A Year After Biden’s CHIPS Act: Labor, Supply-Chain Issues Loom

A little over a year ago, President Biden signed into bill the CHIPS Act, a sweeping set of initiatives intended to encourage U.S. companies to manufacture in North America as well as promote advanced research and development. The bill, pegged at $52 billion, was hailed as the savior needed to revive the lagging U.S. semiconductor industry, which was reeling from the offshoring of manufacturing plants to regions such as China and shift the trade balance in favor of China and other offshore regions.

Fast forward a year later, and the geopolitical tension between the U.S. and China has by no means subsided, with industry associations such as the SIA calling for both nations to cooperate rather than escalate the continuing tug-of-war on both sides. However, there’s strong evidence that major electronics companies have gone in on the CHIPS Act, as many are lining up to take advantage of the incentives to bolster their North American manufacturing footprint.

Intel is probably the most notable example. Even before the CHIPS Act was passed, the semiconductor giant said it was constructing two plants in rural Licking County, OH, outside Columbus. On the heels of the CHIPS Act, other companies also announced they would build new or expanded plants in the U.S., including Micron, Wolfspeed, Global Foundaries, TSMC, Texas Instruments, and Samsung.

Companies Still Looking Abroad

Reshoring some of their operations does not mean that companies are abandoning expanding offshore. The global nature of electronics dictates that companies maintain a strong presence overseas.  In recent months, there have been announcements of global electronics companies expanding their operations in key regions such as Europe and India.

For instance, AMD announced it would invest $400 million over the next five years to expands it footprint in India, which includes constructing a new campus in Bangalore, Karnataka that will serve as the company’s largest design center. AMD would also create 3,000 new engineering jobs in India by the end of 2028.

In addition, the European electronics market has gotten a boost with the late July passing of the EU CHIPS Act, which like the U.S. CHIPS Act is designed to stimulate manufacturing, R&D, and workforce training efforts in European Union countries.

Last week, TSMC, Bosch, Infineon, and NXP agreed to establish a joint manufacturing venture called. European Semiconductor Manufacturing Company (ESMC) GmbH. Under the venture, a 300mm fab will be constructed to support the future capacity needs of the fast-growing automotive and industrial sectors. The planned fab is expected to have a monthly production capacity of 40,000 300mm (12-inch) wafers on TSMC’s 28/22 nanometer planar CMOS and 16/12 nanometer FinFET process technology, further strengthening Europe’s semiconductor manufacturing ecosystem with advanced FinFET transistor technology.

The ESMC venture is expected to create 2,000 direct high-tech professional jobs. ESMC aims to begin construction of the fab in the second half of 2024 with production targeted to begin by the end of 2027.

Labor Shortages?

Regardless of location, there’s a looming issue with all the new plants, to which there is no clear answer. Where will all the workers for these manufacturing plants come from?

A number of online articles have echoed concerns that many of the new plants will not be able to meet planned production goals without filling thousands of positions.  A recent report by Deloitte projects that more than one million additional skilled workers will be needed by 2030, equating to more than 100,000 annually. The report noted that there are fewer than 100,000 graduate students enrolled in electrical engineering and computer science in the United States annually.

The Deloitte report also noted that the labor shortage will not be felt only in the front-end fabs. In fact, a key supply-chain challenge remains the fact that the fabs only manufacture the raw chips, which still need to be packaged and tested. For many companies, that means shipping the chips to another locations, more often than not to remote offshore locations for final assembly and testing. Thus, some of the gains from local chip manufacturing are negated by having to ship parts to other locations for final test and assembly.

Those issues might have loomed in the minds of Intel, which in June announced it would build invest $4.6 billion to build a semiconductor test and assembly facility near Wroclaw, Poland, that will employ 2,000 workers. The company said the plant would complement existing an Intel facility in Leixlip, Ireland, and a planned wafer fabrication facility in Magdeburg, Germany, to help create what Intel terms as an end-to-end, leading-edge semiconductor manufacturing value chain in Europe.

High-tech Skills Lacking

Perhaps the biggest obstacle facing manufacturers is where the workers will come from. The new and expanded plants will require specialized training and skills, not just in manufacturing, but as the Deloitte report noted, digital skills such as cloud expertise, artificial intelligence (AI), and analytics are needed due to increased automation and digitalization.

The CHIPS ACT passed by Biden allocates $13.2 billion for workforce research and development, which includes training and education. Intel and other  electronics companies are increasingly partnering with local colleges to develop partnerships to train workers with the necessary skills to handle future electronics manufacturing. But the results of those programs won’t be felt for a few years as it takes time to train and develop new workers. One challenge will be coordinating the training of specialized workers with the ramp-up of the new manufacturing plants over the next years.

Also exacerbating the issue, at least with some of the U.S-based plants, is that some of them are situated in rural, remote regions, where there is more space and lower costs. For instance, Micron’s future plant is located outside of Syracuse, NY, in a rural area with low population. Companies could face formidable challenges staffing some of these plants, particularly those that have multiple shifts or operate around the clock.

Spencer Chin is a Senior Editor for Design News covering the electronics beat. He has many years of experience covering developments in components, semiconductors, subsystems, power, and other facets of electronics from both a business/supply-chain and technology perspective. He can be reached at [email protected].