The U.S. CHIPS and Science Act spurred a rush to build new semiconductor fabs in the United States. So far, there are at least nine new fabs planned or under construction, as well as expansion plans at many existing fabs. One challenge the industry faces is matching a huge influx of fab capacity worldwide with the notorious boom-bust cycles of the semiconductor industry.

But there may be another challenge looming: having enough skilled labor to operate and support these fabs.

U.S CHIPS Act incentivizing fab investments

U.S. semiconductor manufacturing market share dropped from 37% of global semiconductor production in 1990 to just 12% in 2021. As a result, the Biden Administration passed the CHIPS and Science Act to “revitalize domestic manufacturing, create good-paying American jobs, strengthen American supply chains, and accelerate the industries of the future.”

“The CHIPS and Science Act provides $52.7 billion for American semiconductor research, development, manufacturing, and workforce development,” according to the White House. This includes $39 billion in manufacturing incentives, such as $2 billion for the legacy chips used in automobiles and defense systems, $13.2 billion in R&D and workforce development, and $500 million to provide for international information communications technology security and semiconductor supply chain activities. It also provides a 25% investment tax credit for capital expenses for manufacturing of semiconductors and related equipment.

Even before the passage of the CHIPS Act, competition amongst local and regional governments was fierce for new semiconductor fabs, and rightfully so. In addition to having a manufacturing plant that operates around the clock for a decade or longer, fabs require a huge investment in local infrastructure and education for support. They also create thousands of jobs during construction and operation, and they attract other companies and tech jobs to the area over the long-term. All of this translates into community investment and economic growth.

As an example, Intel estimates that its new manufacturing site near Columbus, Ohio, which initially includes two new fabs, “is expected to create 3,000 Intel jobs and 7,000 construction jobs over the course of the build, and to support tens of thousands of additional local long-term jobs across a broad ecosystem of suppliers and partners,” the company said.

While those numbers are somewhat imprecise, it is safe to assume that each new fab will on average create 1,500 to 2,000 thousand new jobs inside the fab and at least several hundred technical support positions at partnering companies, such as the semiconductor manufacturing equipment vendors needed to support 24/7/365 fab operation.

As a result of the CHIPS Act, every company tied to U.S. semiconductor production has been rushing to claim a portion of the government funding. The largest incentives will likely go to the fabs themselves, which may be upwards of $4 billion per project. So far, in addition to Intel’s two new fabs, these six companies have announced new U.S. fabs: GlobalFoundries (GF), Micron, Samsung, SkyWater Technology, Texas Instruments (TI), and TSMC.

This is in addition to other planned expansions at existing fabs and new overseas fabs.

For example, Intel has committed to investing more than €34 billion in new fabs and fab expansions in Germany, Israel, and Ireland. TIRIAS Research believes there will be further fabs announced in the near future, especially for analog chip production, which is underrepresented by the recent announcements.

Just the new U.S. fabs scheduled for completion over the next three years account for more than a $100 billion investment in semiconductor production.

Talent remains crucial

The CHIPS Act is intended to fund additional manufacturing capacity over the next five years. This also means that, in the U.S. alone, more than 15,000 skilled positions within the new fabs must be filled, as well as more than 5,000 additional support positions before 2024 when much of the new fab capacity begins ramping production.

This conservative estimate represents a 20% increase over current U.S. semiconductor manufacturing employment and does not include potentially as many as 40,000 additional related jobs created by the new fabs.

While a fab can be built and outfitted with new equipment in two to three years, it can take several more years to train and hire the technical staff required to operate and support the fabs.

Some of these jobs will go to new graduates of U.S. colleges and universities. The CHIPS and Science Act includes $170 billion for semiconductor-related research to be spread among several U.S. government agencies, including NSF, DoE, DoC, NIST, and NASA. This money represents significant additional investment over the baseline funding for those agencies.

Universities will receive some of this funding directly—through grants and sponsored programs—and indirectly through partnerships with national labs and industry. As a result, many new graduate student positions will be created, which will ultimately result in many new graduates schooled in advanced semiconductors, semiconductor manufacturing, and related disciplines. These graduates will help fill the new fabs.

Semiconductor companies will likely add to this funding.

For example, in September, Intel announced the first phase of funding for its Ohio Semiconductor Education and Research Program and committed $17.7 million over the next three years to fund eight projects, working with more than 80 colleges and universities in Ohio to develop semiconductor education and workforce programs.

However, this may still not be enough to fill all the open positions in the limited timeframe.

Included in the original draft of the CHIPS Act was an increase in the number of H-1B visas for highly skilled immigrants who are already trained in engineering and semiconductor manufacturing. While this was deleted from the final version of the act, it is another option that the U.S. government should reconsider—and soon. Even with an increase in these visas, it may still be challenging to hire internationally due to the global increase in fab capacity and high demand for engineering talent.

Ironically, the current downturn in semiconductor demand may be a blessing in disguise.

This temporary demand decrease will not only allow supply chains to replenish, but also allow additional time to educate a new workforce for the next generation of fabs. This also means that the installation of equipment and production ramp will likely take longer than planned for some of the new fabs—no matter when the buildings are completed.

By: DocMemory
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