Biden’s $5m Plan to Address Semiconductor Workforce Shortage

In response to the critical shortage of skilled workers in the semiconductor industry, the Biden administration unveiled a bold $5 billion investment plan on Friday, aiming to bolster research and development in advanced computer chips through a public-private consortium. The cornerstone of this initiative, the National Semiconductor Technology Center (NSTC), will establish a “Workforce Center of Excellence” across various regions in the United States, dedicated to training the next generation of semiconductor engineers.

Commerce Secretary Gina Raimondo emphasised the urgency of addressing the workforce shortage, stressing that the success of semiconductor companies hinges on having a highly trained workforce. The initiative comes amidst concerns that labor market constraints pose a significant obstacle to expanding chip manufacturing within the U.S. and could impact President Biden’s reelection efforts.

Previously, the responsibility for training semiconductor workers largely fell on state and local governments and individual companies. However, observers warned that these efforts were insufficient, prompting the need for more comprehensive policy solutions. With immigration-based solutions off the table due to political constraints, attention has turned towards domestic workforce development.

Arizona, poised to become a hub for the U.S. chip sector, has already encountered labor challenges. The Taiwan Semiconductor Manufacturing Company (TSMC) experienced delays in launching its flagship fabrication plant in Phoenix due to worker shortages. Similarly, Intel has adjusted construction schedules for its $20 billion plant in Ohio, citing market slowdowns and issues with government grant disbursement.

The White House’s plan, outlined in a fact sheet, aims to both launch new training programs and leverage existing local efforts to expand proven education and training initiatives. The administration stresses the importance of supporting both manufacturing capacity and research and development efforts to reverse the decline of the U.S. semiconductor industry, which has seen its global market share plummet from nearly 40% in 1990 to less than 10% today.

While the $5 billion investment represents a significant step forward, challenges persist. The semiconductor sector has been lobbying intensively for funding under the CHIPS and Science Act, which allocates $50 billion for grants, divided between manufacturers and research and design. The administration promises more details on direct grants to companies in the coming months, as efforts continue to address the pressing workforce shortage threatening the semiconductor industry’s growth and competitiveness.