Even as several South Asian nations make efforts to climb the semiconductor industry's value chain, an intense talent crunch threatens to derail their progress. Talent development is one of the top priorities of semiconductor companies in the APAC region, according to Deloitte.
That talent crunch is a major concern across the industry, not just in Asia Pacific. With chip demand not showing any signs of relenting, foundries are struggling to discover and recruit the right people. According to the Semiconductor Industry Association, the US chip industry will need around 115,000 more people by 2030. However, as much as 58% of these new jobs may not be filled.
"Job postings for semiconductor technical roles in the European Union and the United States rose at a CAGR of more than 75 percent from 2018 to 2022. If the semiconductor sector does not become more attractive, the resulting talent gap for engineers will be massive: more than 100,000 each in the United States and Europe and upward of 200,000 in Asia–Pacific (excluding China)," according to Mckinsey.
The problem of skill shortage is all the more intense in the Asia Pacific region as several countries in the region are not traditionally chip-producing countries, so they don't have an ecosystem. It is only in the post-pandemic world, when countries are trying to diversify the supply chain, that the region is seeing an influx of investments and efforts to build chipmaking fabs and related factories.
Take India, for example. The country is likely to see the demand for more than 800,000 to 1 million jobs in the semiconductor industry over the next five years, according to staffing company Randstad. On the other hand, Malaysia needs around 50,000 skilled engineers but it produces just 5,000 engineers every year.
Attracting overseas talent and training and upskilling the available talent is going to be crucial for the industry to meet the growing demand for talent. The talent crunch means that people with the right skills are in high demand and can command a premium, making it tougher for companies to retain their workforce.
Different country, different approach to address the chip production skills gap
Different countries are adopting different strategies to address the talent gap. For instance, Malaysia plans to invest around $5.3 billion over the next five to ten years to develop talent for the chip industry. It plans to train 60,000 engineers as part of its plan to strengthen the semiconductor industry. Similarly, India has come up with a Chip to Startup (C2S) program to develop 85,000 specialized workers over the next five years.
The strategy also depends on the area of the chip industry in which the country wants to make a mark. "Malaysia and Vietnam target packaging and testing more, especially since they have pretty good foundations in this sector. Now, both of them are moving to the integrated circuit (IC) design sector, which has lower entry barriers than a foundry," says Helen Chiang, Head of Semiconductor Research, IDC Asia/Pacific.
Malaysia is planning to be the lead of SEA [Southeast Asia] IC design countries, it has built the largest IC design park and plans to target building local startups/attracting foreign startup companies here, which means attracting talent here. Since it takes time to raise talent in this field, attracting outside startups (which means IC design talent) is a smart alternative," adds Chiang.
In contrast to Malaysia and Vietnam, India wants to build a full semiconductor supply chain, including IC design, foundry, OSAT (Outsourced Semiconductor Assembly and Test)/packaging, and testing. While India produces more than 1 million engineers every year, they still need to be trained for the specific demands of the chip industry.
"In terms of IC design, India shows more strengths since it has lots of software talent, and we had heard some companies moving more investment there because of local talent. For OSAT, since the packaging process is similar (at some level) to the panel, India has attracted some investment in this area," says Chiang. "For the foundry, we believe it takes time, not only because of the talent, experience, and know-how but also because India has to prove more for its infrastructure to be ready for the foundry to move in."
The talent war is only likely to intensify as different countries try to grow their competencies in the chip industry.
Gagandeep Kaur is an independent journalist and founder of Deepworkz Media Services.