As McKinsey has written previously, public and private investments to rapidly expand the United States semiconductor industry will total more than $250 billion by 2032.1 This investment brings with it more than 160,000 new job openings in engineering and technician support alongside additional openings in related construction craft jobs, according to McKinsey analysis. While numerous initiatives aimed at building these critical talent pipelines are planned or under way, the expected talent gaps are considerable, and many are likely to persist, albeit to a lesser extent.
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.
The current semiconductor workforce and forecasted demand
The US domestic semiconductor manufacturing workforce has declined precipitously, down 43 percent from its peak employment levels in 2000.2 At the same time (as detailed later in this article), the semiconductor industry’s workforce attrition rate is substantial.
Compounding matters, American semiconductor companies face challenges when it comes to organizational health, with 50 percent of companies scoring below the median benchmark on critical organizational health metrics (compared with 67 percent of all global companies) including talent development, the working environment, and the capture of external ideas.3 While American companies’ health indicator scores are higher than those in the global semiconductor industry, they are far from ideal.4
CHIPS and Science Act investment5 and—to a much lesser extent—a slight uptick in domestic production that began in 2018 helped increase the workforce ranks by 5 percent (18,000 workers) through 2023. But announced semiconductor investments will push demand far above the currently available talent supply (Exhibit 1).
About 1,500 engineers join the semiconductor industry each year, making up just 3 percent of the 52 percent of engineering graduates who enter engineering roles.6 Contrast those numbers with 88,000—the forecast demand for semiconductor engineers by 2029—and the potential scope of the gap becomes apparent.
The talent statistics are similar for semiconductor technicians: only about 1,000 new technicians join the field each year, and by 2029, the rise in demand for these workers is forecasted to reach 75,000 (see sidebar “Methodology”).
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Addressing labor shortages: Long-term strategies
While the efforts outlined in the preceding section can help to shore up gaps in the near future, sizable shortages will persist in the long term unless semiconductor companies augment existing workforce development initiatives with additional strategic investments in sourcing new talent.
Geographic expansion. Fabrication operations may consider investing in local geographic expansion policies to attract a wider pool of labor. To ascertain whether such an expansion is warranted, companies can begin by assessing the likelihood of whether it will be effective in ameliorating their current talent gaps. If expansion appears to be a promising option, companies can then evaluate the best path for achieving it, such as purchasing a company shuttle or partnering locally to expand bus routes. Finally, companies should analyze the expected impact of the expansion in terms of how many new employees would be reached. Once companies have implemented a geographic expansion, they can solicit feedback from employees and readjust their approach as the local community and their workforce evolve.
In 2023, Hemlock Semiconductor implemented a geographic expansion for its Thomas Township, Michigan, facility and successfully grew the pool of local talent.24 By partnering with a local transit authority to subsidize a new bus route to its facility, the company was able to widen its talent pool while reducing transit expenses for employees.