China’s cooling economy affects hot chip sector start-ups and workers

Fresh from six-month training courses to build his skills for a job in China’s talent-hungry semiconductor industry, civil engineering graduate Frank Jiang has sent his resume to more than 20 chip companies since July.

No one has responded with the offer.

In China’s Covid-ravaged economic climate, workers are looking to switch careers to an industry prioritized by Beijing, only to find that it is also suffering from a recession and dwindling job prospects.

“With layoffs almost everywhere, jobs at chip companies are at least stagnant with steady pay,” said Jiang, who traces a friend’s earlier success from teaching math online to becoming a chip verification engineer. Struggling to replicate.

China’s inability to boost hiring should be alarming – it seems to be pursuing its goal of self-reliance in semiconductors. It is also a major concern for young job seekers like Jiang as they learn that the once hot job market is cooling off in the chips. Topic titled “Pessimistic position of recruitment in IC” [integrated circuit] Industry” has been viewed more than 1 million times on Zhihu, a question-and-answer website in China.

“We planned to recruit only half of last year’s numbers, but we’ve got more CVs this time around,” said a human resources executive at a major Shanghai-based chip company, who asked to remain anonymous.

China’s semiconductor sector has suffered from both. deteriorating macro environment and redirection of industrial funding. “Weak market demand has changed investment strategy, especially for those focused on consumer markets,” said Ethan Qi, a senior analyst at research firm Counterpoint.

Start-ups have been particularly hard hit and are cutting costs to try to ensure survival. More than 3,400 Chinese chip-related companies have collapsed so far this year, according to business data provider Kichacha, which has already surpassed the total in 2021.

“If they have to streamline it makes it difficult for them to hire additional people,” said Seho Ng, managing director of financial firm China Renaissance. He added that many of those funded in 2020 will have to produce working products this year or they will struggle to attract more investment from private equity funds.

China is trying to accelerate the development of its domestic semiconductor sector so that reduce its dependency on imported chips. Investment and financing for chip companies in China exceeded Rmb200bn ($29bn) in both 2020 and 2021, and raised nearly Rmb80bn in the first half of 2022, according to data released by ITjuzi, a research company.

“The country will still continue to invest in the chip ecosystem, but without a start-up or any proven track record, it’s going to be tough,” Ng said. Government and private equity will still support companies showing promise in new areas.

Surveys show that semiconductor talent is in short supply due to the rapid expansion of the domestic industry. According to the China Semiconductor Association, the reduction in the number of chip workers needed will exceed 250,000 this year, and reach 300,000 by 2025.

Efforts to close the gap by lowering barriers to entry seem to have created more problems than they solved. In recent times, chip companies have taken on job seekers without a related background. “The industry has recruited a lot of unqualified R&D over the years, with laymen switching through a crash course,” said the HR executive.

“They could only do the bare minimum,” said Jerry Wu, a veteran chip design engineer who received hundreds of questions about careers in the chip field from his active WeChat blog. “It’s getting harder now to change careers through a crash course of months.”

At the other end of the scale, industry giants are still highly prized, but they’re harder to attract. A semiconductor-focused headhunter in Shanghai said companies were looking for experienced chip experts with foreign backgrounds, but few suitable candidates were willing to move to China due to rising geopolitical tensions and the strictness of the zero-Covid policy.

Large, well-funded state-owned enterprises (SOEs) are best positioned to expand and are seeing increased campus recruitment this year as well. Such moves are in line with President Xi Jinping’s recent call to focus on leading technologies.

SOEs are also benefiting from better training courses and more suitable applicants after the expansion of semiconductor-focused schools and departments in Chinese universities. A talent acquisition manager at a major state-owned chip maker said it is busy hiring more engineers for new manufacturing lines and factories. “I am glad that the overall quality of candidates has improved a lot this year,” he said.

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