The Looming Talent Crisis: A Threat to Global Growth
Skills Mismatch and Demographic Challenges Are Threatening Economic Potential
We appear to be in an era of unprecedented demand, with promising opportunities across various sectors, including AI, semiconductors, etc. However, a critical question looms: do we have sufficient manpower to truly capitalize on these advancements and fulfill all essential roles? Mounting evidence suggests a significant and widening global talent gap that threatens to undermine this potential.
The semiconductor industry serves as a stark example. The Semiconductor Industry Association (SIA)'s 2025 State of the US Semiconductor Industry report projects a shortfall of 67,000 workers in the U.S. semiconductor industry by 2030, and a staggering gap of 1.4 million such workers across the broader U.S. economy. This forecast aligns with the May 2024 SIA-Boston Consulting Group report, which also predicts the U.S. will grow its share of advanced (less than 10nm) chip manufacturing to 28% of global capacity by 2032 and capture 28% of total global capital expenditures from 2024 to 2032.
Further compounding this issue, a SEMI blog highlights that, beyond a short supply of electrical engineers graduating from school systems, a significant one-third of the semiconductor industry's current workforce is expected to retire within the next decade.
While the need for traditional hardware-focused engineers remains, the evolving technological landscape is shifting skill demands. McKinsey indicates that artificial intelligence and machine learning (AI/ML) have surpassed systems architecture as the most sought-after skills in European markets. With advancements in AI and 3D IC technologies, McKinsey anticipates that software engineers specializing in embedded programming will become more crucial than traditional SoC, SiP, SoP, and complex ASIC design engineers.
Despite widespread news of layoffs driven by AI-powered automation amid an economic downturn, a paradox exists: there's still a substantial talent gap for highly specialized AI professionals such as AI researchers, ML engineers with deep expertise, prompt engineers, or AI ethicists and compliance experts. Bain & Co. predicts an AI talent shortage of at least 400,000 in countries like the United States and India before 2027. Moreover, a multi-stakeholder survey by the World Economic Forum revealed a global shortage of 4 million cybersecurity professionals, with 67% of organizations reporting a moderate-to-severe skills gap in cybersecurity.
Beyond the tech skill gap and workforce shortages in manufacturing, research, and development, developed societies in Europe and East Asia face an additional challenge: a talent supply shortage driven by aging populations and low birth rates. While robots can address some needs, they cannot fully solve the comprehensive demands of an aging society.
Taiwan's Unique Talent Challenge
Consider Taiwan, a global leader in semiconductor manufacturing. Despite boasting one of the highest numbers of engineers per thousand people, the nation faces a looming demographic crisis. With fewer than 150,000 babies born each year since 2022, Taiwan's low birth rate is rapidly shrinking its future workforce. This demographic trend means there simply won't be enough people to fill the critical roles essential for economic growth, technological innovation, national security, and vital societal functions. Furthermore, an aging population not only reduces the overall labor pool, intensifying existing shortages even in highly specialized fields, but also creates new demands for skilled workers in areas such as medical services, healthcare, and elder care robotics.
It is important to note that the skills of those being laid off by tech companies now often don't directly match the skills required for AI or cybersecurity jobs. This apparent paradox stems from a skills mismatch: the jobs being automated or eliminated are typically routine tasks, while the vacant AI roles demand highly specialized expertise in areas like AI research, machine learning engineering, and ethical AI development, necessitating significant reskilling efforts.
The message is stark: despite our technological ambitions, the lack of human capital is becoming the critical bottleneck. From the semiconductor foundries to the frontiers of AI and cybersecurity, the talent pipeline is simply too thin. To truly capture the vast opportunities ahead, we must urgently and strategically invest in our people through education, reskilling, and attraction—or face the very real consequence of an unfulfilled future. Our capacity to innovate and grow depends on it.
If you were a consultant, how would you advise a country like Taiwan to deal with the talent crunch crisis?