Needs and Opportunities in the Semiconductor Manufacturing Sector

In 2022, President Biden signed into law the bipartisan CHIPS and Science Act – an investment to strengthen U.S. manufacturing, supply chains and our national security. The CHIPS and Science Act provides funding for Manufacturing Extension Partnership (MEP) Centers to deliver services for workforce development, improve the resiliency of domestic supply chains, and adopt advanced technology upgrades at small and medium-sized manufacturers (SMMs).

MEP recently hosted a roundtable discussion featuring semiconductor original equipment manufacturers (OEMs) and assembly and packaging manufacturers. Panelists included senior leadership from Intel, NXP Semiconductors, Applied Materials and SkyWater Technology. They each shared their perspective on critical aspects of the semiconductor supply chain, fabrication, assembly and packaging, workforce pipeline, technology innovation and commercialization.

Participants discussed the challenges and opportunities for U.S. semiconductor sector growth. Discussion focused on opportunities for tier 2+ manufacturers to expand or pivot to meet the OEMs’ future needs as they increase semiconductor production in the U.S. They emphasized that MEP Centers can be connectors, helping OEMs better understand the local ecosystems and resources. Panelists also discussed their workforce needs, including skills and certification requirements, which could result in additional services for MEP Centers.

Key takeaways include:

Wide ranging resources and support infrastructure are needed

The bottom line is that all kinds of resources are needed throughout the country as the semiconductor manufacturing ecosystem ramps up. Different resources will be needed to support different phases of onshoring. For example, constructions workers and other tradespeople will be needed to build new facilities. Then equipment suppliers are needed. Once up and running, factories need skilled operators and engineers, as well as support staff such as human resources and finance. New factories also bring many new needs and new jobs to the community, such as construction jobs to build housing.

A large semiconductor manufacturing facility works with U.S. suppliers across the country, perhaps 6-7 tiers deep. Traditionally, OEMs viewed suppliers as transactional – if they ordered something, they assumed it would be delivered. This has changed. OEMs now need a deep understanding of their supply chain so they can identify risks and choke points – and develop plans to address them.

Manufacturers are working within local ecosystems to address workforce needs

Building capacity and modernizing existing facilities bring different challenges than starting a new facility from scratch. There’s a need to refresh the existing workforce and expand to meet growing needs. Existing facilities place a heavy premium on maintenance technicians – skilled workers who can service equipment and keep it going.

Nationwide, there’s a shortage of manufacturing workers with the right skills. The talent issue is a deep challenge that every semiconductor manufacturer must address. Manufacturing skills need to be reenergized. At the same time, new technology demands entirely new skill sets be developed.

In some ways, semiconductor manufacturers are thinking of educational partners as suppliers – because workforce is similar to other supply chain issues. Companies are working with trade schools and community colleges to establish curriculum and build back talent. They’re also working with universities to develop engineering talent. They’re supporting apprenticeship and internship programs for maintenance technicians and other trades.

There’s a diversity of skills needed, and each manufacturer must work with its local ecosystem and map out the skills sets they need. This will help manufacturers understand the level of training needed for each position. With this information, they can upskill current workers to take on more complicated roles. They can also identify potential workers in adjacent industries who may have the right skills to perform a manufacturing job.

MEP Centers can partner with OEMs on workforce development

Partnering with semiconductor OEMs, MEP Centers can help create and reinvigorate workforce ecosystems, making sure enough workers are trained with the right skill sets. Automation means jobs that require specific skill sets and the training available locally must match OEM needs. MEP Centers can play an important role in helping OEMs connect the dots and find the workers they need.

Manufacturers must work together to move the industry forward

How can semiconductor manufacturers collectively work on the common challenges in the industry? Standards. There’s a need for more engagement to drive the standards. For example, in advanced packaging, there is a convergence of “front end” and “back end” manufacturing. (According to NIST’s Strategic Opportunities for U.S. Semiconductor Manufacturing [opens PDF], front end semiconductor manufacturing is the first step in wafer manufacturing where wafer-based devices like transistors, poly capacitors, non-metal resistors, and diodes are formed. Back end refers to the last step of the manufacturing process where the wafer is cut, assembled, and placed into various packages.)

The convergence of front end and back end for improved performance places unprecedented demand for rapid innovation in measurements and standards. For this type of technology to take off, OEMs need to take process capabilities that are typically applied in the front end and bring them to the back end.

The convergence of front end and back end also applies to intellectual property (IP) licensing. IP licensing allows companies to gain access to valuable technologies, designs and innovations developed by other companies or individuals. They can incorporate advanced features and functionalities into their own semiconductor products without having to develop everything from scratch. By licensing IP, semiconductor companies can use existing technologies and focus their resources on further innovation and differentiation.

The semiconductor industry is the most complex technology you can find, so having flexible models that allow IP to be used will be vital to enabling this technology to keep advancing. As an example, in some cases technology and innovation development are done in partnership with customers. This requires an agreement on the types of IP that are common as a base offering and which elements are unique to a differentiated offering that a customer may have interest in creating. Once the common capability is established, it comes full circle as IP that can serve other customers.

MEP Centers can help semiconductor OEMs build back dormant capabilities and strong supply chains

Beyond workforce, MEP Centers can help semiconductor OEMs put the pieces of the puzzle together. Semiconductor companies have spent decades focusing on Asia, and they may not entirely understand what’s right in their own backyard. With deep and longstanding local connections in each state and Puerto Rico, MEP Centers are uniquely positioned to close the gap between OEMs and SMMs. This includes knowledge of local suppliers and their capabilities and matching these to OEM needs.

Conversely, MEP Centers can learn more about OEM needs and help local companies retool and reinvent themselves to meet them. For example, there is currently almost no processing of rare earth materials in the U.S. Building capabilities will be an important factor in supply chain resiliency. Another example is assembly and testing – a capability that existed in the U.S. many years ago. MEP Centers can help build back these dormant capabilities by interconnecting supply chain stakeholders.

Cost competitiveness will be vital to successfully onshoring the semiconductor industry, and MEP Centers can help suppliers streamline and automate, resulting in lower costs that meet OEM needs. In addition, OEMs want to build sustainability into their processes. MEP Centers can help smaller firms focus on social responsibility and the environmental aspect – making them more attractive suppliers for OEMs.

Watch a recording of the semiconductor OEM roundtable for more details

Semiconductor OEMs want and need the help of the MEP National Network™ and the manufacturers it works with. Watch a recording of the semiconductor OEM roundtable to hear the conversation.

More than 170 people from the MEP National Network, the National Institute of Standards and Technology (NIST), the Semiconductor Research Corporation, and SEMI participated in the roundtable discussion hosted by NIST MEP. Roundtable participants included:

• Intel: Mostafa Aghazadeh, Corporate Vice President, Die Prep and Assembly Director
• Intel: Carolyn Duran, Vice President and Engineering Manager of Process Engineering and External Partnerships in Components Research
• NXP Semiconductors: Paul Hart, Executive Vice President and General Manager, Radio Power
• Applied Materials: Paul Chhabra, Supply Chain Network Head
• SkyWater Technology: Brad Ferguson, Chief Government Affairs Officer, and Senior Vice President and General Manager

MEP Centers support both OEMs and SMMs in reshoring semiconductor manufacturing

One thing is certain – the complexity of bringing semiconductor manufacturing back to the U.S. will require support from many thousands of SMMs. They can turn to their local MEP Centers to ready themselves for this effort.

Drawing on the resources of the entire MEP National Network, MEP Centers can find solutions to local challenges that both OEMs and smaller firms face. Additional solutions may be available from NIST. MEP Centers can tap into the Baldrige Performance Excellence Program and the expertise of the NIST laboratories through the MATTR+ service. Reshoring semiconductor manufacturing to the U.S. is an enormous and complex effort, and MEP Centers play an important role in its success.