Skills shortage threatens Japan's semiconductor industry

Japan is currently facing a shortage of skilled engineers, as the country looks to strengthen its semiconductor manufacturing sector, weakened by Covid-19 supply disruptions.

In an appeal to the Ministry of Economy, Trade and Industry last month, an electronics industry body representing large manufacturers such as Toshiba and Sony said the five years until 2030 were “the last and biggest chance for Japan’s semiconductor industry to regain its footing” after years of losing global market share.

The Japan Electronics and Information Technology Industries Association (JEITA) estimated that eight big producers will need to hire about 35,000 engineers in the next 10 years to keep up with the pace of investment.

“It is often said that semiconductors are lacking, but the biggest shortage is engineers,” Hideki Wakabayashi, the head of the policy proposal task force at the JEITA semiconductor board, told The Financial Times. 

The chip shortage, caused by Covid-related supply chain disruptions, the increase in demand that followed the move to remote working, and the ongoing trade war between the US and China, is currently affecting many industries that rely on the technology and is not expected to slow down in the next 12 months. 

According to the organisation, the semiconductor sector’s success hinges on securing enough talent to innovate and operate its chip plants.

Although Japan used to be the leading producer of semiconductors, the country eventually ceded its dominance to organisations in South Korea, Taiwan and China, in a move that led to mass lay-offs of industry workers following the global financial crisis in 2008 – a loss of talent that, according to Wakabayashi, Japan has never recovered from.

In order to address this situation, the country's biggest chipmakers are targeting local universities and pouring additional funding into recruitment, with the hopes of attracting talent that would have previously preferred to join financial institutions or tech companies. 

“Most Japanese studying science subjects are more interested in IT, not necessarily semiconductors,” said Takashi Miyamori of Toshiba Electronic Devices. “There’s a fight over the best engineers globally and we need to come up with ways to be competitive.”

In addition, the country is also investing heavily in innovation in the sector. Only last month, US president Joe Biden and Japan’s prime minister Fumio Kishida pledged to bolster semiconductor manufacturing capacity and collaboration on developing advanced chips. Moreover, TSMC, Sony, and Kioxia have all announced plans to begin the construction of new chip manufacturing plans in Japan.