Chipmaker visa programme to ensure timely supply of international talent to the US: Danish Faruqui of Fab Economics
He talks to BT about the new developments in the semiconductor space and the competitive geopolitics and geo-economics of semiconductors across various world regions
- Jan 18, 2024,
- Updated Jan 18, 2024 1:05 PM IST
The demand for semiconductors, aka chips, is on the rise, with countries pouring billions of dollars into incentives to bring the ecosystem in-house. But the industry globally will be facing an acute talent challenge. While the US is working aggressively to develop talent locally, it will have to rely on engineers, computer scientists, and technicians from abroad. But given that bringing chip talent to the US under the H-1B visa system is turning out to be a challenge, the US chip industry is proposing that the US government introduce a new type of visa specifically for the semiconductor industry.
In an interview with Business Today, Danish Faruqui, CEO of Fab Economics, a US-based boutique semiconductor Fab/ATMP greenfield projects advisory and implementation practice and semiconductor manufacturing and packaging talent development firm, talks about this new development and the competitive geo-politics and geo-economics of semiconductors across various world regions. Edited excerpts:
BT: What are your views on the US chip maker visa programme proposal by EIG Group and the US semiconductor industry?
DF: We estimate that over 40 new Fab sites will be constructed and expanded on US soil over the current decade across the logic, memory, analogue, and compound semiconductor segments, accounting for over $270 billion of projects.
Semicomductor manufacturing and packaging talent is the highest risk relative to the US Semiconductor Roadmap and thus risks underutilisation and/or delays to the estimated $270-300 billion public-private semiconductor decadal investment.
The US is not the only one tackling this problem. Around the globe, semiconductor talent shortages pose the highest pareto threat to stall full utilisation of new Fab and ATP sites announced worldwide, and India is no exception either.
Semiconductor Manufacturing and Packaging Talent is the perpetual SUPPLY CRUNCH (unlike Chip Shortage) of the decade, and we would like to specifically warn that beyond 2025 (based on manufacturing and packaging capacity coming online by 2025) semiconductor talent will turn into a CRISIS.
We have already started to witness project delays by even the tier-1 players like Intel, Samsung, and TSMC in the US due to the non-availability of semiconductor talent, domestic or international.
So we definitely welcome and support the proposal of a CHIP Maker Visa in the US, which will enable the supply of international semiconductor talent to the US per the immediate requirements of the US. However, this is a band-aid approach. The US must develop and scale domestic semiconductor manufacturing talent to develop a long-term sustainable competitive advantage in the semiconductor industry.
BT: Is it enough for the US to have 10,000 CHIP Maker Visa annual quotas, which is around 12% of the H1B Visa annual cap?
DF: To answer that question, we need to look at the US semiconductor talent requirement for the next decade. Fab Economics is a prominent global leader in forecasting accurate semiconductor manufacturing and packaging talent requirements across world regions, as it is a building block of our core competencies, including Fab/ATMP site-level economics, which required accurate factoring of FTE (full-time employee) types, skill types, and costs for different Opex cost structures.
Our proprietary granular site-level models forecast FTE requirements across each sector of Fab and similarly across the value chain of ATMP sites, which are then aggregated for multiple site types to develop forecasts at the regional level. It is important to develop bottom-up granular methodology to estimate the semiconductor manufacturing and package requirements; otherwise, the estimates at a regional level can be very different from reality and can lead to suboptimal roadmap planning and talent strategy at a regional level.
It is interesting to revisit some of the iterative events in forecasting semiconductor talent requirements in the US and highlight associated risks, wherein Fab Economics estimates have been both first-time right as estimated bottoms up and also validated later by other firms. So in the year 2021, SIA (Semiconductor Industry Association) and Oxford Economics estimated that a $50 billion federal investment programme to incentivize domestic semiconductor manufacturing in the US will result in an estimated 42,000 domestic semiconductor talent requirements, thus not warning of any grave semiconductor talent shortage in the US.
"Fab Economics" in the month of May 2023 provided the semiconductor talent forecast and decadal gap for the US, estimating 127,000 new jobs required in the US by 2030, of which over 60% of new manufacturing semiconductor jobs are at risk of going unfilled due to a talent shortage. We highlighted the massive talent gap between Indian and US leadership in June 2023. Later in the month of July 2023, a report by SIA (Semiconductor Industry Association) and Oxford Economics revised their 2021 estimate by almost 175% on the talent requirement in the US post-US CHIPS Act ($52.7 billion in funding for the semiconductor value chain), thus closely confirming our (Fab Economics) forecasts and providing 115000 new jobs required in the US by 2030, of which 67000, or over 58%, of new manufacturing semiconductor jobs are at risk of going unfilled due to a talent shortage in the US.
A tier-1 management consultancy firm, Kearney, estimated in August 2023 that post-US CHIPS Act, an estimated 55,000 new talents will be required in the US and 5000 new talents will be required in India based on the respective CHIPS Act and semiconductor subsidies.
Thus, it is extremely important to accurately forecast the semiconductor talent requirement at a national level to inform the national-level talent strategy and roadmap; otherwise, the talent crunch can derail the entire semiconductor roadmap even after spending billions in subsidies. Even 10-20% shortage of the required FTE for semiconductor sites is enough to stall or stop its progress, and we are talking about a potential gap as high as 60%.
In summary, accurate forecasting of semiconductor talent requirements at a national level forms the basis for informing and sizing programmes like CHIPS Makers Visa.
So based on Fab Economics R&A comprehending the US chip manufacturing talent shortage for the decade and corresponding CAGR of STEM graduates across Bachelors, Masters, and Ph.D. programmes from US universities, the current annual quota of 10,000 chipmaker visas may majorly suffice the requirement provided fast-paced domestic talent development policy is implemented at various levels.
If the Chipmaker Visa programme gets bipartisan support like the CHIPS Act and a fast passage brings it into effect by H2 2024, then a full utilisation may result in around 55,000 international talent inflows within the US by the year 2030, which is around 75% of the talent shortage in the US, the rest of which needs to be sourced domestically via US universities and industry research consortiums—a difficult but possible goal.
However, the US needs to ensure that the CHIP Maker Visa predominantly facilitates the intake of semiconductor manufacturing and packaging talent and not design, IP, or verification talent; otherwise, the balance of the unmet manufacturing talent shortage will further get skewed.
BT: Should India also follow US footsteps to secure international semiconductor manufacturing talent by emulating the CHIP Maker Visa-like programme when the country is on the cusp of on-shoring potentially quite a few semiconductor manufacturing and packaging sites?
DF: Yes, definitely. Talent is the highest priority of CXOs and boards to decide on a new site location, and a CHIP Maker Visa-like programme could help India in its candidature as a semiconductor manufacturing hub.
However, India needs to supplement such a CHIP Maker Visa programme with additive incentives and policies to both attract expat talent to India and reduce barriers for players to hire international expat talent for Indian site. Additionally, if such a CHIP Maker Visa programme takes shape in India, then it needs to be meticulously crafted and tailored per India-specific requirements so that the right talent for India can be secured across Silicon Fab, Compound Semi Fab, Display Fab, or ATMP units.
Like the US, such a programme would only be a band-aid approach for now, which will enable the supply of international talent per the immediate requirements of India over the next 2–3 years. India must develop and scale domestic semiconductor manufacturing talent to develop a long-term sustainable competitive advantage in the semiconductor industry.
Also Read | Stock market carnage: Sensex falls 2,750 pts in 3 days, investors lose Rs 13.2 lakh crore; key factors
The demand for semiconductors, aka chips, is on the rise, with countries pouring billions of dollars into incentives to bring the ecosystem in-house. But the industry globally will be facing an acute talent challenge. While the US is working aggressively to develop talent locally, it will have to rely on engineers, computer scientists, and technicians from abroad. But given that bringing chip talent to the US under the H-1B visa system is turning out to be a challenge, the US chip industry is proposing that the US government introduce a new type of visa specifically for the semiconductor industry.
In an interview with Business Today, Danish Faruqui, CEO of Fab Economics, a US-based boutique semiconductor Fab/ATMP greenfield projects advisory and implementation practice and semiconductor manufacturing and packaging talent development firm, talks about this new development and the competitive geo-politics and geo-economics of semiconductors across various world regions. Edited excerpts:
BT: What are your views on the US chip maker visa programme proposal by EIG Group and the US semiconductor industry?
DF: We estimate that over 40 new Fab sites will be constructed and expanded on US soil over the current decade across the logic, memory, analogue, and compound semiconductor segments, accounting for over $270 billion of projects.
Semicomductor manufacturing and packaging talent is the highest risk relative to the US Semiconductor Roadmap and thus risks underutilisation and/or delays to the estimated $270-300 billion public-private semiconductor decadal investment.
The US is not the only one tackling this problem. Around the globe, semiconductor talent shortages pose the highest pareto threat to stall full utilisation of new Fab and ATP sites announced worldwide, and India is no exception either.
Semiconductor Manufacturing and Packaging Talent is the perpetual SUPPLY CRUNCH (unlike Chip Shortage) of the decade, and we would like to specifically warn that beyond 2025 (based on manufacturing and packaging capacity coming online by 2025) semiconductor talent will turn into a CRISIS.
We have already started to witness project delays by even the tier-1 players like Intel, Samsung, and TSMC in the US due to the non-availability of semiconductor talent, domestic or international.
So we definitely welcome and support the proposal of a CHIP Maker Visa in the US, which will enable the supply of international semiconductor talent to the US per the immediate requirements of the US. However, this is a band-aid approach. The US must develop and scale domestic semiconductor manufacturing talent to develop a long-term sustainable competitive advantage in the semiconductor industry.
BT: Is it enough for the US to have 10,000 CHIP Maker Visa annual quotas, which is around 12% of the H1B Visa annual cap?
DF: To answer that question, we need to look at the US semiconductor talent requirement for the next decade. Fab Economics is a prominent global leader in forecasting accurate semiconductor manufacturing and packaging talent requirements across world regions, as it is a building block of our core competencies, including Fab/ATMP site-level economics, which required accurate factoring of FTE (full-time employee) types, skill types, and costs for different Opex cost structures.
Our proprietary granular site-level models forecast FTE requirements across each sector of Fab and similarly across the value chain of ATMP sites, which are then aggregated for multiple site types to develop forecasts at the regional level. It is important to develop bottom-up granular methodology to estimate the semiconductor manufacturing and package requirements; otherwise, the estimates at a regional level can be very different from reality and can lead to suboptimal roadmap planning and talent strategy at a regional level.
It is interesting to revisit some of the iterative events in forecasting semiconductor talent requirements in the US and highlight associated risks, wherein Fab Economics estimates have been both first-time right as estimated bottoms up and also validated later by other firms. So in the year 2021, SIA (Semiconductor Industry Association) and Oxford Economics estimated that a $50 billion federal investment programme to incentivize domestic semiconductor manufacturing in the US will result in an estimated 42,000 domestic semiconductor talent requirements, thus not warning of any grave semiconductor talent shortage in the US.
"Fab Economics" in the month of May 2023 provided the semiconductor talent forecast and decadal gap for the US, estimating 127,000 new jobs required in the US by 2030, of which over 60% of new manufacturing semiconductor jobs are at risk of going unfilled due to a talent shortage. We highlighted the massive talent gap between Indian and US leadership in June 2023. Later in the month of July 2023, a report by SIA (Semiconductor Industry Association) and Oxford Economics revised their 2021 estimate by almost 175% on the talent requirement in the US post-US CHIPS Act ($52.7 billion in funding for the semiconductor value chain), thus closely confirming our (Fab Economics) forecasts and providing 115000 new jobs required in the US by 2030, of which 67000, or over 58%, of new manufacturing semiconductor jobs are at risk of going unfilled due to a talent shortage in the US.
A tier-1 management consultancy firm, Kearney, estimated in August 2023 that post-US CHIPS Act, an estimated 55,000 new talents will be required in the US and 5000 new talents will be required in India based on the respective CHIPS Act and semiconductor subsidies.
Thus, it is extremely important to accurately forecast the semiconductor talent requirement at a national level to inform the national-level talent strategy and roadmap; otherwise, the talent crunch can derail the entire semiconductor roadmap even after spending billions in subsidies. Even 10-20% shortage of the required FTE for semiconductor sites is enough to stall or stop its progress, and we are talking about a potential gap as high as 60%.
In summary, accurate forecasting of semiconductor talent requirements at a national level forms the basis for informing and sizing programmes like CHIPS Makers Visa.
So based on Fab Economics R&A comprehending the US chip manufacturing talent shortage for the decade and corresponding CAGR of STEM graduates across Bachelors, Masters, and Ph.D. programmes from US universities, the current annual quota of 10,000 chipmaker visas may majorly suffice the requirement provided fast-paced domestic talent development policy is implemented at various levels.
If the Chipmaker Visa programme gets bipartisan support like the CHIPS Act and a fast passage brings it into effect by H2 2024, then a full utilisation may result in around 55,000 international talent inflows within the US by the year 2030, which is around 75% of the talent shortage in the US, the rest of which needs to be sourced domestically via US universities and industry research consortiums—a difficult but possible goal.
However, the US needs to ensure that the CHIP Maker Visa predominantly facilitates the intake of semiconductor manufacturing and packaging talent and not design, IP, or verification talent; otherwise, the balance of the unmet manufacturing talent shortage will further get skewed.
BT: Should India also follow US footsteps to secure international semiconductor manufacturing talent by emulating the CHIP Maker Visa-like programme when the country is on the cusp of on-shoring potentially quite a few semiconductor manufacturing and packaging sites?
DF: Yes, definitely. Talent is the highest priority of CXOs and boards to decide on a new site location, and a CHIP Maker Visa-like programme could help India in its candidature as a semiconductor manufacturing hub.
However, India needs to supplement such a CHIP Maker Visa programme with additive incentives and policies to both attract expat talent to India and reduce barriers for players to hire international expat talent for Indian site. Additionally, if such a CHIP Maker Visa programme takes shape in India, then it needs to be meticulously crafted and tailored per India-specific requirements so that the right talent for India can be secured across Silicon Fab, Compound Semi Fab, Display Fab, or ATMP units.
Like the US, such a programme would only be a band-aid approach for now, which will enable the supply of international talent per the immediate requirements of India over the next 2–3 years. India must develop and scale domestic semiconductor manufacturing talent to develop a long-term sustainable competitive advantage in the semiconductor industry.
Also Read | Stock market carnage: Sensex falls 2,750 pts in 3 days, investors lose Rs 13.2 lakh crore; key factors