Will Big Competition Attract More Talent For IC Companies?

Google is hiring a chip packaging technologist. General Motors is seeking a wafer fabrication procurement specialist. Facebook Reality Labs wants a materials researcher with experience in photolithography and nanoimprint techniques.

Recent job postings by tech and automotive giants are enough to worry any chip company executive struggling to attract talent. But what may seem at first like a nightmarish recruitment scenario for an industry that has long struggled to attract workers with relevant skill sets could be exactly what the chip industry needs in the long term.

Semiconductor companies — those that manufacture computer chips, as well as those involved in adjacent activities like EDA — have grumbled for years about potential employees ignoring the hardware ecosystem and opting instead for software and AI-related jobs at prominent, high-paying companies like Google (now Alphabet) and Facebook (now Meta). But as more functionality shifts to hardware, or some tightly integrated combination of hardware and software, semiconductor companies find themselves increasingly in direct competition with these and other organizations.

These shifts are occurring as the global economy grapples with wafer and chip shortages, as well as a slowdown in Moore’s Law. So instead of simply shrinking features to improve performance, power, and area/cost, they are now architecting solutions that are increasingly heterogeneous, with a mix of chips or chiplets developed at different process nodes and customized for specific applications. As a result, well-resourced tech and auto companies are moving their semiconductor operations in-house and hiring accordingly, often for niche specialties with relatively few candidates.

This is likely to exacerbate the crunch in the short term as more large companies search for semiconductor-savvy job candidates. Joseph Sawicki, executive vice president of IC-EDA for Siemens EDA predicted, “a few years of turmoil as a whole bunch of people shift and move, and do musical chairs.”

But over time, Sawicki and others say, the luster of brands like Apple, Amazon and Tesla could draw more people to hardware-related careers. Combined with a mellowing of the pandemic-fueled frenzy for consumer electronics and more inclusive hiring practices by chip companies, the new dynamic eventually could help ease labor concerns.

“The really great thing about these systems companies going vertical is that quite often people want to go and work for them — people who may not have gone into the industry,” said Rebecca Dobson, Cadence’s corporate vice president for EMEA. “At the beginning, it may feel like they’re taking a lot of the people  into the systems companies, but overall it’s a net gain.”

Kristy Calcagno, a vice president of human resources at Synopsys, believes the new landscape will bring “more interest, more excitement, more talent and more awareness to the industry.”

Also, Edward Latson, chief executive of the Austin Regional Manufacturing Association, which has multiple chip companies represented among its membership, said the shift will ultimately create a stronger, more robust system. “It’s just getting through these growing pains,” said Latson in a recent webinar hosted by SEMI.

The trek to $1 trillion
While it will take years to see if the predictions are correct, it’s clear the industry is now at a critical juncture. Chip shortages, which many semiconductor companies have blamed at least in part on staffing issues, have upended the auto industry and disrupted medical device manufacturing, among countless other effects.

The industry’s labor woes pre-date both the pandemic and the shifting business models of tech and auto companies. Also, over the past two decades, semiconductor leaders have reported difficulties with finding enough people with the right skill sets. They’ve attributed the problem to any number of factors, such as too few STEM majors in the college pipeline, increasingly complex technologies requiring rare skill sets, and the aging and retirement of the current workforce.

The demand for skilled workers has put the chip industry, at times, at the center of a political maelstrom about training workers domestically versus increasing the number of work visas, and which industry segments should get the lion’s share of those visas. In the U.S., there has been almost perpetual tension about the number of H1-B visas that were issued and who received them.

But what became apparent with pandemic-driven office closures over the past couple years is that chip design activity could continue unabated. In fact, many executives observed that both hardware and software engineers were significantly more productive working from home, and managers were able to keep teams working in sync through regular videoconference calls on Zoom or Microsoft Teams. As a result, talent searches have widened to new regions around the globe. Industry executives say companies are now searching for skilled labor in markets that previously were never considered, and universities around the globe begun to ramp up their curriculums to include some element of hardware or software. That, in turn, is being fueled by national and regional investment in new technologies, including AI, photonics, and quantum.

This has opened the door to a variety of new semiconductor-related jobs that never existed before, and expanded the need for workers in more traditional roles. And with more data being produced everywhere, the need to process that data in more places is growing rapidly, and increasing the need for more efficient and faster chips.

SEMI expects more than 90 new chip manufacturing plants around the globe to become operational in the next few years compared with 2020 fab counts. In the U.S. alone, new plants are estimated to require a total of 40,000 to 50,000 employees to keep them online.

That estimate doesn’t include the hundreds of thousands of skilled workers that keep the industry running outside the plant, including those involved in design, sales, packaging and research, among myriad other activities. Or the employees needed to fill more immediate gaps across job functions. SEMI says its 450 U.S. member organizations had 84,000 job openings over a recent 12-month time period.

“It’s ‘Code Red,” said Latson. “Everybody’s looking around and saying, ‘Where are these people going to come from?’”

The plight has led at least one major industry player to modify its hiring policies. According to The Oregonian/ Oregon Live, Intel has changed its stance on allowing thousands of former employees to apply for jobs within the company. Intel conducted mass layoffs in 2015 and 2016 as a cost-cutting measure and said at the time that those affected would be ineligible to rejoin the company.

Intel noted that much has changed since then. “A number of years have passed since the 2015/2016 restructure, and those impacted may have new and additional skills that are valuable to Intel’s current business strategies,” the company said in a statement. “Accordingly, Intel recently updated its rehire eligibility policy. In most instances, those impacted by the 2015/2016 restructuring in the U.S. are eligible to apply for open roles.”

Consulting firm McKinsey predicts semiconductors will be a $1 trillion industry by the end of the decade if supply and demand issues can be resolved. Ondrej Burkacky, a senior partner at McKinsey who helps lead the firm’s semiconductor and business technology practice, said the pace at which the industry is able to reach the $1 trillion marker is “definitively” tied to labor and the ability to innovate, expand and deal with potential supply chain problems.

“Labor shortages in the semiconductor industry have existed before,” Burkacky said. “What is rather new and unrelated to COVID-19 is the competition for semiconductor-specific talent, caused by the higher demand for such resources outside semiconductor players.”

What’s also different is that even though there are shortages of workers, those workers have more money to spend on technology, which is fueling even more demand for chips and engineering talent. “The labor market is obviously very tight, but even if you can’t find workers, the flipside of that is those workers have more money,” said Tim Mahedy, senior economist at KPMG, in a recent presentation. “They can buy more processors, they can buy more computers, and they can call a company and say, ‘I’m not going back. I’m sitting in a basement in San Francisco, just buy me another computer.’ Those are really tailwinds in the American economy.”

Driving demand, demanding talent
Tech giants are one major set of players behind that demand, and it’s not just Apple. In a presentation at an industry conference earlier this month, Siemens’ Sawicki said systems companies generally represent an increasingly large chunk of foundry revenue. Those companies were responsible for 1% of foundry revenue in 2011, and 21.3% in 2021.

A Siemens analysis of conference proceedings also found that systems companies made up a growing percentage of presenters at the Hot Chips industry conference, growing from 13% in 2011 to 33% a decade later.

Stelios Diamantidis, senior director and head of artificial intelligence strategy at Synopsys, said the current situation is similar to what was seen in the 1990s when systems firms were the primary companies making chips. “There’s a cyclical nature to this,” he said. “We’ll go through this cycle, and then we’ll go through another cycle of disaggregation, which we’ve seen in the past as well.”

Systems companies aren’t the only ones behind the demand for semiconductor resources. In fact, they aren’t even the largest contributor. Demand from the automotive industry could be responsible for up to 20% of the semiconductor industry’s growth over this decade, according to McKinsey’s Burkacky.

A report from Gartner predicts that in the auto industry, half of the top 10 OEMs will design their own chips by 2025. Like their tech giant counterparts, these manufacturers are seeking to insulate themselves from chip shortages and co-design sophisticated technology like autonomous driving capabilities.

That means the battle for the best talent isn’t just about the semiconductor ecosystem vying against Big Tech or Big Auto. It’s also about tech and auto competing against one another, and, in some cases, against partners in their own supply chains.

To be sure, there is no guarantee all the competition will ultimately have a positive impact on labor dynamics.

“The trend toward vertical integration only makes the shortage worse as tech and auto companies need their own teams,” said Rupert Baines, chief marketing officer at Codasip. He noted that one solution is for hardware engineering to become more efficient, while another is for universities to expand their semiconductor-related programs.

Raising the profile
Indeed, there is near-universal consensus that training and educational investments are key to increasing the number of qualified workers regardless of the new competitive landscape. So, too, is a commitment to diverse and inclusive hiring practices, whether that means increasing the number of women in leadership roles or helping veterans apply military skill sets to the hardware world.

There is also the tricky business of wages, and the extent to which a perceived labor shortage actually might be the semiconductor industry failing to provide the types of salaries the market demands.

“We have to change the model, we have to pay people more,” said Santosh Kurinec, a professor at the Rochester Institute of Technology. “If we compare wages with a person who’s sitting around and coding for Facebook, that person is making more money than the person who’s running the tools in the lab.”

Shari Liss, executive director of SEMI’s workforce arm, said job candidates are also increasingly concerned about work-life balance and sustainability practices, things they don’t necessarily equate with the semiconductor industry. Nor are they always aware of the scope of opportunities within the field.

“There’s this one bunny-suit image,” said Liss, referring to the perception that all semiconductor jobs require full-body protective gear in a clean room. “When we talk about the breadth and depth of jobs and opportunities, that’s still news to a lot of people as they consider what they want to do for a career.”

Liss said she’s hopeful big tech and auto companies will raise the profile of semiconductor jobs and help deepen the talent pool.

Or as Kurinec put it, “Facebook cannot exist without a chip, autonomous cars cannot exist without a chip . . . We have to somehow bring glory to hardware.”

—Ed Sperling contributed to this report.

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