By Eric Peterson | Feb 13, 2023
The semiconductor shortage reverberated through industry after industry in recent years, wreaking havoc on the best-laid business plans of manufacturers of everything from gaming hardware to luxury cars.
The cavalry was nowhere to be found, at least not domestically. U.S. manufacturers' global market share had dwindled from 37 percent in 1990 to 12 percent in 2021.
The pendulum is now set to reverse course: Bolstered by more than $50 billion from 2022's CHIPS and Science Act, chip fabs are under construction coast to coast. Intel is building plants in Arizona as it makes plans for what could be a $100 billion site in Ohio. TSMC of Taiwan is also building fabs in Arizona -- its first in the U.S. -- as Samsung and Texas Instruments expand in Texas and GlobalFoundries grows its footprint in New York.
Add it all up, and the semiconductor industry could invest more than $200 billion in new domestic manufacturing capacity in the next decade. A question jumps to the fore: As all of this capacity comes online in coming years, will the workforce emerge to support it?
Ryan Nouis, founder and CEO of TruPath in Chandler, Arizona, started the placement firm in 2002. In 2017, he narrowed his focus recruiting from manufacturing in general to primarily semiconductor work, with an emphasis on operations and management.
"We ended up doing a lot of plant startups over the years," says Nouis. "That provided me the opportunity to create a very diverse recruiting staff that can handle a full plant basically."
TruPath is now helping staff TSMC's upcoming plant in Phoenix, slated to become operational in 2024. It's the first of six phases, with TSMC announcing the start of construction of the second fab in late 2022.
The combined budget for both builds is $40 billion -- one of the largest foreign investments in U.S. history -- and the two facilities are expected to create 4,500 jobs and, as Nouis notes, "That doesn't even talk about the supply chain that's coming with it, which I think is going to be equal to or greater than what TSMC is bringing."
The recruitment map for the first facility is global. "The influx of talent coming to town is just massive," says Nouis. "For this first fab, they're hiring extremely experienced individuals. When the new fabs come up -- they're already building fab two -- they're going to take half their experienced team and put it in fab two, and backfill with lower-level staff and train them up."
It's a solid strategy on paper, but the sheer volume of semiconductor manufacturing investments across the country makes a major battle for talent inevitable.
"It's going to be the same players, the same geographical locations, they're just going to take it to that next level -- all of them," says Nouis. "It's tough. I'm not going to lie, it's very tough to recruit right now, because anybody worth their salt is working."
While an educational initiative at Estrella Mountain Community College aims to foster homegrown semiconductor technicians in the face of the coming need for manufacturing workers in Arizona, it's just the tip of the national iceberg.
According to Justin Kinsey, president SBT Industries in Phoenix, failure is not an option. "Companies have invested billions of dollars, upwards of hundreds of billions of dollars to build fabs. Those fabs sitting stagnant without workers would be a massive loss of revenue. That just can't happen."
Kinsey's forecast? "Over the next five years within semiconductor manufacturing, we're seeing anywhere from 27,000 to 38,000 new jobs, a combination of direct labor as well as engineering." That's a 10 to 14 percent bump over the country's existing semiconductor workforce of 277,000 employees.
SBT has focused exclusively on recruiting positions in manufacturing, R&D, and operations. for the semiconductor industry since 1989. "We're the longest-standing semiconductor-only recruiting firm globally," says Kinsey. "It's all we do and it's an area we are passionate about."
Recent cutbacks at Intel and other large chipmakers to fallout following "what was likely an over-hiring period," he adds. Manufacturing has "a two- to three-lag behind any cooldown that we see in R&D. Some of the manufacturing positions we are recruiting for now, the fabs won't even be finished for a year or two."
The long-term projection for domestic manufacturing growth overwhelms any near-term undulation in the market. The industry's annual revenue is expected to hit $1 trillion worldwide by 2030, according to analysts, up from about $600 million in 2023.
And the U.S. industry is "insulated," notes Kinsey, due to a broad push to reshore manufacturing and the support from the CHIPS Act. "It's created a perfect storm to grow the semiconductor development and manufacturing here domestically. What I see is there's going to be a probably five- to seven-year tight talent market."
That's largely because semiconductor engineers aren't created overnight. "It takes, minimally, four years to get a degree, and a lot of these roles require advanced degrees. Long-term, the growth within education in this field will be paramount and critical to the success of the domestic push for manufacturing and for semiconductor development here. In the meantime, one of the things we've helped our client partners do is have a creative approach as far as looking at adjacent industries where talent is similar or the needs are similar."
Can it be enough to support the investments in capacity as new fabs launch operations? "Only time will tell," answers Kinsey. "We've gotten ahead of the curve as far as looking at some of these adjacencies where people can be cross-trained."
Competitive compensation is essential, but so is company mission: "It's being able to tie what the engineer is doing to a greater good, and to a story they can be proud of but also tell other people. Having a partner that can help create that narrative along with you can be the difference between filling a job in 30 days or in 30 months."
Orion Talent in Cary, North Carolina, specializes in recruiting active-duty military personnel and veterans for the private sector. The firm recruits for many of the major semiconductor manufacturers as well as vendors in the supply chain.
"We do a lot of manufacturing and technical industries in general, whether it's supply-related or maintenance-related, but semiconductor by far is the number-one industry that we focus on," says Jay Koranda, the San Diego-based vice president of operations for Orion's Western Region.
Outside of the existing industry workforce, there are two primary options. "It's either the U.S. college system or the military," says Koranda. "And the military comes with already having hands-on experience, being able to work under pressure, being able to work on high-tech equipment, so a lot of transferable skills from working on weapons systems or aircraft directly transfer directly to the semiconductor industry, because you can get them up to speed and show them your new equipment and they can be up and running. The military has always been a naturally good fit for the industry."
The strategy also allows HR to sidestep the limitations of a single local market, he adds. "A lot of companies tend to look for talent in their own market. That's one of the big problems that you face right now in a place like Austin, which has 2.5 percent unemployment. Then you have companies like Samsung coming in and investing $17 billion, and they're looking at the local market. Well, if you look at military, you change the map around, where you can recruit military from anywhere in the world. In most cases, they're looking to move somewhere, and in a lot of cases, it's not from where they were from anyway."
Orion helped more than 5,000 members of the military transition into semiconductor jobs in 2022. Koranda expects that number to increase "tremendously" as more facilities turn on the lights, noting that Orion Talent could double the number of annual placements in coming years.
"One of the things we're doing is we're partnering with the companies to help them expand their map as far as talent goes," he says. "We've been partnering with companies like Samsung and GlobalFoundries to look at the veteran population."
"We have built a recruiting and training pipeline for military and veterans into these companies for these operational roles. You can take someone that's transitioning out of Fort Bliss in El Paso, Texas, get them while they're still on active duty and recruit them for a company directly, and then train them while they're still on active duty using one of the military programs."
Koranda points to what is often a mismatch between wins for economic developers and the realities of local labor markets. "States have been really good at attracting business," he says. "Texas, for example, has done fantastic jobs attracting companies to come there with their incentive packages. However, they have not been as good as far as attracting employees to support that work. As a state, they're trying to figure out what to do. How do you get people up to speed to work at these factories you're attracting?"