The semiconductor industry has received massive attention in recent years, largely due to supply chain disruptions caused by COVID-19 and the explosion of GPU demand driven by AI advancements. But this coverage has often been short-sighted. Beneath the surface, there are deeper, longer-term structural problems threatening the industry's future. One of these: A severe shortage of skilled labor, which could lead to an economic and geopolitical shift that risks slowing innovation over the next 10-15 years.
The semiconductor industry has been an undeniable force for good. Since Walter Brattain’s accidental discovery in 1947—when he immersed his experiment into a thermos of water and stumbled upon a breakthrough that eventually won him a Nobel Prize—semiconductors have revolutionized nearly every aspect of modern life. From enabling the space race with the Apollo program’s guidance computers, which used about 16,000 transistors each, to reshaping global communications, semiconductors have transformed human society.
Consider the evolution of communication devices: from the humble transistor radio containing just 5 to 8 transistors to the latest iPhone models, which pack in nearly 20 billion transistors. The automotive industry, too, has been reshaped by semiconductors. We’ve gone from Ford’s Model T to autonomous, software-driven vehicles like Tesla and Waymo. In healthcare, semiconductors power everything from MRI machines and ultrasound devices to cutting-edge wearables like the Oura ring and lab-on-a-chip technology, enabling billions of people to access better diagnostics and treatment. Nearly 1 trillion semiconductor devices were sold globally in 2023, more than 100 chips for every person on earth [SIA].
Looking ahead, semiconductors will play an even more critical role in the next 10-15 years as the world’s appetite for computing power continues to grow exponentially. The rise of artificial intelligence, with its insatiable demand for compute power, is driving unprecedented investments. Companies like Microsoft and OpenAI, through their $100 billion Stargate supercomputer project, and xAI with their 200K Colossus GPU supercomputer, are building the future of AI infrastructure. Google and Amazon are also heavily investing in their custom TPU, Trainium, and Inferentia chips to stay ahead in the AI arms race. Yet, the very foundation supporting these advances—skilled talent—remains dangerously shaky.
Despite the undeniable importance of the semiconductor industry, it is facing a severe talent crisis. Deloitte estimates that, by 2030, more than one million additional skilled workers will be needed to meet demand in the semiconductor industry. This shortage of skilled engineers is not just a temporary challenge; it is a structural problem that threatens to undermine the industry’s ability to meet soaring demand.
The problem is twofold. First, universities worldwide, especially in Western countries, are not producing enough graduates to meet the demand. Only about 20% of U.S. graduates leave university with a STEM degree, and only 1% of those are in electrical engineering—critical to semiconductor design and manufacturing. In contrast, China graduates nearly 40% of its students with STEM degrees, making it a hotbed for semiconductor talent.
Second, even if universities ramped up production, the complexity of semiconductor design means that engineers take years to become truly productive. The cutting-edge work in semiconductor design— moving to 2nm chips and beyond—requires highly specialized, hands-on experience that can’t be learned in a classroom. Additionally, a large portion of the current workforce is nearing retirement. For example, in Germany, about a third of the semiconductor workforce will retire within the next decade. The industry's reliance on a rapidly aging talent pool makes this situation even more precarious.
While companies like Synopsys and Cadence have invested in Electronic Design Automation (EDA) tools to streamline some aspects of chip design, this alone won’t solve the talent gap.
If this mismatch between demand and talent supply continues to widen, several outcomes are likely. First, we could see a concentration of talent and innovation within a handful of well-resourced companies. Giants like TSMC, Intel, Nvidia, and cloud behemoths such as Google and Amazon may dominate the field, controlling access to both talent and innovation. This would likely exacerbate existing supply chain issues and limit smaller companies' ability to compete, stifling innovation in the long run. These large companies, incentivized to pursue lower risk nearer term incremental gains, may be less willing to take bold, risky bets on the future of semiconductor technology.
Geopolitically, we are likely to see a shift of innovation power from the West to countries like China. Initiatives like China’s “Made in China 2025” and the U.S.’s CHIPS Act reflect ongoing global competition, but without enough talent to fuel these ambitious programs, the West risks falling behind.
The semiconductor industry is at a critical juncture, and now is the time to act. While we cannot magically create more experienced chip designers overnight, we can work to accelerate their development. Companies and governments must invest not just in STEM education but in creating faster pathways for young engineers to gain hands-on experience. Tools that enhance productivity—will be essential.If the industry does not address these structural issues soon, we risk far more than temporary supply chain disruptions—we risk slowing the pace of innovation that drives the entire global economy. The time to act is now.
