of U.S. government relations, told Axios. "We're building [facilities] and we have to staff them."

Meanwhile, Purdue University is launching new degree programs focused on the semiconductor industry this year. Chiang expects interest to be high.

  • "Until about a year or two ago, most people wouldn't appreciate what chips are," Chiang said.
  • "That's starting to change as people realize, 'Oh, I can't buy a car because of chips.' If you know how to work some part of that total end-to-end process, then you can have very good job prospects."
Go deeper