u.s. chip revival at risk: workforce and cost hurdles loom

2025-05-03 general

Washington, Saturday, 3 May 2025.
The u.s. semiconductor industry faces significant challenges. A shortage of skilled workers and uncompetitive costs threaten domestic chip production. The CHIPS Act, designed to boost manufacturing, is undermined. A TSMC plant in Phoenix, Arizona, faced delays due to workforce issues. A similar plant in Japan started 18 months later, yet achieved full production at the same time. Congress allocated $37 billion in grants and loans. Despite this, the u.s. struggles to rebuild its manufacturing capacity. The nation’s share of advanced chip production has already plummeted from 37% to 10%.

investment concerns amid challenges

The lack of a skilled workforce and uncompetitive cost structure has complicated investments in u.s. chip capacity [1]. Experts suggest that without a plan to utilize new semiconductor resources, the nation risks accumulating unused chips [2]. The u.s. must decide whether to invest in electronics manufacturing or depend on friendshoring [1]. These challenges could deter investors. Companies might hesitate to expand operations in the u.s. due to concerns about profitability and project delays. This hesitation could negatively impact stock valuations for semiconductor companies banking on government support.

the chips act and its implications

The Biden administration launched the CHIPS and Science Act three years prior, aiming to revitalize domestic semiconductor manufacturing [1][2]. This followed decades of outsourcing that decreased the u.s. share of advanced chips from 37% to 10% [1][2]. The act allocated over $37 billion in grants and loans to 32 companies across 48 projects [1][2]. Despite this, the workforce shortage undermines these investments [1]. The median wage for electronics production workers is $24 per hour [1]. High labor costs could make u.s. manufacturing less competitive globally, affecting investor sentiment and stock performance.

tensions in the labor market

Recent data indicates a strong u.s. labor market. The u.s. added 177,000 non-farm payroll jobs in April, exceeding expectations [8]. The unemployment rate remained steady at 4.2% [8]. Despite this positive news, concerns persist about the semiconductor industry’s specific labor challenges [1][2]. This is especially true given the need for highly skilled workers [2]. These concerns could overshadow broader economic optimism, potentially limiting stock gains for semiconductor firms. Investors will closely monitor how companies address workforce development to ensure long-term growth and profitability.

global strategies and vietnam’s rise

While the u.s. grapples with semiconductor manufacturing challenges, other countries are strategically positioning themselves in the global supply chain [7]. Vietnam’s semiconductor market is projected to reach $31.28 billion by 2027, with an 11.6% compound annual growth rate from 2023 [7]. This growth is supported by government policies and foreign direct investment [7]. NVIDIA recently signed an AI cooperation agreement with the Vietnamese government [7]. The rise of alternative manufacturing hubs could further pressure u.s. companies [1]. It may force them to diversify their operations and reduce reliance on domestic production.

Bronnen

workforce shortage manufacturing costs