CHIPPING IN
THE POSITIVE IMPACT
OF THE SEMICONDUCTOR INDUSTRYON THE AMERICAN WORKFORCE AND
HOW FEDERAL INDUSTRY INCENTIVESWILL INCREASE DOMESTIC JOBS

MAY 2021

The Semiconductor Industry Association (SIA) is the voice of thesemiconductor industry, one of America’s top export industries anda key driver of America’s economic strength, national security, andglobal competitiveness. Semiconductors—the tiny chips that enable
modern technologies—power incredible products and services that havetransformed our lives and our economy. The semiconductor industry
directly employs nearly a quarter of a million workers in the UnitedStates, and U.S. semiconductor company sales totaled $208 billion in
2020. SIA represents 98% of the U.S. semiconductor industry by revenue
and nearly two-thirds of non-U.S. chip firms. Through this coalition, SIA
seeks to strengthen leadership of semiconductor manufacturing, design,
and research by working with Congress, the Administration, and key
industry stakeholders around the world to encourage policies that fuelinnovation, propel business, and drive international competition.
Learn more at www.semiconductors.org.

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MAY 2021
All data shown in tables and charts are Oxford
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stated and cited in footnotes, and are copyright© Oxford Economics Ltd.
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its report and forecasts in good faith. Any
subsequent revision or update of those data willaffect the assessments and projections shown.
To discuss the report further,please contact:

Michael Reid
Senior Economist

Oxford Economics
5 Hanover Square, 8th Floor
New York, NY 10004
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michaelreid@oxfordeconomics.com

Falan Yinug
Director, Industry Statistics & Economic Policy

Semiconductor Industry Association
1101 K Street NW, Suite 450
Washington, DC 20005
Tel: (202) 446-1705 | m: (202) 400-4926
fyinug@semiconductors.org

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About the report﻿

2

CONTENTS
Executive summary 

4



6

1. Introduction

2. The economic contribution of the U.S. semiconductor industry
2.1

7

Total contribution to U.S. GDP	

7

2.1.1

Direct impact	

8

2.1.2

Indirect impact	

8

2.1.3

Induced impact	8

2.2 Jobs impact of the semiconductor industry	
2.2.1

8

Jobs multiplier	

10



11

Semiconductor workforce by state	

11

3.1.1

Location quotients	

12

3.2

Occupational profile 	

13

3.3

People who work in the semiconductor industry	

14

3.3.1

Race and ethnicity	

14

3.3.2

Age distribution	

15

3.3.3

Educational attainment	

15

3. The semiconductor workforce
3.1

4. The economic impact of federal chip incentives
4.1



17

Total impact on the U.S. economy during the build-out phase, 2021 to 2026	17

4.2 Total temporary jobs created during the build-out phase, 2021 to 2026	

18

4.3

Fab operational impacts	

19

4.4

R&D impacts	

19

4.5

Construction impacts	

20

4.6 Capex and equipment outfitting impacts	

20

4.7

21

Long-term, positive incentive program impacts	5. The many uses of semiconductors
6. Conclusion

7. Appendix 

22
23
24

Creating the database	

24

An introduction to economic impact analysis	25

Impact model structure	

26

About IMPLAN	

26

Glossary of terms	

27

Table of contents﻿

3

EXECUTIVE SUMMARYWith its origin in the latter part of the 20th century, the semiconductor industry has grown tobecome one of the most important segments of the global economy. Today, semiconductors
are found in nearly every electronic device, including phones, cars, and appliances. They
enable nearly every industry, reflected by global sales of over $440 billion in 2020.1 Over 300
downstream economic sectors accounting for over 26 million U.S. workers are consumers ofand are therefore enabled by semiconductors as a critical input for their sectors.

1.85 million
U.S. jobs
supported in 2020

Beyond providing inputs to nearly every industry, the U.S. semiconductor industry isessential to the U.S. economy, generating value for the economy, stimulating jobs, and paying
income to workers. In total, the U.S. semiconductor industry supported 1.85 million U.S. jobs
in 2020. The industry directly employs more than 277,000 domestic workers in R&D, design,and manufacturing activities, among others.
In addition, for each U.S. worker directly employed by the semiconductor industry, an
additional 5.7 jobs are supported in the wider U.S. economy, either in the supply chains of
the semiconductor industry or through the wage spending of those employed by the firms
themselves or their supply chains.

INDUCEDI N D I R EC T
DIR

Income(US$, billions)$160.8

$51.8

$61.9

EC T

$47.1

GDP
(US$, billions)
$55.8

$98.6

$92.0

TOTAL

$246.4
TOTAL

FIG. 1: Economic
impact of thesemiconductor
industry on the
U.S., 2020

277,000

669,498

905,551

1,852,049
TOTAL

Employment
1

See https://www.semiconductors.org/global-semiconductor-sales-increase-6-5-to-439-billion-in-2020.

Executive summary4Now, more than ever, there is a need to expand semiconductor R&D, design, andmanufacturing in the U.S. through robust federal investments such as those called for in
the CHIPS for America (CHIPS) Act, federal legislation enacted in January 2021 but not yet
funded. By supporting the expansion of the domestic semiconductor industry, nearly all othersectors of the economy will benefit, beyond the semiconductor industry itself.

$147.7 billion
GDP impact from2021 to 2026

We estimate a $50 billion federal investment program to incentivize domestic semiconductor
manufacturing would add $24.6 billion annually to the U.S. economy and would create an
average of 185,000 temporary jobs annually throughout the U.S. economy from 2021 to
2026. Over this six-year build-out period, therefore, the cumulative annual impact of such an
incentive program on GDP and jobs would be $147.7 billion and 1.1 million, respectively. These
economic benefits combine all the channels of impact—direct, indirect (supply chain) and
induced (wage spending).2
A $50 billion federal investment program to incentivize domestic semiconductor
manufacturing can be expected to substantially increase the demand for talent within
the semiconductor industry. As more domestic investments in semiconductor R&D,
design, and manufacturing come online and increase production, the industry will needto hire more workers in a range of occupations. As a result of these incentives, theenduring positive impact on the U.S. economy is an additional 280,000 new jobs, of which
42,000 would be directly employed in the domestic semiconductor industry. This would
boost U.S. semiconductor industry employment to 319,000 and its total jobs impact to2.13 million in 2027.

‘21

‘26

FIG. 2: The total annual jobs impact of a $50 billion federal semiconductor
manufacturing incentive program, 2021–2026
350,000
300,000

Annual jobs

250,000
Operations

200,000

Capex

150,000

Construction

100,000

R&D

50,000
0
2021

2

2022

2023

2024

2025

2026

The CHIPS Act also includes semiconductor research provisions, but this analysis does not consider the economic
and job gains that would come from federal funding for those research provisions. Because legislation to fund theCHIPS Act has not been finalized as of publication, this report models the domestic jobs and economic impact of ahypothetical $50 billion federal program to incentivize domestic semiconductor manufacturing that was modeled in
the recent SIA/BCG joint report, Turning the Tide for Semiconductor Manufacturing in the U.S.

Executive summary5

1. INTRODUCTION
With its origins in the latter part of the 20th century, the semiconductor industry has
grown to become one of the most important segments of the global economy. Today,
semiconductors are found in nearly every electronic device, including phones, cars, andappliances. Semiconductors enable nearly every industry, reflected by global sales of over$440 billion in 2020 alone.
Today, semiconductor companies are producing more chips than ever before. The successand growth in computers and software have subsequently helped to drive growth in thesemiconductor industry. The U.S. semiconductor industry is substantial, directly contributing$246.4 billion to U.S. GDP and directly employing over 277,000 workers in 2020. However,
the economic contribution of the semiconductor industry extends far beyond fabrication
facilities (fabs) or research facilities where its products are designed and manufactured.
The strong demand for all types of chips facilitates the need for a broader domestic support
ecosystem including manufacturing equipment, materials, design services, testing labs, andR&D activity. This ecosystem creates activities that generate additional economic value
throughout the U.S. economy.
Now, more than ever, there is a need to expand semiconductor R&D, design, andmanufacturing in the U.S. By supporting the expansion of the U.S. semiconductor
industry, nearly all other domestic sectors will benefit. Whether it is increased demand
for semiconductor equipment, tools, and materials, or a more steady supply of chips fordownstream industries, semiconductor R&D, design, and manufacturing is an integral partof the U.S. economy. In fact, we estimate that over 300 different downstream sectors of theeconomy accounting for a total of 26.5 million American jobs make purchases from and are
therefore enabled by the U.S. semiconductor industry. This is done by tracing purchases ofsemiconductors as inputs into the production of other products. This includes industries suchas aircraft manufacturing, automobile manufacturing, and printing.
For this study, Oxford Economics has quantified the economic contribution of the U.S.
semiconductor industry by using an economic impact analysis at the national level in the U.S.3
This technique highlights the importance of the semiconductor industry to the U.S. economy
in terms of jobs, wages, and GDP. More detail on our methodology is included in the appendix
and footnotes in this report. In the subsequent sections, we will examine the economic
impacts of the U.S. semiconductor industry and a federal funding program to incentivize
domestic manufacturing in detail.

3

For the purposes of this report and the domestic employment and GDP figures contained in it, the U.S.
semiconductor industry includes all semiconductor companies and their establishments in the United States
whether they are U.S. headquartered firms or foreign owned firms with operations in the United States. Similarly,
the U.S. semiconductor industry data in this report does not include U.S. firms’ activities and establishments
outside of the United States.

1. Introduction

6

2. THE ECONOMIC
CONTRIBUTION OF THE
U.S. SEMICONDUCTOR
INDUSTRY
The semiconductor industry has a considerable economic footprint in the U.S. Nearly 277,000
people work in the industry, designing, manufacturing, testing, and conducting R&D on
semiconductors throughout 49 states in the U.S. The purchases made by the semiconductor
industry from suppliers during the fabrication process (i.e. the indirect effects) enable further
activity throughout the U.S., sustaining thousands of more jobs across the country. Finally,
wages paid to employees, and those employed in the supply chain, fund consumer spending(i.e. the induced effects), for example in retail and leisure establishments, and deliver
additional economic benefit to the country.
In the following sections, we quantify the industry’s economic footprint in terms of its
contribution to GDP, and the employment it supports.

2.1 Total contribution to U.S. GDP
Combining all the channels of impact—direct, indirect (supply chain) and induced (wagespending)—the total impact of the semiconductor industry on the U.S. economy amounted to$246.4 billion in 2020. The chart below shows the breakdown of this impact across the threecore channels, in terms of gross value added (GVA) contribution to GDP.

$246.4 billion
GDP impact in 2020

FIG. 3: The total GVA contribution of the U.S. semiconductor industry

GVA contribution, in billions of US$$300$246.4

$250
$200

$92.0

$92.0

$150
$98.6

$100

$98.6

$50
$55.8

$55.8

$0
DirectIndirectInduced

Total

Source: Oxford Economics

2. The economic contribution of the U.S. semiconductor industry

72.1.1 Direct impact
The direct impact of the semiconductor industry’s activities comprises the value-added output
generated by the industry; those employed directly by the semiconductor industry, the wages these
semiconductor firms pay, and their operation expenditures. We estimate that in 2020, this direct
impact accounted for $55.8 billion in GDP.

2.1.2 Indirect impact
The indirect impact of the semiconductor industry reflects the employment and GDP contribution
made by the suppliers of those establishments (e.g. security providers, IT support, and legal services)and, in turn, within the supply chains of those suppliers. In 2020, the GDP contribution of these
suppliers was $98.6 billion. Some of the top inputs (i.e. indirect impacts) for semiconductor industry
operations include:•••

Electronic devices (part of manufacturing);
Insurance (part of financial activities); andElectricity (part of trade transportation, and utilities).

2.1.3 Induced impact
The induced impact of the semiconductor industry represents the economic activity supportedby the consumer spending of wages by those employed directly by the semiconductor industry orin its supply chains. As a result of this consumer spending, we estimate that the induced impact
attributable to the semiconductor industry operations to be a $92.0 billion contribution to GDP in
2020. Some of the top expenditures for consumers (i.e. induced impacts) include:•••

Housing (part of financial activities);
Transportation (part of trade transportation, and utilities); andHealthcare (part of education and health services).

2.2 Jobs impact of the semiconductor industry
The total 1.85 million jobs impact (direct + indirect + induced) of the semiconductor industry
is displayed in the following chart. The industry’s employment impact is concentrated in the
manufacturing industry, which accounts for 21 percent of the total employment impact. Still, othersectors are supported by the industry’s activities including professional and business services (27percent); education (11 percent); and other services (10 percent).

2. The economic contribution of the U.S. semiconductor industry

81+1+219527117103A
24
62.4 10.6

FIG. 4: Total semiconductor jobs impact by industry
Natural resources
and mining

Professional andbusiness services

Construction

Education andhealth services

Manufacturing

Leisure and hospitality

Trade, transportation,and utilities

Other services

Information

Government

Financial activities

184.7

393.7

133.1

202.3

1.85 million jobs
(noted by sector
in thousands)

163.5

89.5

Source: Oxford Economics, IMPLAN

498.6

89.8

CASE STUDY:COMMUNITY IMPACTS

Beyond the direct, indirect, and induced domestic jobs
impacts of their operations, semiconductor companies
have a strong record of charitable support and involvementin the local communities where they have a presence.
For example, one major U.S. semiconductor firm runs a$4.5 million multi-year program with 6 historically blackcolleges and universities (HBCUs) to increase the pipelineof African Americans in engineering fields. This program
has increased black enrollment in these fields by as muchas 55 percent in some partner universities. The same
firm also runs a $5 million partnership with a local publicschool district to encourage underrepresented youth topursue further education in STEM fields. Over four years,
underrepresented minority students enrolled in computerscience classes in the district increased by 17 times, andgirls enrolled in computer science increased by 33 times.

2. The economic contribution of the U.S. semiconductor industry

9

2.2.1

Jobs multiplier

Beyond its GDP impact, the U.S. semiconductor industry supported 1.85 million jobs
throughout the economy in 2020. While different industries affect the U.S. economy
in different ways, a useful metric to compare those industries is by evaluating the jobs
multiplier. Employment multipliers represent the total jobs generated as a result of 1 job inthe specified industry. For example, the semiconductor jobs multiplier is 6.7, which meansthat for every direct job in the semiconductor industry, an additional 5.7 jobs are supported
in other industries.
The number itself reflects 1) what the industry needs to purchase in order to make its
product—the indirect, or supply-chain effect, and 2) the value of the industry’s labor income,profits and what each household consumes as a result of earning income—the induced effect.
The multiplier of 6.7 ranks in the 85th percentile for all detailed industry jobs multipliers.
By comparison, the median value of all 534 detailed industries was 3.7. The following chart
highlights semiconductor manufacturing along with other industries and their respective
jobs multipliers.
FIG. 5: Multipliers of U.S. semiconductor industry compared to other U.S. industries
Employment multiplier
0

5

10

15

10055+ 54+ 4945+ 38+ 3430+ 27+ 2421+ 1613+

Computer storage device mfg.

12.2

Aircraft mfg.

6.7

Semiconductor mfg.

6.7

Motor vehicle parts mfg.

6.5

Oil and gas extraction

5.9

Railroad rolling stock mfg.

5.5

Cement mfg.

5.5

Iron and steel forging

4.6

Motor vehicle body mfg.

4.1

Air transportation

3.7

Water, sewage and other systems

3.6

Motion picture and video industries

3.3

Hospitals

2.9

Legal services

2.6

Warehousing and storage

1.9

Amusement parks and arcades

1.5

Source: IMPLAN

2. The economic contribution of the U.S. semiconductor industry

10

3. THE SEMICONDUCTORWORKFORCE
FIG. 6: Composition of thesemiconductor workforce
Fabless semiconductor
design firm workforce
92,00033%

67+33AThe semiconductor industry is a significant employer in the U.S. In 2020, we
estimate the size of the workforce at 277,000 inclusive of workers in research
and fabrication facilities where semiconductors are designed and manufactured.
Semiconductor integrated device manufacturers, pure-play foundries, and otherestablishments involved in semiconductor manufacturing directly employednearly 185,000 U.S. workers. In addition, we estimate the employment by fablesssemiconductor design firms accounts for an additional 92,000 workers in the U.S.
Workers in the semiconductor industry are highly productive, and wages reflect
this at $170,000 annual income on average in 2020, placing them well above theaverage income earners in the U.S. In this section, we examine the occupation
profile of the industry to get an enhanced sense of the types of skills andeducation that workers need to be employed in the industry. Additionally, we
explore the workforce characteristics to better understand who the people arethat support the industry. But first, we explore the geographic distribution of
the workforce across the U.S.

185,000
67%

Semiconductor
manufacturing workforce

3.1 Semiconductor workforce by state
The semiconductor industry directly employed an estimated 277,000 workers in the U.S. in
2020. The semiconductor workforce is represented in 49 states and Washington, D.C. The
total state workforce is largest in a handful of Western and Southwestern states including
California, Oregon, and Arizona with Texas accounting for a large workforce presence, as well.

The semiconductor
workforce is represented in

49 states andWashington, D.C.

FIG. 7: Rank of top 15 semiconductor workforces by state

Rank

State

Semiconductor
employment

Share of U.S.
semiconductor
employment

Rank

State

Semiconductor
employment

Share of U.S.
semiconductor
employment

1

California

63,30023%

9North Carolina

7,900

3%

2

Texas

43,800

16%

10Washington

5,000

2%

3

Oregon40,30015%11

Virginia

4,100

1%

4

Arizona

28,900

10%

12

Ohio

4,000

1%

5

Florida12,900

5%

13

New Mexico

4,000

1%

6

Idaho

12,300

4%

14

Utah

3,700

1%

7

Massachusetts

12,2004%

15Pennsylvania

3,300

1%

8

New York

10,2004%

Source: Oxford Economics

3. The semiconductor workforce113.1.1 Location quotients
A location quotient (LQ) for an industry helps to illustrate how concentrated it is in one state
by comparison to others. A location quotient that is equal to one indicates that the state’s
industry concentration is equal to the national concentration of the same industry. Industries
with above-average location quotients (greater than 1.0) indicate that a region has a higher
concentration in the production of that good or service, relative to the rest of the nation.
A value of 1.5 indicates that industry output within the region is 1.5 times more concentrated
than the U.S. average. A location quotient below 1.0 indicates that industry output within theregion is less concentrated compared to the U.S. average.
Note, high employment states do not necessarily result in high location quotients, as thisstatistic is relative to national employment. For example, if the semiconductor industry
makes up 0.50 percent of New Mexico’s workforce and only 0.20 percent of output in the U.S.,
then New Mexico’s LQ for the semiconductor workforce would be 2.5 (0.50%/0.20%).
As noted above, the semiconductor workforce is largest in California, Texas, and Oregon.
However, the states with high LQ values include Idaho, Arizona, and New Mexico. This
indicates, for example, that the workforce of Idaho is more reliant on the semiconductor
industry compared to California, even though California has a larger semiconductor
workforce by volume.

FIG. 8: Top states by workforce location quotients (LQ)
Location quotient
0

2.0

4.0

6.0

8.0

10.0

12.0

9273+ 442116+ 1512+ 119
OregonIdaho

Arizona

New Mexico
California

Texas

Massachusetts

Vermont
Utah

Maine

The semiconductor
workforce is highly
concentrated in West Coastand Mountain states such as
Oregon, Idaho, and Arizona.

Source: Oxford Economics

3. The semiconductor workforce123.2 Occupational profile
The occupation profile of the semiconductor industry describes the types of jobs thatare employed in the industry. The roles and responsibilities of employees are many andvaried. They are assemblers and fabricators, maintenance and repair workers, logisticians,
management analysts, software developers, engineers, electricians, and procurement
clerks among others. The major occupation group that has the largest share of employment
within the industry is production occupations, which account for about 39 percent ofworkers in the industry. Together, these job functions make up more than half of thesemiconductor workforce.
Beyond the production capacity the semiconductor industry provides, several otherfunctions are essential to the operations of the industry, including engineering occupations
that comprise about 24 percent of workers, management occupations that make up about
9 percent, as well as computer and mathematical roles, which account for around 7 percent
of workers in the industry.
FIG. 9: Occupation profile of semiconductor industry

Occupation group

Share of total

Average wage

Management

8.6%$375,124

Business and Financial Operations

6.3%$204,223

Computer and Mathematical

6.9%$265,582

Architecture and Engineering

23.9%$226,145

Life, Physical, and Social Science

0.6%$207,991

Production andengineering
jobs make up

Legal

0.2%

$213,996

over halfArts, Design, Entertainment, Sports, and Media

0.5%$195,762

Healthcare Practitioners and Technical<0.1%$63,432

Protective Service

0.1%$61,116of the domestic
semiconductor
workforce.

Building and Grounds Cleaning and Maintenance0.2%$40,164

Sales and Related

2.4%$116,664

Office and Administrative Support

6.3%$57,864

Construction and Extraction

0.1%$75,108

Installation, Maintenance, and Repair

3.3%$70,320

Production

38.6%$94,824

Transportation and Material Moving

2.0%$43,836

Total

100%

$170,000

63+37

Source: BLS OES May 2019, Oxford Economics tabulations

3. The semiconductor workforce

133.3 People who work in the semiconductor industry
This section considers the socioeconomic characteristics of the semiconductor industry in the U.S.
The data come from the 2019 American Community Survey (ACS), the most recently available data.
It includes all workers currently employed in the semiconductor industry as well as a comparison
to the broader manufacturing industry as well as all other4 employed workers in the U.S.

3.3.1 Race and ethnicity
The U.S. semiconductor workforce is racially and ethnically diverse. In fact, the semiconductor
industry employs a greater share of non-white workers when compared to the manufacturingsector and all other industries in the U.S.
FIG. 10: Race and ethnicity profile
Semiconductor

3%
52%

4%

28%

13%

Manufacturing

White
2%

64%

10%

6%

17%

All other

Asian
3%

61%

12%

6%

18%

Black

Hispanic
Other

Source: ACS 2019, Oxford Economics tabulations
4

All other excludes workers in the manufacturing sector.

CASE STUDY:

DIVERSITY AND INCLUSIONThe U.S. semiconductor industry is constantly working to diversify its
workforce, leveraging support for both underrepresented professionals andstudents, including women and people of color, pursuing STEM degrees. One
large U.S. semiconductor firm has supported external students throughannual contributions of over $500,000 to underrepresented minorities
pursuing electrical engineering through scholarship awards and program
sponsorships. Another U.S. semiconductor company runs a workforce
diversity recruitment program, including support to national affinity
engineering associations and minority serving institutions (MSIs) of higher
education, as well as internal financing for employee affinity groups. In
addition, another semiconductor firm created an endowment fund thatprovides financial support for students from underrepresented minority
populations in their graduate STEM pursuits.

3. The semiconductor workforce

143.3.2 Age distribution
Workers in the semiconductor industry are more likely to be between 35 and 49 years old
compared to the rest of the U.S. workforce. Indeed, only 24 percent of the semiconductor
workforce was under the age of 35, reflecting the length of tenure within the industry as wellas industry knowledge. But as workers aged 50 years old and above approach retirement age,
employers in the industry will need to prepare to recruit for the future workforce.
FIG. 11: Age profile of the semiconductor industry
Semiconductor
24%

37%

35%

4%
Age 16–34

Manufacturing
30%

33%

33%

5%

Age 35–49
Age 50–64

All otherAge 65+
36%

31%

26%

6%

Source: ACS 2019, Oxford Economics tabulations

3.3.3 Educational attainment
The semiconductor industry employs a higher share of workers with college degrees
compared to manufacturing and all other industries. Still, one in five workers in thesemiconductor industry has not attended university. This highlights how the semiconductor
industry is an increasingly rare example of an industry that provides opportunities across theeducation and skills spectrum in which jobs exist for workers to earn family-sustaining wages.
FIG. 12: Educational attainment in the semiconductor industry
Semiconductor
20%

15%

9%

30%

26%

High schoolor below

Manufacturing

Some college
43%

9%

21%

19%

8%

All other

Associate’s degree
Bachelor’s degree

32%

22%

9%

23%

14%

Graduate degree

Source: ACS 2019, Oxford Economics tabulations

3. The semiconductor workforce

15

The average pay across the education spectrum within the semiconductor industry is an orderof magnitude higher when compared to the average of all other industries. While average
wages vary based on educational attainment, semiconductor industry workers consistently
earn more than the U.S. average at all education attainment levels. The figure below
highlights the pay premium that semiconductor workers can expect to see when compared toworkers with similar educational backgrounds who are employed elsewhere in the economy.

35+65
65% degree
educated

FIG. 13: Educational wage premium in the semiconductor industry

242317+ +342821+ +403224+ +675037+ +917454
Semiconductor

Manufacturing

All other70%$180,000$160,000$140,000

79%

Semiconductor
wage premium$120,000$100,00065%

65%$80,000

35% of semiconductor
workers do not have acollege degree.

41%$60,000$40,000$20,000$0High schoolor belowSomecollege

Associate’s
degreeBachelor’s
degreeGraduate
degreeSource: ACS 2019, Oxford Economics tabulations

CASE STUDY:

THE UPSKILLING OF THE
SEMICONDUCTOR WORKFORCE
Because the demand for highly skilled talent regularly outstrips the
supply of U.S. STEM graduates, the U.S. semiconductor industry reinvests
significantly in their current workforce to maintain and up-level their skills.
For example, one major U.S. semiconductor firm runs a robust $1.4 million
annual educational assistance program where hundreds of employees aresupported each year to pursue master’s degrees, bachelors, associates,
and certificate programs in job-related fields. Similarly, another firm
supports its own employees’ up-skilling with a $30,000 annual tuition
reimbursement program. Beyond tuition assistance, another U.S. firmhires over 170 Co-Op/Intern students each year, while another firm spends
over $1.5 million annually to support approximately 70 interns acrossthe U.S. The vocational training programs offered by another firm is
especially effective at developing the technology workforce, as its training
program does not require participants to have a bachelor’s degree.

3. The semiconductor workforce

164. THE ECONOMIC
IMPACT OF FEDERALCHIP INCENTIVES
Now, more than ever, there is a need to expand semiconductor research, design, andfabrication in the U.S. By supporting the expansion of the semiconductor industry, nearly allother sectors will benefit, beyond the semiconductor industry itself, either through supply
chain spending and increased consumer spending or through the increased availability ofchips for downstream industries to secure for their production processes.
In this section, we estimate the economic impacts of federal incentives for semiconductor
manufacturing to understand how they could benefit both the semiconductor industry
and the broader U.S. economy.5 We do this over a 6-year period to reflect the duration of
construction, equipment installation, and the ramp-up period of potential new fabs to reachfull capacity. These jobs are reflective of the build-out period, and their impacts should beconsidered temporary, in that they are attributable to this investment activity between 2021
and 2026. All impacts are reported in constant, 2020 U.S. dollars unless otherwise stated.
The sections below examine in more detail what this means for domestic jobs and wages.
We expect this investment will expand semiconductor manufacturing capacity by adding
new manufacturing facilities in the U.S. that would otherwise not be built and create 42,000
new permanent semiconductor jobs in the U.S., growing from 277,000 direct jobs in 2020
to 319,000 direct jobs by 2027. In addition, the total number of jobs supported throughout
the U.S. economy would grow by 280,000 from 1.85 million in 2020 to 2.13 million by 2027.
These new fabs and jobs would represent a permanent expansion to the U.S. semiconductor
industry footprint and its impact, which we explore in Section 4.7. The sections below
examine in more detail what this means for domestic jobs and wages.

1.1 million
temporary jobs
created from2021 to 2026*

‘21

‘26

* Inclusive of the direct,
indirect, and induced
job impacts

4.1 Total impact on the U.S. economy during
the build-out phase, 2021 to 2026
We estimate a $50 billion federal investment program to incentivize domestic semiconductor
manufacturing would add $24.6 billion annually to the U.S. economy and would create an
average of 185,000 temporary jobs annually throughout the U.S. economy from 2021 to
2026. Over this six-year build-out period, therefore, the cumulative annual impact of such an
incentive program on GDP and jobs would be $147.7 billion and 1.1 million, respectively. These
economic benefits combine all the channels of impact—direct, indirect (supply chain) and
induced (wage spending).

5

Because legislation to fund the CHIPS Act has not been finalized as of publication, this report models the domestic
jobs and economic impact of a hypothetical $50 billion federal program to incentivize domestic semiconductor
manufacturing that was modeled in the recent SIA/BCG joint report, Turning the Tide for Semiconductor
Manufacturing in the U.S.

4. The economic impact of federal chip incentives

17

FIG. 14: The total annual jobs impact of a $50 billion federal semiconductor
manufacturing incentive program, 2021–2026
350,000
300,000

Annual jobs

250,000
Operations

200,000

Capex

150,000

Construction

100,000

R&D

50,000
0
2021

2022

2023

2024

2025

2026

4.2 Total temporary jobs created during
the build-out phase, 2021 to 2026
In addition to its GDP impact, such a federal incentive program would create an average of
185,000 temporary jobs annually throughout the U.S. economy from 2021 to 2026. In total
therefore, if you were to sum the number of jobs created per year due to the incentive program
over the six-year build-out phase, the total would be 1.1 million temporary jobs. Of these 1.1
million jobs, we estimate that approximately 235,500 jobs will directly support the design,
construction, and equipment installation phase, and operations of the new fab facilities during
the period examined. Additionally, we expect 347,500 jobs will be supported by supply
14.0
chain purchases (indirect jobs), whether they are employed in manufacturing, design,
6.2
37.9
or professional services. Lastly, we estimate 531,000 jobs will be supported asa result of workers spending their wages on consumer goods and services,such as groceries, utilities, and transportation (induced jobs).

1+1+22156519117103A
110.9

FIG. 15: Jobs impact by sector of a $50 billion federal

semiconductor manufacturing incentive program, 2021–2026
Natural resources
and mining

Professional andbusiness services

Construction

Education andhealth services

Manufacturing

Leisure and hospitality

Trade, transportation,and utilities

Other services

Information

Government

Financial activities

247.2

78.9

120.3

1.1 million jobs
(noted by sector
in thousands)

165.4

213.6

62.5

55.3

Source: Oxford Economics, IMPLAN

4. The economic impact of federal chip incentives

18

In the following sections, we provide detail on the impacts of each activity considered,including construction, capex, fab operations, and R&D activity over the period 2021 to 2026.

4.3 Fab operational impacts
These are estimates of expanded semiconductor manufacturing activity economic impacts
on the U.S. economy. Excluded from the calculations in this section are the economic impact
associated with regular and significant investments in the construction of new facilities,
which is explored in subsequent sections. Also excluded are impacts associated with theresearch and development activities, which we estimate separately. These impacts represent
the ramp up period to full capacity in the initial years of operations and would help to create
over 523,000 jobs and add $76.3 billion to GDP between 2021 and 2026.
FIG. 16: Semiconductor incentive program operational impacts, 2021–2026

DirectIndirectInduced

Total

Income and GVA in billions of US$

Employment

89,250176,566

257,264

523,080

Income

$15.1

$15.7

$14.7

$45.5

GVA

$26.9

$23.4

$26.0

$76.3

Source: Oxford Economics, IMPLAN

4.4

R&D impacts

These are estimates of expanded semiconductor R&D activity economic impacts on the U.S.
economy. Although we do not consider the economic and job gains that would come fromfederal funding for those research provisions, R&D activity is a critical function that begins
even before a modern semiconductor fab is complete. Such activity typically can begin even
before the start of fab construction, continue and ramp up while the fab is being built, andthen continue in earnest once the fab is completed. Fabricating semiconductors is one of
the most R&D intensive manufacturing processes of any industry, and that R&D activity
occurs across production stages and throughout front-end fabrication, including during
preproduction when a fab is still being built. These impacts are substantial and help to create
over 66,000 jobs and add $7.7 billion to GDP between 2021 and 2026.6

6

In addition to the direct, indirect, and induced employment impacts of R&D activity in the U.S., the academic
literature suggests R&D activity to have additional broader economic spillover effects that positively impact totalfactor productivity (TFP) and GDP by increasing output per worker. See, for example: Blanco, Luisa; Prieger, James;
and Gu, Ji, “The Impact of Research and Development on Economic Growth and Productivity in the US States”(2013). Pepperdine University, School of Public Policy Working Papers. Paper 48.

4. The economic impact of federal chip incentives

19FIG. 17: Semiconductor incentive program R&D impacts, 2021–2026

DirectIndirectInduced

Total

Income and GVA in billions of US$

Employment

19,83018,02728,221

66,079

Income

$2.1

$1.3

$1.6

$5.0

GVA

$2.8

$2.0

$2.9

$7.7

Source: Oxford Economics, IMPLAN

4.5 Construction impacts
These are estimates of construction activity economic impacts on the U.S. economy as
the result of building new semiconductor fabrication facilities incentivized by a $50 billion
federal incentive program. These impacts, while temporary, are substantial and help to create
nearly 120,000 jobs and add $10.7 billion to GDP between 2021 and 2026.
FIG. 18: Semiconductor incentive program construction impacts, 2021–2026

DirectIndirectInduced

Total

Income and GVA in billions of US$

Employment

56,427

19,904

43,669119,999

Income

$3.8

$1.5

$2.5

$7.8

GVA

$3.8

$2.5

$4.4

$10.7

Source: Oxford Economics, IMPLAN

4.6 Capex and equipment outfitting impacts
These are estimates of capital expenditure investment economic impacts on the
U.S. economy as the result of outfitting new semiconductor fabrication facilities with
manufacturing equipment, tools, computers, and other necessary investments to enable
operations. Indeed, the manufacturing equipment itself represents the largest investment
when building a new fab. As a result of new equipment, we expect the semiconductor
manufacturing equipment sector would benefit and grow substantially.
The capex impacts, while also temporary, are indeed substantial and help to create nearly
405,000 jobs and add $53.0 billion to GDP between 2021 and 2026.

4. The economic impact of federal chip incentives

20

FIG. 19: Semiconductor incentive program capex impacts, 2021–2026

DirectIndirectInduced

Total

Income and GVA in billions of US$

Employment

69,973133,055

201,641404,669

Income

$12.9

$11.4

$11.6

$36.0

GVA

$15.5

$16.8

$20.7

$53.0

Source: Oxford Economics, IMPLAN

4.7 Long-term, positive incentive program impacts
While the $50 billion federal incentive program would be a one-time investment, the end
result of building up this domestic semiconductor industrial infrastructure will have anenduring positive impact on the U.S. economy and jobs. An investment of this magnitude
would help create an estimated 10 additional fabs in the U.S. that would otherwise not be built
and add 42,000 new semiconductor jobs to the U.S. economy.7 This uplift would translate
into additional ripple effects that the domestic semiconductor industry contributes to the U.S.
economy. For example, we would expect the U.S. semiconductor workforce to reach 319,000 by
2027, an increase of 42,000 from the 2020 total of 277,000.8 Assuming a similar magnitudeof jobs multipliers identified in our 2020 findings, (6.7 jobs multiplier for the semiconductor
industry), we anticipate the U.S. semiconductor industry would support roughly 2.13 million
jobs in the U.S. economy in 2027, an increase of 280,000 from the 2020 total of 1.85 million.
FIG. 20: The estimated long-term job impacts of the U.S. semiconductor industry in2027 as a result of a $50 billion federal incentive program

Jobs, in thousands

2,500
2,132.9

137.3

2,000

Existing
jobs

905.6

1,500

Induced

101.5

1,000

Indirect
Direct

669.5

500
42
0

New
jobs

277
DirectIndirectInduced

Total

Source: Oxford Economics

7

According to the SIA/BCG joint report, Turning the Tide For Semiconductor Manufacturing in the U.S., a $50 billion
incentive program would enable the constructions of 19 advanced fabs in the U.S. over the next 10 years, 10 morethan what would be built without the incentive program. In addition, of the estimated 70,000 direct jobs created by
the 19 total fabs, 42,000 would be the direct result of the 10 additional fabs built because of the incentive program.

8

We consider this estimate to be conservative in terms of job growth. While the 42,000 new jobs would be a result of
the $50 billion dollar investment, we do expect some amount of organic growth in the U.S. semiconductor industry
without the investment. However, for modeling purposes, we do not include that in our impact estimates.

4. The economic impact of federal chip incentives

21

5. THE MANY USES OFSEMICONDUCTORS

Fig. 21 shows the top 10 purchasers ofsemiconductors and their respective U.S.
workforce in 2019. If you were to total
all the workers in the 300 plus sectors

downstream jobs
supported in 2019

FIG. 21: The top consumers ofsemiconductors by industry andtheir 2019 U.S. workforce size

Semiconductors are an integral part of
the U.S. economy. Over 300 different
industries out of 546 in the U.S. economy
made $86.1 billion in purchases fromthe semiconductor industry in 2020.
This is identified by tracing purchasesof semiconductors as inputs into the
production of other products, such as
aircraft, appliances, and automobiles.
The uses of semiconductors vary bypurpose and industry. Automobile
manufacturers use them to provide safety
and performance indicators; cell phonemakers design them to fit perfectly ina pocket-sized computer, and appliancemanufacturers are increasingly using themto improve performance and reduce energy
consumption. Indeed, semiconductors canbe found as an input for or used by nearly
every industry of the economy.
It should also be noted that these 300
sectors are only the ones that directly
purchase semiconductors as inputs forthe products they produce in their sectors.
It does not account for those sectorsthat purchase electronic products andsubsystems enabled by semiconductors.
If you were to account for all downstream
sectors of the economy that eitherpurchase semiconductors directly as wellas those that purchase semiconductors
indirectly through the purchase ofelectronic products and subsystems
enabled by semiconductors, it is not astretch that total would likely be close to if
not all 546 industries in the U.S. economy.9

26.5 million

Source: IMPLAN, BLS QCEW 2019

Custom computer
programming services

968,100
Telecommunications
carriers

625,000

Printing

401,900

Aerospace mfg

306,700
Electromedical,
detection, &navigation
instruments mfg

205,100

Total U.S. downstreamjobs supported in 2019

Automobile& light truck& utility
vehicle mfg

203,700

Electronic
computer& storage
device mfg

Bottled &canned softdrinks & water

125,300

94,40026.5 million

Satellite & all othertelecommunications

89,700that purchased semiconductors in 2019
and which are therefore enabled bysemiconductors, that total would be 26.5
million jobs.10 This shows how criticalsemiconductors are for enabling so many
downstream sectors of our economy
and by extension by enabling so many
downstream jobs throughout our economy.

Plastics packaging
materials &unlaminatedfilm mfg

84,700All other industries

23.4 million
9

Industry classifications as defined and classified by IMPLAN.

102019 data from QCEW is used, as 2020 annual data was not complete as of the date of report release.

5. The many uses of semiconductors

22

6. CONCLUSIONThe U.S. semiconductor industry is a vital and growing part of the U.S. economy. The
industry’s ability to provide key inputs into a variety of products throughout the broader
economy is evidenced by its significant contribution to U.S. GDP and the number of domestic
jobs it supports. In 2020, we estimate that the semiconductor industry directly employedover 277,000 workers across 49 states and DC. The industry’s overall contribution to the U.S.
economy is substantial and it spreads the benefits of the industry to other parts of the U.S.
economy. Of the $246.6 billion total contribution to GDP in 2020, some $189 billion camefrom supply chain and consumer spending activities.
FIG. 22: Summary of the U.S. semiconductor industry’s economic impact, 2020

DirectIndirectInduced

Total

Income and GVA in billions of US$

Employment

277,000

669,498

905,551

1,852,049

Income

$47.1

$61.9

$51.8

$160.8

GVA

$55.8

$98.6

$92.0

$246.4

Source: Oxford Economics, IMPLAN

The use of semiconductors is essential to virtually all supply chains in every industry,making them indispensable to the economy. Not only does the semiconductor industry
produce a vital product to support that economic activity, it also provides additional support
services such as design, testing, and R&D services that generate additional economic value
throughout the economy.
Now, more than ever, there is a vital need to expand semiconductor R&D, design andmanufacturing in the U.S. By supporting the expansion of the semiconductor industry,nearly all other sectors will benefit, either through supply chain spending and increased
consumer spending or through the increased availability of downstream industries to secure
semiconductor chips for their production processes.
FIG. 23: Estimated impact of a $50 billion federal U.S. semiconductor

manufacturing incentive program, 2021–2026
DirectIndirectInduced

Total

Income and GVA in billions of US$

Employment

235,480

347,551

530,796

1,113,827

Income

$34.0

$29.9

$30.4

$94.4

GVA

$49.0

$44.8

$53.9

$147.7

Source: Oxford Economics, IMPLAN

6. Conclusion

23

7. APPENDIX

Creating the database
To conduct the impact assessment and analysis, Oxford Economics constructed a state-level
database using information gathered from various sources. Use of multiple data sources
increases accuracy in the database and mitigates chances of error and outliers in estimation
process. The sources of data include:•

BLS Quarterly Census of Employment and Wages (QCEW): 2019 annual data.

•

BLS Occupational Employment Statistics (OES): May 2019 data.

•

Census American Community Survey (ACS): 2019 annual data.

•

IMPLAN (IMpact analysis for PLANning): 2020 annual data.

•

Census County Business Patterns (CBP): 2018 annual data.

•

Proprietary databases: Including data provided by a member survey.

Oxford Economics would like to thank the members of SIA for their support in completing
detailed surveys that allowed U.S. to complete this analysis. Without this input, the analysis
would not have been possible.

7. Appendix

24

An introduction to economic impact analysis

A standard economic impact assessment identifies threechannels of impact that stem from an activity:•

Direct effect, which measures the economic benefit ofsemiconductor operations and activities in the U.S.

•

Indirect effect, which encapsulates the activity
driven by the supply chain as a result of the
procurement of goods and services fromother businesses.

•

Induced effect, which captures the impact ofworkers spending their wages on locally produced
goods and services. This supports activity across the
spectrum of consumer goods and services, and their
supply chains. An example of this is the purchases
a worker makes spending his wages on groceries,
clothing, transportation, and utilities.

In accordance with standard economic impact
assessments, the scale of the semiconductor industry ismeasured using three key metrics:•

GVA: the gross value added (GVA)
contribution to GDP.

•

Employment: employment is measured in terms ofheadcount of workers.

•

Wages: the compensation paid to workers within
the industry, the industry’s supply chain and induced
wages paid to workers in consumer industries.

All monetary impacts in this report are presented in current
2020 (i.e. non-inflation adjusted) U.S.$.
FIG. 24: The channels of economic impact

DIRECT
IMPACT

Company/industry expenditure

Suppliers’ own
supply chains

INDIRECTIMPACT

Purchases of inputs
from suppliers

INDUCEDIMPACT

Consumer spending out of employee’s
wages: Food and beverages; recreation;
clothing; and household goods

TOTAL
IMPACT

Value-added

Employment

Taxes

7. Appendix

25

Impact model structure
The model is designed to capture the inter-industry relationships, consumer spending, andripple effects that result from direct economic activity generated by the U.S. semiconductor
industry Input-output modeling characterizes and follows the flow of spending through an
economy, thereby capturing and quantifying effects on supply chains, consumer/payroll
spending, economic leakages and even taxes paid to governments. The following figure
depicts the overarching structure of the model.

Industry 1

Industry 2

Industry 3

Consumerspending

Other final
demandTotal
outputs

Industry 1

C 1, 1

C 2, 1

C 3, 1

C 4, 1

C 5, 6, 7, 1

C 8, 1

Industry 2

C 1, 2

Industry 3

C 1, 3

Employment

C 1, 4

Incomes
Profits

C 1, 5

Leakages

C 1, 6, 7

Total inputs

C 1, 8About IMPLAN
This analysis utilized IMPLAN economic impact software. IMPLAN is an input-output
modeling system used to build models at various levels of geography, including national,
state, county, and congressional district. It allows for adjustable assumptions of supply-chain
connections and leakages from survey input data and improved accuracy of assumptions.
IMPLAN is widely used and recognized by government organizations, non-profits, economic
development organizations, workforce planners, education institutions, and consultants
across the U.S. and Canada.

7. Appendix

26

Glossary of terms
American Community Survey (ACS): An annual household survey conducted by the
U.S. Census Bureau that samples about 3.5 million addresses across the U.S. It provides
information on individual socioeconomic and demographic characteristics.
County Business Patterns (CBP): A U.S. Census program that measures subnational
economic data by industry. This series includes the number of establishments, employment
during the week of March 12, first quarter payroll, and annual payroll.
Gross Domestic Product (GDP): Produced by the Bureau of Economic Analysis (BEA),
GDP is the official economic measure of output in the U.S. economy.
Gross Value Added (GVA): A measure of output less intermediate consumption(contribution to GDP), it is the measure of the value of goods and services produced
in a specified region.
IMPLAN: Economic impact software that uses Input-Output tables showing therelationships between industries to evaluate the full economic contribution of one
industry throughout the economy.
Location Quotient: A location quotient (LQ) for an industry helps to illustrate how
concentrated it is in a state by comparing it to the U.S. An LQ equal to 1.0 indicates thatthe state’s industry concentration is equal to the U.S. concentration of the same industry.
Industries with LQs greater than 1.0 indicate that a state has a higher concentrationof the industry, relative to the U.S. For example, a value of 1.5 indicates that industry
employment within the state is 1.5 times more concentrated than the U.S. overall. A
location quotient below 1.0 indicates that industry employment within the state is lessconcentrated compared to the U.S.
NAICS: The North American Industry Classification System (NAICS) is the standard usedby Federal statistical agencies in classifying business establishments for the purpose ofcollecting, analyzing, and publishing statistical data related to the U.S. business economy.
Occupational Employment Statistics (OES): A Bureau of Labor Statistics (BLS) programthat produces employment and wage estimates annually for over 840 occupations.
Quarterly Census of Employment and Wages (QCEW): A Bureau of Labor Statistics (BLS)
program that publishes a quarterly count of employment and wages reported by employers
covering 98 percent of U.S. jobs.
Standard Occupational Classification (SOC): A system used by Federal statisticalagencies to classify workers into occupational categories for the purpose of collecting,calculating, or disseminating data. All workers are classified into one of 840 detailed
occupations according to their occupational definition.

7. Appendix

27

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