America’s chip renaissance needs workers

Now comes the hard part. SK Hynix must not only build the fabrication plant, or fab, which will package high-bandwidth memory chips used in artificial intelligence, and a connected research-and-development center. It also has to staff them.

“We need several hundred engineers to operate our advanced-packaging manufacturing fab—in physics, chemistry, material science, electronics engineering," Kwak Noh-Jung, chief executive of SK Hynix, said in an interview following last week’s announcement.

Staffing a fab is harder in the U.S. than in South Korea, where SK Hynix has contracts with local universities and its own in-house university. Nonetheless, Kwak said, “the final goal is very clear. We need to have very good engineers for our success in U.S."

The U.S. is trying to do something unprecedented: reverse a shrinking share in a key manufacturing sector. Between 1990 and 2020, the U.S. share of world chip making shrank to 12% from 37%, while the combined share of Taiwan, South Korea and China grew to 58%.

The federal CHIPS program has showered billions of dollars on Intel for fabs in several states, Taiwan Semiconductor Manufacturing Co.in Arizona and GlobalFoundries in New York and Vermont. SK Hynix hopes for support as well.

Subsidies alone won’t guarantee a sustainable industry. Fabs need customers, a supply chain and, above all, a skilled, specialized workforce.

From 2000 to 2017, U.S. employment in semiconductor manufacturing shrank to 181,000 from 287,000. It has since recovered to about 200,000.

Why did the U.S. share of semiconductor production shrink? As in other industries, the U.S. became an expensive place to manufacture.

Susan Houseman of the Upjohn Institute, who has studied outsourcing, said this wasn’t “primarily a story about offshoring." U.S. companies still lead in chip design: Nvidia in artificial intelligence, Qualcomm in communications and Apple in smartphones. Over time they mostly contracted out fabrication of their chips to foundries such as TSMC who benefited from generous domestic subsidies.

The theory behind CHIPS is that, by matching Asia’s subsidies, the U.S. can again be competitive in chip making. Nonetheless, there is a chicken-egg problem. Fabs need a ready supply of skilled workers. But without fabs, America’s best and brightest have little incentive to pursue careers in the sector.

That may be changing. Mark Cramer, a junior in chemical engineering at Purdue, knew almost nothing about the industry, even though his father worked in a fab for Texas Instruments many decades ago. Then last year he participated in a Purdue summer program providing hands-on exposure.

He wore a white “bunny suit" in a fab clean room where sophisticated tools etch countless transistors on silicon wafers. “Every week my interest grew. Every company talked about how…we have to create more semiconductor engineers to keep up with the growing advancements in technology. I wanted to be part of the innovators." This summer, he will intern at an Intel fab in Hillsboro, Ore.

Purdue under past president Mitch Daniels (a former Indiana governor) promoted itself as a partner to industry, offering land and research collaboration to companies such as Saab and Rolls-Royce. Around the time SK Hynix came calling a few years ago, Purdue was launching several specialized semiconductor graduate, undergraduate and certificate programs. Meanwhile, Congress passed the CHIPS, program which requires grant recipients to show workforce-development plans.

In South Korea and Taiwan, manufacturers have an almost captive labor supply. John Wu, a materials engineering Ph.D. candidate at Purdue, was raised in Taiwan, where engineering students “start out with a mindset, ‘Oh, I’m going to end up in a factory,’ and that’s set for them." U.S. students will work in a fab because they want to, he said.

“One of the biggest challenges is getting students to fall in love with semiconductors," said Nikhilesh Chawla, a professor of materials engineering who co-directs Purdue’s semiconductor programs. Students have a wealth of alternatives: “You have AI, you have computer science, additive manufacturing."

For some students, CHIPS publicity, the spectacular rise of AI and Nvidia, and evangelizing industry visitors have made chips seem exciting. Said Raygan Bingham, a mechanical-engineering sophomore: “Purdue students will do anything to do something that they think is really cool. They’re willing to put in 70-hour weeks." Electrical-engineering senior Joey Lopez co-founded a campus club for semiconductors that signed up 170 members in just two months.

So far, 100 Purdue students have graduated with semiconductor concentrations in majors such as materials, mechanical or electrical engineering. Another 135, mostly sophomores and juniors, are enrolled in certificate programs.

While their prospects look good right now, that’s not guaranteed. Other attempts at reshoring electronics manufacturing have foundered on unforgiving economics. The U.S. will be an expensive place to make chips for the foreseeable future. Kwak cited construction and materials in particular.

Other countries are ramping up their subsidies, while the U.S. budget is finite. In 2022 SkyWater Technology, which makes older-generation chips, said it would build a fab and R&D facility at Purdue, contingent on CHIPS funding. The funding didn’t come, and last week it terminated those plans.

Purdue’s current president, Mung Chiang, an electrical engineer by training, thinks labor costs may be a diminishing obstacle for the U.S.

Historically, processing and memory chips were largely separate. With artificial intelligence, chip architecture is changing, and processing and memory are more integrated. This opens up the opportunity for more innovation and higher profit margins on memory chips, where SK Hynix is a leader, Chiang said.

Furthermore, packaging—equipping chips to connect to other devices—has traditionally been labor intensive and thus a weak link for the U.S. Advanced packaging, as SK Hynix plans at Purdue, “is where innovation will sustain Moore’s Law…and rewrite the cost equation," Chiang said.

“People think of universities as absolutely essential to the workforce and talent development, the most important supply chain of all in the end," said Chiang. “But it is also essential to transformational innovation."

Write to Greg Ip at greg.ip@wsj.com