Chipmakers are struggling to get enough Americans trained for the positions needed to keep pace with growing demand. The Biden administration on Friday announced its latest effort to help alleviate the problem.
The White House said Friday that the US expects to invest more than $5 billion in a public-private consortium aimed at supporting research and development in advanced computer chips.
A key part of the mission of this National Semiconductor Technology Center (NSTC) would be to stand up a “Workforce Center of Excellence” funded with hundreds of millions of those dollars. The center plans to set up shop in different regions of the US to try and spur the training of more semiconductor engineers.
“I cannot overestimate how important this is,” Commerce Secretary Gina Raimondo said of the workforce efforts on a call with reporters this week. “Every semiconductor company we talk to says their success will rely upon having enough highly trained, qualified people to work in the industry,” she added.
It remains to be seen if the new effort will be enough to make a dent in labor market concerns that have emerged as a significant roadblock in the effort to bring more chipmaking to the US, not to mention President Biden’s reelection efforts.
Until this week’s announcement, much of the responsibility for training workers fell to state and local governments as well as the companies themselves. But observers repeatedly warned that those efforts wouldn’t be enough, with more dramatic policy solutions likely becoming inevitable.
And with efforts to alleviate the problem via immigration likely foreclosed by the political climate in Washington, the focus has turned toward training new workers.
Arizona is set to be a hotbed of the growing US chip sector but has already seen labor issues impinge on those plans. The Taiwan Semiconductor Manufacturing Company (TSMC) is at work on a flagship fabrication plant in northern Phoenix but recently announced a delay in the plant’s full-scale launch from 2024 to 2025. It cited worker shortages as a reason for the delay.
Intel (INTC) is also reportedly slowing the construction timetable on its $20 billion plant in Ohio, but that delay has primarily been caused by a slowing chip market as well as issues with the rollout of government grant money, according to the Wall Street Journal.
A need to ‘scale up’
The White House’s workforce plan, per a fact sheet released by the administration, is to launch new programs but also leverage the existing local efforts to “scale up proven education and training programs.”
A senior administration official added this week that the workforce efforts would be focused on both supporting the manufacturing capacity as well as the emerging research and development efforts.
The overall goal of the Biden administration’s effort is to reverse a downward spiral for the industry in the US in recent decades. American semiconductor manufacturing’s share of the global market has fallen from nearly 40% in 1990 to less than 10% today, according to the White House.
The situation is even worse with the world’s most advanced semiconductors, 100% of which are currently manufactured overseas. The plants under construction in the US are designed to change that, but the workforce issues could only grow in the years ahead.
“It’s just become a huge issue, … and it’s just not clear where these workers are coming from,” noted Greg Wright, a professor of economics at the University of California Merced, in an interview last week.
“If we can’t even get the workforce straightened out, I don’t know what’s going to happen,” he added.
President Biden signed the CHIPS and Science Act into law on Aug. 9, 2022, and it has been the subject of intense lobbying in the 17 months since. Semiconductor giants like Intel, Micron (MU), IBM (IBM), and the Taiwan Semiconductor Manufacturing Company have all been vying for a piece of the money.
In total, the bill sets aside about $50 billion for grants to the semiconductor sector. That is divided between $39 billion earmarked for manufacturers and $11 billion set aside for chip research and design purposes.
Friday’s announcement was focused on that latter pot of money, with the NSTC being described as the centerpiece of the administration’s R&D efforts.
Still to come are the highly anticipated direct grants to companies. Most of that money has not yet been allocated, but administration officials promise more details within the next two months.
Ben Werschkul is Washington correspondent for Yahoo Finance.
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