"Because of Trump," 9,140 People Left in 3 Years... Semiconductor Factories Without Workers [Chip Talk]

US Faces Worsening Labor Shortage Due to Tariff Hikes and Visa Restrictions
Projected Shortfall of 146,000 Workers by 2029
Mismatch Between Labor Demand and Supply Likely to Widen Temporarily
"Paradigm Shift Needed to Bridge the Gap"

The United States is struggling with a severe semiconductor workforce shortage. An analysis has revealed that this shortage has been exacerbated by various protectionist trade policies, such as tariff increases and visa restrictions, implemented since former President Donald Trump's administration in 2018. Voices are growing that winning the semiconductor supremacy war requires not only securing manufacturing facilities but also solving the challenging issue of having enough workers to operate those facilities.

[Image source=AFP Yonhap News]

Raising Tariffs and Blocking Work Visas... 9,140 Leave Semiconductor Industry in 3 Years

Professors Mehmet Kanayaz of Pennsylvania State University, Isil Erel of Ohio State University, and Umit Grun of the University of Texas analyzed in their paper "When Protectionism Steals Talent," released last month, that protectionist trade policies implemented in the U.S. since 2018 have negatively impacted the semiconductor industry's labor force. Based on data from 1.6 million technicians with semiconductor manufacturing-related skills, the paper was reported last month to the U.S. private think tank Cato Institute and the European think tank Centre for Economic Policy Research (CEPR).

Since the Trump administration began in 2017, various tariff rates have increased, and protectionist policies such as restrictions on visas for highly skilled workers and foreign company employees stationed in the U.S. have been implemented. Then-President Trump issued an executive order limiting certain work visas, including the H-1B visa for specialty occupations, arguing that these visa holders should not be considered skilled workers. The intention was to protect American jobs and increase demand for domestically produced goods, but the researchers analyzed that it ultimately harmed the supply of necessary labor.

According to the analysis by the three professors, these protectionist policies led to a 9% decrease in hiring scientists and engineers within U.S. semiconductor companies from 2019 to 2022, and a 3% reduction in total jobs. Specifically, an average of 2,285 engineers and scientists in semiconductor manufacturing lost their jobs annually. Cumulatively, while there were 66,382 engineers and 9,768 scientists in the industry at the end of 2017, 9,140 left between 2019 and 2022.

The researchers noted, "Especially new hires and younger employees experienced a sharp decline in employment," and "the impact was disproportionately felt among younger workers within the labor force."

A more significant issue pointed out is the shortage of students who will lead the semiconductor industry in the future. The number of U.S. students majoring in semiconductor manufacturing-related technologies was 65,290 undergraduates in 2017 before the implementation of protectionist policies but dropped sharply to 12,311 in 2022. Graduate students also decreased nearly 50%, from 39,019 to around 20,000.

The researchers pointed out that these students moved to finance, marketing, or other high-income jobs instead of semiconductor technology, leading to a decline in interest in the semiconductor manufacturing industry within the U.S. Based on current graduation rates, it could take about 16 years to fully meet the semiconductor workforce demand domestically.

No Solution in Sight for the U.S.... "Paradigm Shift Needed"

This report stands out because the semiconductor workforce shortage in the U.S. is becoming increasingly severe. According to data released earlier this month by global consulting firm McKinsey, the additional number of semiconductor engineers and technicians needed in the U.S. semiconductor industry from this year through 2029 could reach up to 164,000. However, only about 18,000 new workers are expected to join the industry during this period, resulting in a projected shortage of 146,000 by 2029. This is more than double the 67,000 shortage forecast by the Semiconductor Industry Association (SIA) just a year ago.

President Joe Biden attracted global semiconductor companies' manufacturing facilities to the United States by enacting the U.S. Semiconductor Support Act.
[Photo by Reuters]

The fact that the semiconductor industry is not a popular career choice in the U.S. also contributes to the worsening labor shortage. Citing data from the U.S. Census Bureau, McKinsey explained that among U.S. engineering technology graduates, 52% enter engineering jobs, but only 3% of those, about 1,500 people, find employment in the semiconductor industry. Additionally, although programs to cultivate semiconductor talent are underway nationwide, the training periods are long, and the completion rates are relatively low.

Bill Wiseman, Senior Partner at McKinsey, expressed concern, saying, "Numerous initiatives are planned or underway to build critical talent pipelines, but the gap between supply and demand is significant and likely to persist for quite some time." He emphasized, "To close this gap, the U.S. semiconductor industry needs a paradigm shift that radically changes its approach to training, securing, and retaining talent by directly addressing the problem."

While the U.S. struggles to find solutions and faces a severe semiconductor workforce shortage, semiconductor manufacturing facilities continue to be constructed. According to data compiled by the SIA, 25 projects are underway in 16 U.S. states, with total investments expected to reach $350 billion (approximately 467.74 trillion KRW) over the next 20 years. Most projects are expected to be completed by 2030. The U.S. government has promised $32.4876 billion in subsidies and $28.8 billion in loan guarantees for these projects.

The semiconductor workforce shortage is not limited to the U.S. but is also occurring in countries like South Korea and Japan. In South Korea, a shortage of 56,000 workers is expected over the next decade. Japan, dreaming of a semiconductor industry "revival," is also struggling with workforce shortages while attracting facilities like Rapidus and TSMC factories. An analysis by recruitment firms shows that the number of semiconductor engineering job openings in Japan increased more than sevenfold from 2013 to 2021 and more than thirteenfold in 2022.