On human capacity building measures designed by the U.S. to support domestic semiconductor manufacturing

In February 2022, the U.S. Center for Security and Emerging Technology undertook an analytical study of issues related to the use of high-skilled foreign semiconductor workforce. Today, the Center for Global IT-Cooperation provides a summary of the analysis and measures taken by the U.S. to train professionals in microelectronics.

Today, the issue of developing domestic semiconductor industry is becoming increasingly important in the U.S. In order to strengthen the country’s position in the field of research, development and manufacturing, the U.S. Congress passed the Creating Helpful Incentives to Produce Semiconductors (CHIPS) Act, a set of programs also referred to as the CHIPS for America Act, as a part of the FY21 National Defense Authorization Act (NDAA)[1]. The National Artificial Intelligence Initiative Act was also included in the FY21 NDAA[2].

The CHIPS Act program aims at reestablishing America’s global leadership in semiconductor manufacturing through creating relevant incentives and fostering growth of investments, which would allow to enhance domestic production capacity.

It is planned to allocate nearly $50 billion in funding over five years for implementing the CHIPS Act program, strengthening the industry and generating new jobs. Roughly $40 billion will be directed toward the construction or modernization of U.S. facilities for semiconductor fabrication, assembly, testing, and advanced packaging. Another $10 billion will support critical R&D and infrastructure investments to help protect and extend U.S. technological leadership, including:

-       The establishment of a National Semiconductor Technology Center (NSTC), a hub of talent, knowledge, equipment, and tool sets that will foster research into new materials, architectures, processes, devices, and applications. It’s also important that this center will help to bridge the gap between public and private sector R&D and commercialization.

-       The establishment of an advanced program that focuses on the design and fabrication of secure microelectronics, including integrated circuits, logic units, data storage, packaging and test methods that could be applied to microelectronic components in the domestic ecosystem.

-       The establishment of one or more manufacturing U.S. institutes targeting the R&D needs of the semiconductor industry.

-        Increased investment and expansion of the National Institute of Standards and Technology’s metrology R&D in support of semiconductor and microelectronics research.

According to the document, specific tasks and responsibilities for the implementation of the program are assigned to relevant organizations, federal departments, and agencies.

In February 2022, the Center for Security and Emerging Technology undertook the analytical study “Reshoring Chipmaking Capacity Requires High-Skilled Foreign Talent. Estimating the Labor Demand Generated by CHIPS Act Incentives.”[3] The author of the study focuses on the goals and implementation strategy of the program and provides analysis of specific labor market segments in the field of microelectronics, while also taking into account the amount of funding. The report is supported by detailed data on likely and actual implementation outcomes, labor statistics, and occupation diversification statistics.

According to the study, the main purpose of the CHIPS Act incentives is to address the issue of insufficient manufacturing talent in the U.S. The Act aims at providing financial support to eight new semiconductor fabrication facilities. Over the next ten years, these fabs will most likely employ nearly 27,000 workers, which means that employment in the industry will grow by 13 %. According to the author, the staffing shortages problem will be solved by both recruiting the talent currently employed in adjacent industries and attracting high-skilled foreign experts.

Employment growth will vary across different semiconductor manufacturing occupations: the highest-growth occupations will be skilled engineering and software development roles, for which employment will rise by an estimated 19 %. Experienced, high-skilled foreign talent will be especially needed for these roles. Lower-skilled roles will see roughly 11 % employment growth over the same period.

It is planned to provide protection and income for experts from East Asia, primarily from Taiwan and South Korea, who are sympathetic toward the U.S. In order to implement the program, it will be necessary to attract at least 3,500 foreign experts in the field. According to the study, the incentives may require the immigration of even more workers. Thus, the U.S. will be able to successfully increase human resource capacity in case of unfavorable geopolitical change (for instance, hostile acts initiated by China or North Korea) and adopt such solution for a more effective economy in the near future. The author points out that creating a convenient and effective mechanism to issue work visas is the key to the successful implementation of the CHIPS Act program.

The author puts special emphasis on the need to make long-term investments in national workforce development and support American-born talent. This will reduce U.S. dependence on foreign talent and generate jobs for American-born workers. It is suggested that supporting high-skilled American workers will foster building additional capacity in the U.S. and allow to successfully reshore the semiconductor industry in the long run, that is, to restructure and reequip it.

However, the author also points out that each of the strategies may impose its challenges, have certain cons, and fail to fit into the best chance scenario.

As for the influx of workers from adjacent industries, it mostly meets the demand for certain lower-skilled and less specialized jobs. Highly specialized jobs require thorough professional training and semiconductor manufacturing experience. Also, non-specialized workers are in demand in other key industries. We can capture significant movements into other industries, which are hard to predict. In the narrow occupation category, the highest percentage of people employed in the semiconductor industry, 16.4 %, are electromechanical assemblers followed by technologists (10.6 %) and high-skilled electrical and electronics engineers (8.6 % of total employment). However, these workers are in demand not only in the semiconductor industry, but also in other sensitive U.S. industries, such as the federal government, navigation systems, aerospace products, or arms industry. This will make it harder to both attract these talents to work for new enterprises and transfer them to new facilities.

Training of U.S.-born workers, such as graduates from U.S. academic institutions, PhD students, other scientific workers, researchers, and engineers, may also pose challenges and expose the strategy’s vulnerabilities. Much of the talent studying semiconductor-relevant subjects in U.S. universities—particularly at the master’s and doctoral levels (70 % and 55 % respectively)—is foreign born. This necessitates the need for a safe visa policy and ultimately permanent residency status, which entails additional costs and management actions. This being the case, there’s no doubt that national expertise development, that is, professional training of U.S. citizens, will require a lot more time and funding.

Considering the experience of successful foreign enterprises operating in semiconductor-related fields, it is vital to employ highly educated and experienced workers. For example, in 2018, 49 % of all employees of the leading Taiwan foundry TSMC had at least a master’s degree. Thus, in order to successfully raise U.S.-born experts, the U.S. will have to enhance professional development programs and improve their efficiency.

Taking into account the aforementioned points, the strategy that involves experienced foreign talent attraction appears to be the best and least expensive path toward the implementation of the CHIPS Act incentives. This is the fastest way to solve the problem, which will also give an impetus to the realization of projects.

The study argues for taking a thought-out series of effective measures aimed at streamlining immigration processes and supporting the influx of fresh blood into the U.S. microelectronics industry. For instance, it is proposed to moderately manage or limit, if necessary, the number of visas and, therefore, attract the most valuable and critical workers of the industry. It is also proposed to introduce specialized visa categories for the most demanded and high-skilled workers from certain countries.

According to the study, on-the-job training programs run by experienced foreign talent that has already gained enough practice and hands-on experience in the field, could reduce U.S. dependence on the immigration of employees. Through participating in such programs and events, recent American graduates will be provided with practical guidance and acquire important and valuable engineering knowledge that is not taught in schools.

In the author’s view, all measures and approaches described in the program should be complemented by long-term investments in growing the pipeline of American students attending graduate school in fields relevant to semiconductor manufacturing. It is essential to provide financial support to those who are already getting trained while at the same time developing a talent pool for future purposes.

[1] William M. (Mac) Thornberry National Defense Authorization Act for Fiscal Year 2021. Pub. L. No. 116–283. P. 1456–1473. Title XCIX—Creating Helpful Incentives to Produce Semiconductors for America. URL: https://www.congress.gov/116/bills/hr6395/BILLS-116hr6395enr.pdf

[2] National Artificial Intelligence Initiative Act of 2020 (Division E, Sec. 5001). P. 1136–1161.

[3] Hunt W. Reshoring Chipmaking Capacity Requires High-Skilled Foreign Talent. Center for Security and Emerging Technology, February 2022. URL: https://cset.georgetown.edu/publication/reshoring-chipmaking-capacity-requires-high-skilled-foreign-talent/