Why the Chip Industry Is Struggling to Attract the Next Generation
Six hard truths about how engineers enter, survive, and often get stuck in the chip industry — and what needs to change.
This is a free edition of my weekly newsletter. Each week, I help readers learn about chip design, stay up-to-date on complex topics, and navigate a career in semiconductors. You can do this short 3-question survey to give your take on the issues in semiconductor hiring (responses are strictly kept confidential).
There is a worldwide shortage of semiconductor talent.
Deloitte estimates that 1 million additional skilled workers are required to meet the semiconductor industry demand by 2030. Regardless of the accuracy of that number or timeline, we need a larger supply of well trained semiconductor professionals because chips are here to stay.
We have seen countries launch CHIPS programs to develop a homegrown supply of semiconductors that protects them from geopolitical turbulences and pandemic-inspired supply chain shortages. Unfortunately, the upskilling needed for semiconductor talent cannot happen overnight. There has been a systemic shift away from hardware engineering over the past few decades, and making semiconductors sexy again is no easy task.
In this article, we will discuss 6 reasons why the chip industry is struggling to attract new talent.
Theory-first education: In an effort to build from fundamentals, there is too much emphasis on theory rather than a focus on applications.
Compensation myth: There is a feeling that software pays more than hardware. Reality is not so cut and dry.
Graduate degrees: A lot more employers ask for graduate level degrees to enter chip design creating bottlenecks in talent supply.
Early specialization: Highly niche skillsets are less marketable and career limiting.
Documentation shortages: Hardware design is entirely tribal knowledge and hard to self-learn.
Chip design culture: Hardware companies have a retro feel to them, deadlines are tight, and mistakes are deadly.
Read time: 8 mins
#1: Semiconductor Education is Theory-First
Semiconductors sit at the intersection of math, physics, chemistry, mechanics, programming, and measurement — few fields are more interdisciplinary. The learning curve is steep, and students often face high barriers in time, effort, and financial cost.
To what extent do you need to go deep into the details? When you learn a programming language, you don’t think about the translation to bytecode, or how the instruction pipeline is executed in the CPU. There are experts who still work at low level machine interfaces but programming is mostly abstracted away by modern tools.
The same holds true in semiconductors to a large extent. An in-depth knowledge of transistor operation would benefit those who work on analog electronics, device modeling, or advanced manufacturing; but this would be of little use to digital designers, system level or test engineers because they operate at higher abstraction layers.
Yet most university programs still take a theory-first route. They start with an equation-centric approach with the good intention of laying a strong conceptual foundation. While I agree with having a good understanding of the basics, it need not be taught in an academic, theoretical sense. A more qualitative understanding is often sufficient. The difficulty of assimilating complex equations often drives away prospective engineers when they could have been a perfectly good fit for the industry.
What is needed is a practical-first approach to semiconductor design where the craft of designing silicon is highly tailored to the end application. One could always go deeper into the fundamentals on an as-needed basis. For example, learners could begin by building and simulating simple circuits before diving into solid-state theory. The current disconnect between how the field is practiced and how it’s taught is part of what’s keeping people out.
#2: The Hardware vs. Software Compensation Myth
A 2024 survey found that the perception of software engineering as more lucrative than hardware was one of the biggest barriers to students pursuing careers in the semiconductor industry.
According to levels.fyi, an L4 software engineer at Google (a mid-level role with 2-4 years of experience) has a total annual compensation of $296,000 in the US (or ₹67 Lakhs in India). The reported salaries of an ICT3 (2-4 years of experience) hardware engineer in Apple is about $225,000 in the US. These salary numbers include base pay, stock, and bonuses.
While differences exist, total compensation depends on a wide range of factors including company, location, technical role and prior work experience. On an absolute scale, electrical engineers are paid quite well as shown by this 2023 IEEE-USA survey below. The highest earners in EE were those who specialized in semiconductor devices and circuits.
It is hard to make any sweeping conclusions that software pays more than hardware, or vice versa. The myth of software always being more lucrative may be unfounded, but the sentiment does exist among young professionals looking to choose career paths.
#3: Tearing Down Graduate-Degree Barriers
Semiconductor design jobs often favor graduate degree holders, creating a bottleneck in building a steady, well-trained workforce. The most sought after graduate programs are usually international in nature, highly competitive and place substantial financial burden, which makes it less accessible to those interested in a career in semiconductors.
The bias towards post-graduate degrees stems from the lack of a practical-first education in semiconductors at the undergraduate level. A lot of the skills relevant to the industry, such as analog and digital design, communication theory, and electromagnetics, or even more basic skills like layout, verification and testing are often taught at the graduate level.
Instead, education for the chip industry should be more comprehensive in undergraduate programs. Teaching students to work with a foundry Process Design Kit (PDK), run key simulations, analyze results, perform layout, and rule checking should constitute the core curriculum in an undergraduate program directed towards a specialization in chip design. If undergraduate programs were to provide industry-standard education, then high school programs should also be appropriately STEM-focused to prepare students for an elevated level of undergraduate education.
What the semiconductor industry also needs is a learning community. To foster more practical learning and identify top talent, large semiconductor companies should fund chip hackathons, where young enthusiasts build and simulate integrated circuits in a day. An online “Kaggle for chips” platform where people can design and submit chip designs would also foster innovation. All this can be done with “educational PDKs” that emulate state-of-the art technologies without giving away foundry technology secrets.
#4: The Trap of Early Specialization in Hardware
The high cost of engineering education, lack of re-skilling resources and undocumented knowledge means that there is a career lock-in based on your choice of early-career specialization.
Pivoting to adjacent sub-fields is often difficult for one major reason: few companies are willing to hire someone without formal credentials or prior job titles in the new area. Over-specialization in the semiconductor industry is so severe that experts often work on the same thing their entire lives, regardless of the company they work for.
The consequence of pigeon-holed careers is that know-how eventually becomes the limiting factor when skill-sets are so narrow. Big corporations are able to accommodate extremely narrow roles due to their ability to support large teams. Smaller startups usually do better with engineering generalists. The stability and compensation provided by large companies means that engineers are more inclined to sequester themselves into a niche job function early in their careers which hurts job prospects in the long run.
While most engineers strive to land jobs at big name companies early on, over-specialization can become a liability. It often makes more sense to start at a smaller company and transition to larger firms later, once you’ve built broad exposure since smaller companies provide opportunities to understand a wider section of the semiconductor industry.
Career lock-in has major implications for talent shortages in the industry when engineers are not able to shift engineering tracks or pivot easily into more interesting roles due to hiring barriers. In contrast, the shared tools, ecosystems, and cultural flexibility in software engineering makes such shifts possible. Hardware career paths tend to be more rigid, with fewer opportunities for lateral movement or experimentation.
#5: The Hidden Cost of Not Writing Things Down
Hardware knowledge in many areas of semiconductors is tribal in nature. Most critical engineering insights are in people’s heads. This is deep, experiential knowledge that can’t easily be replicated — but teams depend on it.
The weak culture of written documentation in hardware engineering could be attributed to six fundamental factors:
Documentation is treated as a second-class citizen
Engineering documentation is not incentivized as a key performance metric.
Poor documentation infrastructure
PowerPoint remains the default documentation format which is often too shallow, informal, and unsearchable for serious engineering work.
EDA tools are ineffective in auto-generating design documentation.
No documentation standards
No widely adopted industry standards for chip design documentation, leading each team to invent ad-hoc formats that rarely scale.
Culture of secrecy
Stops the sharing of information even within project groups of the same company.
High time pressures
Leaves little time for documentation, reflections or lessons-learned.
Ineffective mechanisms of information flow within a chip design company means that existing employees often face substantial delays in getting the information required to do their job. Knowledge attrition is a real problem when key individual contributors leave and the onboarding process for new employees is highly inefficient.
The culture of secrecy compounds the problem. Experts in semiconductor fields avoid writing online about their learnings in fear of retribution from company management. Even in casual settings, engineers are reluctant to discuss technical breakthroughs — fearing IP leaks or legal risk.
The end result is that semiconductors become even more inaccessible — both to newcomers and to those already inside the system.
#6: The Stress, Stakes, and Culture of Chip Design
While remote work briefly became the norm, hardware jobs remained largely tethered to the lab. A fraction of chip design roles are amenable to offsite work, like layout design or chip verification, but most hardware companies are transitioning to full-time onsite work. Today remote work is becoming increasingly unlikely in the chip design world.
The other issue is work-life balance. Anybody who has been through the rigors of taping out and bringing up a chip knows the nerve-racking, high pressure environment that shows up in bursts. ASIC companies, for example, have hundreds of engineers working for years on a single chip. The process of making a chip is a multi-million dollar affair depending on the technology node. Mistakes can be fatal, and are often the death-knell for smaller companies because they run out of startup capital.
The culture in big hardware companies is still retro in a sense with people poring over a whiteboard, hanging out in the lab with their ESD smocks, and presenters sometimes calling their slides 'viewgraphs.' When things do not work as expected, it is often a long and arduous process to figure out why, with lots of failed experiments and 'wasted' work. This work environment may seem highly attractive to some, while others may find it tedious.
Despite the higher stress associated with office-centric high stakes situations, many engineers thrive on the tangible impact, technical challenge, and team-driven problem solving. There is something deeply satisfying about holding the miniature marvel you just created in your own hands.
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The views, thoughts, and opinions expressed in this newsletter are solely mine; they do not reflect the views or positions of any past, present or future employers or any entities I am affiliated with. The content provided is for informational purposes only and does not constitute professional or investment advice.
To me the biggest problem has been since the 80s the shift to make this technology funded by Americans nd ten capture by PE then farmed out to cheap cost labor. Say you want to use CADENCE and even down to MATLAB you are forced to pay enormous SW cost. The hardware is so expensive while in other countries it’s incredibly cheap to get into IC/FPGA etc design. I can walk down the streets of these other nations and purchase a $50k/month SW what someone in China it’s for $5. Our elites priced us out. That’s the end of it.
On #5 , many of the documentation issues stem from politics and ego too. This is on the higher side in the semi industry. It becomes worse where the culture itself is tribal. Very few are "deep, experiential knowledge that can’t easily be replicated" issues. It is some proprietary information or document that gets withheld by someone which causes these issues.
Also poor tooling and workflow causes enormous amounts of stress in #6. There are so many crappy tools and the logging is extremely antiquated. Also due to poor documentation, patch work done on earlier parts the problem keeps coming up in various ways in the later chips. So essentially it becomes a game of someone planting a problem due to their carelessness and later down the road, someone spending a lot of time hunting it down and creating patch work and finally it breaking elsewhere.
Due to all these, why would a passionate engineer waste his time in such dinosaur semi companies which is where all these problems usually lie? A better proposition would be to work in a startup semi company where you are not bogged down by baggage. Unfortunately startups in semi are few and far between.