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In the nearly two years since President Biden signed the CHIPS and Science Act into law<\/a> with the aim of revitalizing the American semiconductor industry, the topline numbers have been impressive. So far, the Commerce Department has announced nearly $30 billion in grants and an additional $25 billion in loans to leading chip manufacturers, along with generous tax breaks to give the sector an extra boost. That\u2019s attracted a staggering $450 billion in private investment<\/a>, and the development of major new factories from Ohio to Arizona.<\/p>\n But experts tell Fortune<\/em> that as the CHIPS Act enters a new phase and planned projects start to become operational, they\u2019re bracing for a major hurdle: Factories don\u2019t have enough qualified workers to staff them.<\/p>\n \u201cWorkforce is a really, really important potential bottleneck,\u201d a top CHIPS Act official told Fortune, who agreed to an interview on condition that they not be named directly. \u201cWe have some of the world\u2019s greatest talent in this country. But because we have dramatically reduced our footprint in semiconductor manufacturing over the past 35 years, we have lost a lot of those skills, and we need to reinvigorate that.\u201d<\/p>\n After a yearslong trend of outsourcing skilled chipmaking labor to Asia, the leading semiconductor trade group estimates the U.S. is currently short roughly 67,000 skilled workers<\/a>\u2014or 58% of all new jobs that will be created by CHIPS Act investment by 2030. Federal officials, nonprofits, and educators are already hard at work figuring out how to close that gap, and confronting the consequences of the United States\u2019 long term turn away from manufacturing.<\/p>\n \u201cYou can\u2019t run an economy like ours without having a solid manufacturing sector,\u201d Mike Russo, President and CEO of the National Institute for Innovation & Technology (NIIT), told Fortune<\/em>. \u201cIt\u2019s a foundational component of innovation. If you want to lead, you have to innovate.\u201d<\/p>\n At the dawn of the commercial semiconductor age in the 1970s, the U.S. was the industry\u2019s undisputed global talent hotspot. American companies including Texas Instruments<\/a> and Micron<\/a> were the biggest innovators worldwide, attracting top-tier engineering talent and producing many of their own chips domestically.\u00a0<\/p>\n Over the following decades, though, the industry\u2019s business model changed. Many of the top chip designers\u2014the companies that engineer semiconductors\u2019 complex circuitry, including Nvidia<\/a>, Intel<\/a>, and AMD\u2014kept their operations in the United States. But as manufacturing became more complex and specialized, the industry began to outsource the actual physical production of advanced chips to Asia. Jobs went primarily to Taiwanese giant TSMC, which currently produces 92% of the world\u2019s cutting-edge chips<\/a> used for advanced AI and computing applications.<\/p>\n Bringing \u201csexy\u201d back to manufacturing<\/strong><\/p>\n As semiconductor manufacturing jobs left the country, the American talent base dried up. The shift was only further accelerated by a broader, decades-long decline in skills-based, technical public education. The domestic economy shifted from primarily relying on manufacturing to being more service-based.<\/a><\/p>\n \u201cEarly on, there were shop courses. When somebody signed up for college, [they] could take electrical, mechanical, iron, shop, carpentry\u2026[that was] all part of your regular public education. That went away,\u201d said Russo, a former government relations director at chipmaker GlobalFoundries and longtime labor advocate in the semiconductor industry. \u201cThat led to the erosion of the basic talent that you would have had in place to upskill\u2014to get [workers] into the more automated and semiconductor-related industries.\u201d<\/p>\n Many hardware engineering and manufacturing jobs have also been supplanted by an emphasis on advanced STEM degrees.<\/p>\n \u201cOver the years, semiconductor companies like Intel have relied on community college students to fill a large portion of technician jobs at [factories], but the emphasis on technician training waned over the years as companies invested more in science, technology, engineering, and math (STEM) education and research funding for bachelor, master and Ph.D. programs,\u201d Intel wrote in a 2023 report on the semiconductor labor shortage<\/a>.<\/p>\n In recent decades, schools have poured money into advanced STEM education\u2014and pushed students away from the more skills-based, technical education required in the semiconductor sector.<\/p>\n \u201cWe have to make semiconductor manufacturing sexy,\u201d said the CHIPS Act official.<\/p>\n And the entire industry is already mobilizing to do just that: From educators, to policy officials, to nonprofits. Much hinges on a promise that new semiconductor manufacturing jobs will be safe and sustainable, boosted by strong government support for the sector. The major manufacturers that have received government subsidies through the CHIPS Act have all agreed to extensive terms that ensure they will keep American manufacturing sites open long-term and do their part to help train and develop the workforce.<\/p>\n \u201cIt\u2019s going to be years of hard work on the ground\u2014building programs, building connections, building stakeholder groups, getting middle schoolers excited about semiconductors,\u201d said the official. \u201cThat\u2019s what it\u2019s going to take. And we\u2019re going to get there, but it\u2019s going to take a lot of work.\u201d<\/p>\n Government officials insist that the tens of thousands of manufacturing jobs the CHIPS Act will create will be durable and protected from companies outsourcing production offshore to save on labor costs.\u00a0 But other industries have received big government handouts and then moved offshore in recent history: losing millions of manufacturing jobs over the past 50 years in sectors including the auto and electronics industries has burned the American economy<\/a>, generating massive unemployment<\/a> and severely weakening supply chains<\/a>.\u00a0<\/p>\n CHIPS Act critics are skeptical: They argue that not all of the jobs that will be created by semiconductor companies will be attainable for workers without advanced degrees. There\u2019s no promise that the semiconductor industry will be able to continue to support job growth without significant technological development, and increasing automation in the sector threatens to undercut the government\u2019s promises of abundant chip manufacturing jobs, as the Carnegie Endowment for International Peace pointed out.<\/a><\/p>\n Officials counter that CHIPS Act money comes with rigorous terms that require receiving companies to stay in the U.S. long-term, and that manufacturing jobs will be protected by semiconductors\u2019 vital role in everything from commerce to entertainment to national security.<\/p>\n \u201cCHIPS for America is\u2026going to create hundreds of thousands of good jobs that have the potential to change lives, offer family-sustaining benefits, and lead to long-term careers,\u201d Secretary of Commerce Gina Raimondo said in a speech last year<\/a>.<\/p>\n A new career path<\/strong><\/p>\n Under Russo\u2019s leadership, NIIT has spearheaded a sprawling network of training and apprenticeship programs to help close the semiconductor workforce gap. The nonprofit has teamed up with over 80 local and regional apprentice programs in 17 states across the country, which have collectively brought nearly 5,000 students into paid workforce training programs over the past year and a half, Russo said. They\u2019re also working with community colleges and universities to ensure that students are being encouraged to consider working in the semiconductor industry as a viable career option and have the right instruction.\u00a0<\/p>\n Russo pointed out that many of the workforce skills the semiconductor industry desperately needs right now don\u2019t require a PhD, or even a college degree at all\u2014just specialized technical education that many candidates with a high school education and the right training are capable of mastering.<\/p>\n \u201cPart of our strategy is really bringing [students] up and connecting them with the same foundational, translational skills that you can use across all these strategic [semiconductor] industry sectors,\u201d Russo said.<\/p>\n Companies benefiting from CHIPS Act funding are also pitching in to train workers. Intel\u2019s $8.5 billion grant<\/a>, for example, includes $50 million earmarked specifically for workforce training, and adds to the $250 million Intel has already spent on bringing in new workers over the past five years.<\/a><\/p>\n \u201cIf you look at what some of these companies have committed\u2026Our money is going directly to workforce [development],\u201d said the official. \u201cThis is an all-of-the-above effort.\u201d<\/p>\n<\/div>\n\nSubscribe to the CFO Daily newsletter to keep up with the trends, issues, and executives shaping corporate finance. Sign up<\/a> for free.<\/div>\n