As Tech Layoffs Continue, Chip Foundry Plans Become Vital

Macroeconomic strife continues to gouge away at the IT workforce, and observers say the semiconductor industry’s lofty global foundry gambit could forge a stable supply chain.

Shane Snider , Senior Writer, InformationWeek

May 3, 2023

4 Min Read
Illustration concept of global semiconductor technology factories fighting supply battle over chips manufacturing.
Quality Stock via Alamy Stock

Intel, Micron, TSMC, and other global semiconductor players have multi-billion dollar plans to build out chip manufacturing in North America and Europe to diversify the supply chain and avoid the massive backlogs experienced during the COVID-19 pandemic. Those companies helped lobby for (and quickly tapped into) the Biden Administration’s $208 billion 2022 Chips and Science Act. A global chip shortage helped illustrate the need for supply chain relief and moved lawmakers to action.

Now, the chip industry is saddled with a supply glut as consumer spending recoils after a two-year tech shopping spree spurred by the pandemic’s remote work and school needs. The market has since corrected course, and tech cuts have sliced thousands from the workforce and more cost-saving initiatives are on the table in the coming months.

While it may seem like a conspicuous time to continue herculean efforts to resuscitate the western world’s chip manufacturing capabilities, some analysts say the industry needs to forge ahead despite a gloomy economic backdrop.

According to a 2021 report by the Semiconductor Industry Association, the US chip market share has declined from about 37% to 12%, with Asia now producing the lion’s share of chips used in everything from cars and refrigerators to smart phones and personal computers. That deep imbalance has created a fragile semiconductor supply chain. The pandemic’s chip shortage saw delays for deliveries of cars, computers, appliances -- just about every device with a semiconductor brain.

Creating a Stable Supply Chain Will Take Years

Steve Leibson, author and analyst with Tirias Research, says while the situation is complex, Intel and others are right to quickly stage a semiconductor manufacturing comeback -- even if those new fabrication operations (fabs), will take years to produce enough product to shore up supplies. “All these new fabs that are being planned will not do anything to alleviate shortages in the short term,” Leibson says. One reason is that the focus of US and European’s fab ambitions is on advanced semiconductors -- not the less advanced chips that caused shortages in appliances and automobiles.

“Intel and TSMC are rightfully focused on building the most advanced fabs that they can because those fabs will have the longest lifespan. They are the ones that will operate far into the future as we migrate forward,” Leibson says.

While fabs planned by Intel, Micron, and Taiwan’s TSMC could be up and running within a few years, manning those operations could prove to be a difficult task. “Much of the ready talent in semiconductors is overseas, and we’ve made immigration very difficult in this country,” Leibson says.

Despite the hurdles, the US and Europe are pouring tens of billions into semiconductor production at a feverish pace. Part of the rush has to do with geopolitical tensions around China’s tumultuous relationship with semiconductor king-of-the-hill Taiwan -- where TSMC alone accounts for 58% of the global chip foundry market, according to research firm Trendforce. A war with China could be disastrous for the global chip supply and would shift an enormous amount of power to China.

Chip Foundry Future Hinges on Education/Training

To fill the overwhelming need for brainpower to run the fabs, the education system will need to pivot to more technical training and less focus on degrees, according to author and former Microsoft CIO Jim DuBois. “Non-degree education is going to grow significantly,” he says. “Whether that’s in semiconductor engineering, or software development -- we just don’t have enough people to do it all and we’re going to have to have more specialized focused training for those specialties.”

And universities are taking notice. While $52 billion from the Chips Act will be focused on manufacturing needs, much of the money will be used to bolster education to meet the demand. Last month, Purdue University announced a major initiative called Purdue Computes that will focus on computing, artificial intelligence, and semiconductor education and innovation. The university plans to hire dozens of faculty in each area over the next several years to meet expected demand.

“Through this strategic research leadership, Purdue is focusing current and future assets on areas that will carry research into the next generation of technology,” Karen Plaut, executive vice president of research said in a release. “Successes in the lab and the classroom on these topics will help tomorrow’s leaders tackle the world’s evolving challenges.”

Intel and other companies are rushing to lend support to training initiatives.

“We do not have enough people and the semiconductor industry recognizes this,” Leibson says. “One of the reasons Intel picked Ohio for its new fab campus is because the company is working closely with the Ohio university system to ramp up semiconductor classes and courses to generate talent and train more people.”

Now, the companies are faced with the task of generating enough excitement for students to want to enter the semiconductor field. “The American population seems to be less and less interested in studying these topics,” Leibson laments. “Kids right now want to become YouTube influencers, not semiconductor makers -- and these are good paying jobs. So, how do you convince kids that this is all worthwhile?”

What to Read Next:

Solving the American Tech Talent Shortage

Is the US IT Industry Prepared for a Chinese Invasion of Taiwan?

February 2023 Global Tech Policy Bulletin: From Terrorists on YouTube to the Chips Act and Its Discontents

Read more about:

Chip Shortage

About the Author(s)

Shane Snider

Senior Writer, InformationWeek, InformationWeek

Shane Snider is a veteran journalist with more than 20 years of industry experience. He started his career as a general assignment reporter and has covered government, business, education, technology and much more. He was a reporter for the Triangle Business Journal, Raleigh News and Observer and most recently a tech reporter for CRN. He was also a top wedding photographer for many years, traveling across the country and around the world. He lives in Raleigh with his wife and two children.

Never Miss a Beat: Get a snapshot of the issues affecting the IT industry straight to your inbox.

You May Also Like

More Insights