downloadGroupGroupnoun_press release_995423_000000 copyGroupnoun_Feed_96767_000000Group 19noun_pictures_1817522_000000Group 19Group 19noun_Photo_2085192_000000 Copynoun_presentation_2096081_000000Group 19Group Copy 7noun_webinar_692730_000000Path
Skip to main content

Looming talent gap challenges semiconductor industry

How the industry can close the gap—and remain on the leading edge of innovation

By: Chris Richard, Karthik Ramachandran, and Ivan Pandoy

 

Introduction

Semiconductors have long been the backbone of the technology industry. They’ve ushered in a wide range of technologies that touch numerous aspects of businesses and societies­­—from data centers and smartphones to drones and satellites.

The semiconductor industry’s far-reaching impact is reflected in its strong sales, which grew 21.6 percent year over year in 2017, to an all-time record of $412 billion.[1] Significant market growth continued in the first quarter of 2018, with a revenue gain of 20 percent year over year.[2] Ongoing advancements in Internet of Things (IoT), artificial intelligence (AI), wireless, and mobile technologies should continue to fuel demand through 2018 and beyond.[3] These digital technological shifts have benefited companies across the semiconductor industry’s value chain. Electronic and equipment manufacturers, as well as chip design and manufacturing companies, all reported strong revenue gains and earnings in the second quarter of 2018.[4]

Yet, despite its impressive growth, the semiconductor manufacturing supply chain’s ability to advance and thrive may now face serious challenges. At this crucial phase, the industry is contending with an acute shortage of core skills and talent. To gain deeper insight into this problem, Deloitte and SEMI (the global industry association serving the electronics manufacturing supply chain) jointly conducted a Workforce Development Survey of semiconductor industry executives in the second half of 2017.

In this article, we present key insights from the survey, along with recommendations for addressing the talent shortage and positioning semiconductor companies for continued growth.

The Deloitte-SEMI Workforce Development Survey (2017) is a joint effort between Deloitte and SEMI, the global industry association for the microelectronics manufacturing supply chain. The survey targeted several levels of executives, including the C-suite, vice presidents, and senior and mid-level managers. Respondents came from a wide range of functions, including HR, marketing, finance, supply chain, and operations. The sample consisted of 22 SEMI member companies that accounted for combined revenues of $130 billion in 2017, including chip makers, capital equipment providers, materials companies, and other technology providers. Companies surveyed ranged from fewer than 500 employees to more than 100,000.

 

The widening talent gap

The Deloitte-SEMI Workforce Development Survey found that 75 percent of respondents believe digital business technologies—including automation, AI, analytics, and machine learning—will influence their businesses’ operating models (see figure 1). Eighty-eight percent of executives agree these shifts will require new skills and talent. A large majority (77 percent) believe there is currently a critical talent shortage within the industry, and another 14 percent feel the industry will face a severe talent shortage over the next three years (2018–2020).

Deloitte-SEMI Workforce Figure 1-A
Deloitte-SEMI Workforce Figure 1-Deloitte-SEMI Workforce Figure 1-B

Figure 1: Impact of digital transformation on the semiconductor industry
Source: Deloitte-SEMI Workforce Development Survey (2017)
Note: Analysis based on responses received from 16 industry executives at various SEMI member companies

The widening talent gap is a global issue: major semiconductor hubs face talent shortages of varied proportions. For example, Singapore is attempting to address talent shortages in the specialized fields of electronics and electrical engineering manufacturing, the semiconductor industry’s building blocks.[5] China, which accounts for 50 percent of global chip demand[6], needs 400,000 more semiconductor employees to meet its growing ambitions to develop domestic semiconductor manufacturing. China has been spending heavily on chip imports due to its lack of indigenous capacity—attributable mainly to limited educational pathways and competitive career prospects.[7] Moreover, the ongoing trade tariff battle between the United States and China could affect the competitive position of US semiconductor companies, and may have an adverse impact on US semiconductor- and electronics-related talent and job opportunities.[8]

As the Deloitte-SEMI survey found, most executives acknowledge that digital transformation shifts are altering the industry landscape, but few are building a responsive talent strategy. Less than half of the executives surveyed think they invest sufficiently in advanced skill development, and only 35 percent have put an actionable talent and leadership roadmap in place for their employees.

 

Semiconductor industry talent shortage: 3 key themes

Many semiconductor industry leaders are struggling to attract new talent and retain skilled employees. The Deloitte-SEMI survey found that the industry’s talent-related challenges fall under three major themes: 1) hiring skilled professionals, 2) brand and perception, and 3) learning and development (L&D).

  1. Hiring skilled professionals: Because the semiconductor industry is highly technical, it demands graduates with strong backgrounds in the science, technology, engineering, and math (STEM) fields. However, the industry has found it difficult to attract new talent, including recent graduates. The Deloitte US Prestige survey (2017), which targeted 95 recent graduates, found that engineering professionals in fields critical to the semiconductor industry are among the most difficult to hire.[9] These include electrical engineering (at No. 1), computer sciences, software, mechanical, computer/systems, and materials sciences/chemical engineering positions. In addition, the Deloitte-SEMI survey found that there is a shortage of qualified candidates (mentioned by 82 percent of executives surveyed) and a lack of diverse skills and talent (73 percent).

Fifty-five percent of respondents also said their companies are “unprepared” to tackle the issue of attracting larger numbers of millennials and recent university graduates (see figure 2). Several executives mentioned that their companies have changed their approach toward recruiting millennials. However, perception and branding issues remain.

Deloitte-SEMI Workforce Chart2

Figure 2: Attracting millennials and recent graduates is the No. 1 recruiting challenge for the semiconductor industry
Source: Deloitte-SEMI Workforce Development Survey (2017)
Note: Analysis based on responses received from 18 industry executives at various SEMI member companies

 

  1. Brand and perception: Sixty percent of the executives surveyed feel that companies in the semiconductor supply chain suffer from a poor brand image compared with other technology companies. And, there are perception issues due to a lack of awareness about how employees can use their technical qualifications to find other opportunities within the industry. The survey revealed a pronounced employee-retention issue, with respondents noting that 60 percent of their employees leave their jobs within three to five years. This aligns with another key finding: 59 percent of respondents said that the semiconductor industry’s career path is not as attractive as that of other technology industries.

 

  1. Learning and development: For an industry that places significant emphasis on STEM education and background, it is surprising that L&D is an area of concern. Seventy-five percent of respondents say their companies have plans to increase their L&D investments over the next 12 to 18 months. Nonetheless, executives cited a critical lack of necessary resources to offer training support—particularly for large semiconductor companies spread across several locations worldwide. Even as the semiconductor industry faces issues on the internal L&D front, several companies in adjacent technology industries—especially software—have made strides through novel, self-paced learning initiatives. For example, Google’s G2G (Googler-to-Googler) is a peer-to-peer training network that enables its employees to learn and grow through on-the job training.[10]

 

Talent strategies and tactics to help make semiconductor companies more attractive destinations

To sustain a high-performing workforce, semiconductor-related companies should stay abreast of technological shifts and remain competitive. The following are three ways industry executives can position their companies for future growth by attracting and retaining top-class talent.

  1. Communicate the deep impact of the semiconductor industry. Deloitte research finds that young professionals are keen to see their business leaders not only deliver solid financial results, but also drive programs that have a positive impact on society and the world at large.[11] This insight has a strong connection with the semiconductor industry, which is critical to fueling innovation across a wide range of industries. By demonstrating how their companies influence a broad range of issues across industries and societies, semiconductor industry executives can potentially improve how the industry is perceived.

 

As a related example, SEMI in 2001 designed the High Tech University (HTU) initiative that fosters interactions among high school students, industry professionals, and academic institutions.[12] The initiative encourages students to build their interest in careers centered on the STEM fields.[13] This industry-academia partnership model is delivering benefits for a growing number of semiconductor companies. It helps aspiring professionals not only to advance their STEM skills, but also to gain a more holistic understanding of the scope and value of a broad range of high-tech industries.[14] By taking cues from the SEMI HTU program, the semiconductor industry can demonstrate diverse opportunities in areas such as manufacturing innovation, R&D, and data sciences. In addition, it can show how the industry supports adjacent technologies such as IoT and AI, which have the potential to deliver tangible benefits for societies.[15]

 

“This industry continues to run at the absolute forefront of technological innovation and leadership. It is a fantastic career choice for young professionals who want to have a huge impact on technology and on society.” – Dan Durn, senior vice president and chief financial officer, Applied Materials, Inc.

 

  1. Create ample growth prospects and career development opportunities. For professionals who are passionate about math, sciences, and engineering, the semiconductor industry has plenty to offer. To attract and retain highly skilled and enthusiastic professionals, semiconductor-related companies should focus on creating diverse opportunities such as on-the-job learning, career guidance, and lifelong learning pathways. They also should redesign their workplace to create an enabling environment that allows their employees to be passionate at work, explore solutions to business challenges, and deliver greater value to the organization.[16] In addition, collaboration with organizations and entities across the extended industry ecosystem can help bolster career-growth prospects for the semiconductor workforce. As a case in point, in Singapore, employers, industry associations, and education/training providers had collaborated to develop the Skills Framework for Electronics, with an emphasis on lifelong learning.[17]

 

 

  1. Make employees feel more involved and engaged at work. Young, talented professionals often are attracted to new-age technology companies. Yet, only half of the executives surveyed said their companies have changed their approach (either “significantly” or “to some extent”) toward recruiting millennials using tactics such as increasing their campus presence and related marketing efforts; enhancing usage of social media platforms to recruit; and creating programs for interns and new college graduates. It is time that semiconductor companies strongly consider allowing their younger workforce to have a voice in crafting various job roles. In addition, given the process-centric nature of work, semiconductor companies should consider shifting from an efficiency mind-set and moving toward redefining the work itself by sharpening their focus on talent. By tapping into capabilities such as creativity, imagination, curiosity, and social and emotional intelligence, semiconductor companies can potentially push their employee engagement levels to new heights.[18]

 

As our survey shows, executives in the semiconductor manufacturing supply chain agree that the industry should nurture the talent required to generate continuous innovation and growth. Unfortunately, as a whole, the industry isn’t taking proactive steps to address this issue. To close the talent gap, semiconductor companies should approach talent acquisition, retention, and skills development with the same rigor and focus that they apply to solving complex technological and operational challenges.

 

This publication contains general information only and Deloitte is not, by means of this publication, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services. This publication is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor.

Deloitte shall not be responsible for any loss sustained by any person who relies on this publication.

 

About Deloitte

 

Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee (“DTTL”), its network of member firms, and their related entities. DTTL and each of its member firms are legally separate and independent entities. DTTL (also referred to as “Deloitte Global”) does not provide services to clients. In the United States, Deloitte refers to one or more of the US member firms of DTTL, their related entities that operate using the “Deloitte” name in the United States and their respective affiliates. Certain services may not be available to attest clients under the rules and regulations of public accounting. Please see www.deloitte.com/about to learn more about our global network of member firms.

Copyright © 2018 Deloitte Development LLC. All rights reserved.

 

 

Endnotes

 

[1] Dan Rasso, Annual Semiconductor Sales Increase 21.6 Percent, Top $400 Billion for First Time, Semiconductors.Org, February 5, 2018.

[2] Dan Rasso, Global Semiconductor Sales Up 20 Percent Year-to-Year in Q1, Semiconductors.Org, April 30, 2018.

[3] Dan Rasso, Annual Semiconductor Sales Increase 21.6 Percent, Top $400 Billion for First Time, Semiconductors.Org, February 5, 2018.

[4] Ritujay Ghosh, Global Semiconductor Sales Hit Record High in Q2: 5 Picks, Zacks, August 23, 2018.

[5] How Singapore Is Addressing Talent Gaps in the Smart Manufacturing Sector, Economic Development Board Singapore, May 17, 2017.

[6] Owen Guo, A crisis looms over China’s chip sector, Tech In Asia, June 28, 2018.

[7] Zhang Zhihao, Zhang Yangfei, Shortage of Talent Hits Chipmakers, China Daily, May 9, 2018.

[8] Dylan McGrath, China tariffs to hit the chip sector, EE Times, August 8, 2018.

[9] The Deloitte US Prestige Survey (2017) targeted US millennials. Specifically, 95 recent college graduates were asked about their familiarity with select major companies and brands across the high-tech industry. The responses were analyzed to understand the brand appeal of semiconductor companies compared with companies from other high-tech industries.

[10] Medium, Learning & Development Best Practices from the Top Silicon Valley Companies, May 21, 2018.

[11] Based on insights presented in The evolution of work (co-authored by Heather Stockton, Mariya Filipova, Kelly Monahan, Deloitte Insights, January 30, 2018) and 2018 Deloitte Millennial Survey: Millennials disappointed in business, unprepared for Industry 4.0.

[12] SEMI High Tech U program, http://www.semi.org/en/node/42591, last accessed August 13, 2018.

[13] John Cropley, Semiconductor Organization Says Education Key to Future, Daily Gazette, May 1, 2018.

[14] SEMI, SEMI High Tech U Helping Companies Achieve Community Outreach Objectives, last accessed August 13, 2018.

[15] Simon Peter Akugizibwe, Artificial Intelligence and Internet of Things in the development of Smart Sustainable Cities, International Telecommunications Union, 8th Green Standards Week, Zanzibar, April 2018.

[16] Based on Deloitte research findings and insights presented in the article titled “If you love them, set them free: Why building the workforce you need for tomorrow means giving them wings to fly today,” co-authored by John Hagel, John Seely Brown, Maggie Wooll, and Alok Ranjan, June 6, 2017.

[17]Skills Framework for Electronics”, published by SkillsFuture Singapore (SSG), Workforce Singapore (WSG), and Singapore Economic Development Board (EDB), September 2017.

[18] Based on insights presented in a Deloitte study co-authored by John Hagel, Jeff Schwartz, and Josh Bersin titled “Navigating the future of work: Can we point business, workers, and social institutions in the same direction?,” Deloitte Review, Issue 21, July 31, 2017.