CHIPS Act 1 year later: No funding & Worker Shortage

The next few months will be critical in determining whether the industry is able to take advantage of the funding and regain its global leadership.

Introduction

The semiconductor industry in the United States stands on the cusp of transformation, thanks to the CHIPS and Science Act signed into law by President Joe Biden. This $52.7 billion legislation aims to bolster national security by reshoring the semiconductor supply chain and reducing reliance on foreign sources. While high hopes and expectations surround this funding package, the distribution of funds has yet to begin, leaving industry stakeholders and investors in a state of anticipation.

Waiting on the Windfall

Despite the CHIPS Act being enacted a year ago, the allocation of funds remains pending. Secretary of Commerce Gina Raimondo has affirmed that the disbursement of funds will kick off later this year. The focus is on ensuring both speed and precision in assigning funds to deserving projects, underscoring the importance of getting this allocation right.

Funding Landscape

The earmarked $52.7 billion for the semiconductor industry seeks to counterbalance the elevated costs associated with establishing domestic manufacturing hubs. However, none of these funds have been allocated as of now. The Department of Commerce has received over 460 statements of interest from global companies vying for federal funding, signaling widespread interest in the potential benefits of the program.

Private Sector Investment Catalyst

The promise of federal funding has ignited significant private sector investments in the semiconductor industry. A staggering $231 billion in private sector semiconductor investments has been announced within the US. The realization of these investments and their impact on the industry’s landscape hinges on the availability of federal government support.

Industry’s Stakeholders Eagerly Awaiting

Key players such as Integra Technologies and SkyWater Technology find themselves in a holding pattern, awaiting federal funding to initiate groundbreaking projects. Integra Technologies envisions a sprawling semiconductor facility in Kansas, aimed at generating jobs and strengthening domestic industry presence. Similarly, SkyWater Technology has its sights set on a substantial plant in Indiana, both projects contingent on federal backing to commence operations.

Government’s Preparedness and Challenges Ahead

The Department of Commerce has proactively assembled a team of 140 staff members to assess CHIPS Act applications. The agency is actively engaged in dialogues with potential recipients. However, not all projects are guaranteed to receive financial aid. A senior Commerce Department official acknowledges the impending challenge of making tough decisions when allocating capital.

Struggling to Bridge the Skills Gap: Challenges and Innovations in the US Semiconductor Industry

Hiring Hurdles: A Growing Predicament

Semiconductor firms are currently experiencing a hiring process that is twice as long as other industries, averaging about three months. Revelio Labs, a labor-market data analyst, conducted an analysis of the top 50 chip producers in the US, shedding light on the severity of the problem. The industry’s struggle to attract and retain technicians and mechanical engineers poses a significant threat to its recovery.

The Biden Administration’s Push for Revival

President Biden’s administration is investing heavily in the semiconductor industry, aiming to bolster domestic production and reduce dependency on overseas supply chains. However, the recent study’s findings highlight the urgent need for skilled labor to actualize these ambitions. The $52 billion subsidy has already initiated a wave of investment across the US, yet the scarcity of qualified professionals could potentially impede the realization of these investments’ full potential.

Skills Deficit: A Long-Standing Issue

The lack of job candidates with a science, technology, engineering, and mathematics (STEM) background is a long-standing concern within the chipmaking sector. The Semiconductor Industry Association predicts that the industry will create 115,000 jobs by 2030. However, given the current rate of degree completions, nearly 60% of these positions could remain vacant. This deficiency, if unaddressed, poses a grave threat to the industry’s growth trajectory.

Training and Education Initiatives

To address the skills gap, semiconductor companies are collaborating with educational institutions such as trade schools, community colleges, and universities to develop tailored training programs. These initiatives aim to equip students with the specialized skills required by the industry, thereby increasing the pool of qualified candidates. The Commerce Department’s commitment to evaluating workforce development efforts as part of the application process for chip funding adds a critical dimension to this approach.

Immigration Reform: A Complex Solution

The industry association has advocated for immigration reform to enable international students who come to the US for education to stay and contribute to the workforce. However, the political complexities surrounding immigration reform in Washington make the likelihood of a near-term solution uncertain. Nevertheless, the potential benefits of attracting global talent to fill the skills gap remain significant.

Surge in Applications and Changing Dynamics

A recent survey by career-services website Handshake underscores the industry’s allure, revealing an almost 80% surge in applications for full-time entry-level semiconductor positions, along with a 40% increase in internship opportunities. This surge demonstrates the growing interest in pursuing careers within the sector, highlighting the industry’s potential to attract new talent.

The CHIPS and Science Act’s Impact

Revelio Labs’ study shows a marked shift in job postings, with a sharp increase in the share of postings based in the US. This development follows the passage of President Biden’s CHIPS and Science Act, which provides crucial support to the industry. Texas leads the charge in expanding hiring, trailed by North Carolina and New York, showcasing the geographic distribution of the industry’s efforts.

Conclusion

The potential for the CHIPS and Science Act to invigorate the US semiconductor industry is a monumental stride towards enhancing national security and regaining control over the supply chain. Despite a year elapsing since the legislation’s enactment, the actual disbursement of funds remains on the horizon. The semiconductor sector, coupled with private sector investors, anticipates transformative shifts, with numerous projects awaiting federal support to take flight. The industry’s future is poised for growth, job creation, and technological advancement, all contingent upon the successful execution of the CHIPS Act’s ambitious objectives. As the semiconductor industry navigates this crucial juncture, stakeholders hold their collective breath, hopeful for the positive changes the legislation promises to bring.

Kumar Priyadarshi
Kumar Priyadarshi

Kumar Priyadarshi is a prominent figure in the world of technology and semiconductors. With a deep passion for innovation and a keen understanding of the intricacies of the semiconductor industry, Kumar has established himself as a thought leader and expert in the field. He is the founder of Techovedas, India’s first semiconductor and AI tech media company, where he shares insights, analysis, and trends related to the semiconductor and AI industries.

Kumar Joined IISER Pune after qualifying IIT-JEE in 2012. In his 5th year, he travelled to Singapore for his master’s thesis which yielded a Research Paper in ACS Nano. Kumar Joined Global Foundries as a process Engineer in Singapore working at 40 nm Process node. He couldn’t find joy working in the fab and moved to India. Working as a scientist at IIT Bombay as Senior Scientist, Kumar Led the team which built India’s 1st Memory Chip with Semiconductor Lab (SCL)

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