By Jack Yue, MEng ’23 (ME/Product Development)This op-ed is recognized as an Honorable Mention in the annual Berkeley MEng op-ed contest and part of a series from E295: Communications for Engineering Leaders. In this course, Master of Engineering students were challenged to communicate a topic they found interesting to a broad audience of technical and non-technical readers. As an opinion piece, the views shared here are neither an expression of nor endorsed by UC Berkeley or the Fung Institute. You wake up one morning, and you’ve lost your phone. What would you do? What if the electronic stores in your town are out of stock until 3 months later due to a global semiconductor chip shortage? Though this is a slight exaggeration, the semiconductor supply chain is a very fragile system given the current global affairs. Semiconductors are quintessential in the production of nearly all sectors of electronics, and the ability to manufacture these components is paramount to a nation’s technological security due to their increased utilization within phones, computers, missiles, etc. (Angel 1989) Still, the technology to create these key components is heavily centralized outside of the United States. Therefore, the US government should establish more primacy in cooperating with universities on training the next epoch of engineers to bring more talent to designing these processes in the United States. Currently, the United States only produces 6% of semiconductor chips while Asia produces 80% of the global supply. (Jazeera 2022) This is a major problem considering that semiconductors are effectively utilized in all aspects of computing. These chips control and manage the flow of electric current in electronic equipment and devices, and their applications interpenetrate throughout our modern society. The technology, healthcare, financial, and national defense sectors of society would not be able to function without the manufacturing and distribution of these chips. (Gastright, 2022) Hence, their importance within the global economy cannot be understated. The majority producer of the world’s semiconductor chips right now is Taiwan Semiconductor Manufacturing Company (TSMC) located in Taiwan, and they control the production of 54% of the global market while producing 90% of the most advanced chips as shown in Figure 1. The island itself contributes to 64% of the global supply chain. (Liao 2007) Given the rising tensions between China and the United States over the Taiwan Strait, this centralized position provides great value for whichever country can project a greater political influence. This delicate supply chain has gone through even more hardship over the last couple of years with the US-China trade war, covid regulations, severe weather, factory fires, and the Russia-Ukraine war. (Gastright, 2022) Trade regulations, high tariffs, weather-induced factory shutdowns, and general disruption of daily life due to war all contribute to the interruption between supplying the raw material to make these chips to producing them.
“While the demand for semiconductors is at an all-time high as societies recover from Covid-19, the supply remains heavily restricted.”To address these concerns, the Biden administration signed the CHIPS and Science Act in 2022 to inject approximately $280 billion into the semiconductor research and manufacturing sector in the United States. (Jean-Pierre, 2022) This pledge is estimated to create a historical number of manufacturing jobs in the US while creating more regional technology hubs. Since 2021, 642,000 manufacturing jobs have been created in the United States. (Jean-Pierre, 2022) Companies are beginning to invest in the United States again, and the number of new manufacturing facilities has increased by 116% in the past year alone. This increase would dramatically lower the reliance on importing these advanced chips abroad and allow the United States to control the technical trade secrets that go into creating these chips. However, even though this is a great start for bringing more of the technology back home and decreasing reliance abroad, this is not sufficient to solve the critical issues of developing these complex semiconductor chips. The main issue with producing these chips is that the level of expertise is still highly concentrated abroad. (Lee, 2010) The technical knowledge of how to produce and manufacture these chips is still heavily safeguarded since these are commercial products, and there has not been significant support for students in the US to pursue a career in this industry in the past compared to Asian countries. Another alternative solution to this lack of regional talent has been to recruit heavily from global talent instead due to the lack of expertise at home. This is a quick and easy way of providing the technical expertise to construct these factories and begin manufacturing. Though this has its advantages, the number of visas that can be issued is still limited and is still reliant on foreign talent to proactively want to contribute to the development of the technologies here rather than simply bringing the old techniques here instead. (Kuo, 1999) Hence, the demand for training the next generation of leaders in this field while still attracting premier global talent is ever so more important if the United States wants to become a global leader in semiconductor chip production. The proposal that more emphasis in terms of funding and new programs should be placed on universities for encouraging more students to pursue this field has gained some traction in recent years. Naturally, as the number of semiconductor companies increases, the number of employment opportunities and internships will also increase which would hopefully attract some of the country’s top talent to pursue a career in this sector. Many engineers currently are gravitating to other industries which are also consequential in their own regard. However, there should be more stimuli for college graduates to become involved in this industry such as higher salaries, competitive benefits, and meaningful impact on work. The US government has a lot of leverage in this case due to its capacity to provide funding to public universities and encourage conditions that would facilitate the growth of the next generation of highly trained engineers in this specialization. This would essentially alleviate the issue of lack of talent and ensure that the United States would be able to become a dominant player in the semiconductor chip manufacturing playing field and be able to project its power further abroad. References Angel, David P. 1989. “The Labor Market For Engineers In The U.S. Semiconductor Industry”. Economic Geography 65 (2): 99. doi:10.2307/143775. Gastright, John. 2022. “Initial Report — United States, Taiwan, And Semiconductors: A Critical Supply Chain Partnership”. Us-Taiwan.Org. https://www.us-taiwan.org/wp-content/uploads/2022/06/2022.06.08-Initial-Report-U.S.-T aiwan-and-Semiconductors-A-Critical-Supply-Chain-Partnership.pdf. Jazeera, Al. 2022. “Why China Is Not Sanctioning Taiwan’s Key Chip Industry.” Business and Economy | Al Jazeera. https://www.aljazeera.com/economy/2022/8/4/why-china-is-not-sanctioning-taiwans-cruc ial-tech-industry. Jean-Pierre, Karine. 2022. “Fact Sheet: Chips and Science Act Will Lower Costs, Create Jobs, Strengthen Supply Chains, and Counter China.” The White House. The United States Government, August 9, 2022. https://www.whitehouse.gov/briefing-room/statements-releases/2022/08/09/fact-sheet-chi ps-and-science-act-will-lower-costs-create-jobs-strengthen-supply-chains-and-counter-chi na/. Kuo, Way, and Taeho Kim. 1999. “An Overview Of Manufacturing Yield And Reliability Modeling For Semiconductor Products”. Proceedings Of The IEEE 87 (8): 1329–1344. doi:10.1109/5.775417. Lee, Chia-Wen, Roger Hayter, and David W. Edgington. 2010. “Large and Latecomer Firms: The Taiwan Semiconductor Manufacturing Company and Taiwan’s Electronics Industry”. Tijdschrift Voor Economische En Sociale Geografie 101 (2): 177–198. doi:10.1111/j.1467–9663.2009.00539.x. Liao, Shu-Hsien, and Ta-Chien Hu. 2007. “Knowledge Transfer And Competitive Advantage On Environmental Uncertainty: An Empirical Study Of The Taiwan Semiconductor Industry”. Technovation 27 (6–7): 402–411. doi:10.1016/j.technovation.2007.02.005. Connect with Jack. Edited by Mary Tran.
Op-ed: The United States semiconductor talent shortage was originally published in Berkeley Master of Engineering on Medium, where people are continuing the conversation by highlighting and responding to this story.