The semiconductor industry faces an uncomfortable contradiction. Markets are expanding and demand continues rising, but the talent pool is shrinking.
By 2030, the industry will need to add 1 million skilled workers globally, with shortages of over 100,000 engineers in Europe and more than 200,000 engineers in Asia-Pacific. This expansion requires at least 100,000 second-line leaders and 10,000 third-line leaders—many of whom must come from outside the industry.
Markets Keep Growing, Leadership Doesn't
The industry's outlook remains optimistic. Nearly one in five (19%) semiconductor executives anticipate continued demand growth without inventory excess in the next four years. Global sales hit $627.6 billion in 2024—a 19.1% increase driven by AI advancements, consumer electronics demand, 5G adoption, and automotive innovation.
Governments are backing this growth with large investments too. The European Chips Act aims to double the EU's production share to 20% by 2030 with €43 billion. Companies like NXP Semiconductors, Infineon Technologies, and STMicroelectronics are expanding. Taiwan Semiconductor Manufacturing Company (TSMC) remains the world's largest contract chipmaker. The UK government unveiled a £1 billion strategy over 10 years, while the CHIPS and Science Act allocated $52.7 billion for US manufacturing and research.
But there aren't enough semiconductor leaders to manage this growth.
The Education Crisis
The talent shortage begins in universities. Electrical engineering and computer science enrollment has been declining for years. Germany saw 6.5% fewer STEM students in 2021 than the previous year.
An analysis of recent data shows concerning patterns. While Germany had 81,934 electrical engineering students in 2018, Ireland had only 742 new electrical engineering students in 2017. The United States awarded just 13,767 bachelor's degrees in electrical engineering in 2018.
Retirement and Skills Gaps
While universities produce fewer graduates, experienced leaders are retiring. One-third of US semiconductor employees are 55 or older. In Germany, one-third of the workforce will retire within the next decade.
The job itself is also changing. Artificial intelligence and machine learning have surpassed systems architecture as the most sought-after skills in European markets. Software engineers specializing in embedded programming are becoming more important than traditional design engineers.
Competition and Turnover
The semiconductor industry competes with other tech sectors for talent, and ninety-two percent of tech leaders report challenges finding skilled workers.
Employee turnover is accelerating as well. Fifty-three percent of semiconductor workers were expected to resign in early 2024, compared to 40% in 2021. Top reasons include lack of career development (34%) and insufficient workplace flexibility (33%).
Geographic Challenges
Manufacturing concentration creates additional problems. Taiwan handles 65% of global manufacturing, China 15%, South Korea 12%, and the US 12%. Despite this, U.S.-based companies hold roughly 46.3% of global market share.
Each region has developed different skill sets, making it difficult to move leaders across markets.
What Companies Are Doing
About 60% of senior executives believe semiconductor companies have weak employer brands compared to higher-profile tech companies. Many are working to change this through competitive compensation, improved work-life balance, and better career opportunities.
Some companies are expanding their search beyond traditional candidates, too. Seventy-three percent now use skills-based hiring, focusing on capability rather than traditional backgrounds. Others target adjacent tech sectors for executives with transferable skills.
Retention has become more important as well. With the tech industry's 13.2% attrition rate, companies are investing in career progression and workplace flexibility.
Diversity initiatives are also still gaining traction worldwide. Women represent only 17% of semiconductor tech roles, compared to 23% in the industrial sector.
The semiconductor industry's future depends on solving this talent paradox. Companies that act decisively to attract, develop, and retain leadership talent will be best positioned to capitalize on market opportunities.
About the Author
Jan-Bart Smits is Managing Partner at Stanton Chase Amsterdam and Global Subsector Leader for the Semiconductor industry.
