McKinsey&Company
Rethink six critical areas
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Tech talent wanted. The semiconductor industry has a talent issue, particularly in the US. As demand for chips has increased, semiconductor companies are struggling to hire engineers and other skilled workers in a tight labor market. From 2020 to 2021, job openings for electrical engineers in the US chip sector jumped 78%, far faster than in other sectors. Part of the problem is a shortage of workers with the technical skills that are most in demand. Some tech companies and colleges are launching semiconductor-specific higher-education programs that are intended to build up the talent pipeline. [Axios] |
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Clouds forming? The Semiconductor Industry Association reported $52.5 billion in global sales for the month of February, a monthly record that’s also a one-third increase from the same month last year. While those numbers sound promising, the industry still faces tough challenges. Long lead times—beyond 35 weeks on average for certain types of chips—are on the rise. The cyclical nature of the semiconductor business, combined with higher interest rates, has given investors pause. Chip stocks have generally been down for the year. [WSJ] |
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Chip crunch. As chip demand has taken off, semiconductor companies would appear to be in a strong position. Annual revenue increased by 9% in 2020 and by 23% in 2021, up from the 5% reported in 2019. Even before the pandemic—when remote work became the norm and consumers and businesses upped their technology purchases—semiconductor companies delivered an annual average of 25% in total shareholder returns from the end of 2015 to the end of 2019. Still, chip shortages continue to be a challenge, as companies deal with increased design complexity, talent shortages, and supply chain disruptions. |
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Start strategizing. Despite ongoing chip shortages, semiconductor companies have an opportunity to improve productivity and revenues. Focusing on leading-edge chips, pursuing innovations, and improving the talent pipeline are among the ways industry players can potentially stay ahead. McKinsey analysis reveals that strong growth is possible for semiconductor companies of all sizes. Read on to learn more strategies on how to lead in the semiconductor world, including six critical areas to gain competitive advantage. |
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| — Edited by Andrew Simon |
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