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The Semiconductor Manufacturing Landscape

The Semiconductor Manufacturing Landscape

In the coming years, the landscape of semiconductor manufacturing and design will expand as fabless semiconductor companies as well as tech giants, including Apple, Google (Tensor), and Amazon (Graviton), continue to push their designs in the direction of on shore manufacturers. This expansion will come at a time when there is expected to be turnover at the executive level, furthering increased demand for talent throughout the semiconductor supply chain. 

Why Semiconductors Matter 

Semiconductors underpin our national security and are a key driver of our economy, global competitiveness, and technology leadership. Given the widespread use of semiconductors in products and across industries and the global growth of AI and IoT devices, semiconductor sales are expected to be in excess of $655 billion in 2025

After losing its standing as the global leader within the semiconductor industry in the 1980s, the US industry rebounded in the late 1990s. By 2019, US firms held 45% of the global market share

Semiconductors underpin national security

With the August 2022 passage of the CHIPS and Science Act, the US is well-poised to increase production of American-made semiconductors, address supply chain vulnerabilities, build and strengthen research and technological leadership and talent, and enhance economic and national security. 

How Industry Leaders Can Drive Growth 

Given this increased funding and attention from governmental sources, there is a need to think clearly and strategically about how to best grow the industry. Sustainability doesn’t only refer to ecological impacts, as important as they are. It is also key to manage the pace of growth over time. 

Increase investment in research and innovation 
Increasing investment in semiconductor research and innovation to develop next-generation technology is critical. This includes exploring ways to make semiconductor manufacturing more reliable and cost-effective, identifying new applications for semiconductor use, bringing new applications to market, and experimenting with new semiconductor materials. 

Build public-private partnerships 
The CHIPS and Science Act includes $52 billion in subsidies and tax credits for companies that manufacture chips in the US. More than half of these funds are dedicated to helping companies build facilities for making, assembling, and packaging chips.

81 percent of US-made semiconductors are made by US firms

 

Immediately following the Act's passage, companies announced nearly $50 billion in additional investments in American semiconductor manufacturing. And, over the past few months, this investment, and the opportunity to drive growth through public-private partnerships have increased. One example is IBM’s announcement that it will invest over $20 billion across the Hudson Valley region of New York over the next 10 years to increase its production of semiconductors and develop advanced technologies, including artificial intelligence and quantum computing. 

Leaders who recognize the historic opportunity afforded by the CHIPS and Science Act and those who take the time to build and foster public-private partnerships will realize the benefits. 

$52Bn in subsidies to the semiconductor industry.

Focus on talent 
While the US semiconductor industry has strong executive leadership talent today across all functions, we are most critically behind in having nurtured technical manufacturing talent here within our borders. Our universities are now discussing how best to employ a long-term strategy and offer majors such as nanotechnology manufacturing. 

For the immediate need and short-term strategy, seek out those leaders who bring the direct set of leadership qualifications required for critical roles. Be careful not to cast too narrow a net. Rather, bringing others forward who have a strong combination of existing experiences from a variety of adjacent industries can add up to great business leadership and the ability to solve ambiguous and novel problems. In part, this is about knowing the complexity, history, and physics behind the obstacles that these executives must face. While some of the required skills land squarely in the frame of manufacturing best practices, others are harder to replicate outside of the immediate industry.      

The Future of Talent  

The need for great leadership will continue to expand. To sufficiently build the leadership teams alongside our current and future semiconductor clients, consider partnering with an advisory firm that can creatively source executive talent from adjacent industries where the cutting edge, higher margin, and higher performance semiconductor technologies exist today. Make sure your candidate pool includes the aerospace, satellite, astronautical, EUV, and nuclear industries. For manufacturing executive talent, we know that companies like ASML and Samsung that can produce 3-5 nanometer technologies will be most in demand. TSMC and others have determined to lay the foundation for their manufacturing facilities here in the U.S., and the hope is this trend of significant investment will continue to expand.  

To maintain a competitive edge, leaders need to focus on expanding the size and skills of the semiconductor pipeline and workforce, specifically regarding design, manufacturing, and R&D. In the absence of exceptional talent and a robust pipeline, innovation and growth will be threatened.  

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