Taiwan’s semiconductor industry is confronting a significant talent deficit, with a reported shortage of 34,000 workers as of May, according to a joint assessment by 104 Job Bank and the Industrial Technology Research Institute (ITRI).
This growing labor gap poses a mounting challenge to the island nation, which remains at the epicenter of the global semiconductor supply chain, particularly through the dominant presence of Taiwan Semiconductor Manufacturing Co. (NYSE:TSM).
TSM is the world’s largest dedicated independent semiconductor foundry and plays a vital role in Taiwan’s economy by contributing a substantial share of the country’s GDP and exports.
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Through its leadership in advanced chip manufacturing, TSM positions Taiwan at the heart of the global semiconductor supply chain.
The 2025 Semiconductor Industry Talent Report links the labor gap to rapid industry expansion driven by increased investments in cutting-edge manufacturing technologies, the Taipei Times reported on Tuesday.
Employers struggle to fill roles in three key areas: production, quality control, and environmental safety; research and development; and operations, technical support, and maintenance.
Job listings in production and quality-related fields rose from 5,600 in October 2023 to nearly 10,000 in May. Openings in R&D climbed from 6,000 to 9,316, while roles in operations and technical maintenance jumped 67%, from 4,300 to 7,240.
This rise reflects growing demand for skilled personnel to support the scale-up of advanced manufacturing and packaging lines. Recruiting for maintenance and support roles remains particularly challenging due to the hands-on nature of the work and the need for shift-based schedules.
Last year, Taiwan maintained a dominant position in the global chip industry, holding 68.8% of the foundry market and nearly 50% of the IC packaging and testing market, said Jeff Lin, general director at ITRI’s Industry, Science and Technology International Strategy Center. The country also produces up to 83% of the world’s AI chips and is a key manufacturing base for chips smaller than 7 nanometers.
Despite the industry’s impressive tripling of output value since 2010, concerns are mounting regarding a potential long-term talent shortfall exacerbated by Taiwan’s declining birthrate, which has fallen by approximately 20% over the same period. This demographic trend presents a structural headwind to sustained growth.
Adding another layer of complexity, geopolitical dynamics are influencing Taiwan’s semiconductor investment landscape. Following the Trump administration’s tariffs on imported chips, TSM has recalibrated its expansion strategy, opting to delay a second plant in Japan while accelerating its footprint in the United States. In a significant announcement in March, TSM Chairman C.C. Wei committed an additional $100 billion to U.S. chipmaking, building upon a prior $65 billion pledge made in April 2024.
In a forward-looking move, Taiwan last week unveiled its Ten Major AI Infrastructure Projects to inject over 15 trillion New Taiwan dollars (about $510 billion) into its economy by 2040. The country aims to cement its global leadership in AI by building on its strengths in ICT and semiconductors.
The initiative focuses on three strategic technologies, silicon photonics, quantum tech, and AI robotics, and includes efforts like forming the AI Robotics Industry Grand Alliance with Foxconn’s support, building a quantum supply chain, and expanding AI infrastructure nationwide.
To speed up this transformation, the government plans to invest over 100 billion New Taiwan dollars ($3.08 billion) in AI-focused venture capital, targeting 500,000 new jobs and three world-class research labs.
The market has largely reacted positively to these developments. TSM’s stock has surged 23% year-to-date and gained 48% in the last three months, largely propelled by the fervent demand for AI-related technologies.
This buoyancy is further evidenced by a recent significant order from Nvidia (NASDAQ:NVDA). The AI chip giant placed an order for an additional 300,000 H20 AI chips from TSMC last week, marking a notable shift in its production plans for the H20 GPU.
This change comes after the Trump administration eased export restrictions on the H20 chip, which were initially imposed in April over national security concerns.
Nvidia had previously halted H20 production and cautioned customers about limited inventory, with CEO Jensen Huang noting that resuming production would necessitate strong demand and a minimum of nine months to re-establish the supply chain.
As Taiwan navigates these intricate challenges and opportunities, the interplay of labor supply, geopolitical pressures, and strategic investments will undoubtedly shape the financial trajectory of its globally critical semiconductor industry.
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