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

Fresh out of six months of training courses to develop his skills for a job in China’s talent-strapped semiconductor industry, civil engineering graduate Frank Jiang has sent his resume to more than 20 chip companies since July .

None responded with an offer.

In China’s Covid-ravaged economic climate, workers have sought to change careers in an industry prioritized by Beijing, only to find that it, too, is suffering from the recession and job prospects are darkening.

“With layoffs almost everywhere, chip company jobs are at least stable with decent pay,” said Jiang, who struggles to replicate the earlier success of a friend who moved from teaching math. online to that of chip verification engineer.

A failure to boost hiring should alarm China’s leaders – they appear to be pushing their goal of self-sufficiency in semiconductors further. It’s also a major concern for young job seekers like Jiang who are finding the once-hot flea job market is cooling. The topic entitled “The pessimistic situation of recruitment in the CI [integrated circuit] industry” has had over a million views on Zhihu, a question-and-answer site in China.

“We only expect to recruit half the number we did last year, but we received more resumes this time around,” said a human resources manager at a major Shanghai-based chip company, who asked to remain anonymous.

China’s semiconductor sector suffered from both a deteriorating macroeconomic environment and a shift in industrial financing. “Investment strategy has changed as market demand has weakened, especially for those focused on consumer markets,” said Ethan Qi, principal analyst at research firm Counterpoint.

Start-ups have been particularly affected and are cutting costs to try to ensure their survival. So far this year, more than 3,400 Chinese chip-related companies have collapsed, already exceeding the total number in 2021, according to trade data provider Qichacha.

“It’s harder for them to hire additional people if they have to streamline,” said Szeho Ng, chief executive of financial firm China Renaissance. He added that many of those funded in 2020 would have to produce working products this year, otherwise they would struggle to attract more investment from private equity funds.

China has tried to accelerate the growth of its domestic semiconductor industry to reduce its reliance on imported chips. Investments and funding from chip companies in China topped Rmb200 billion ($29 billion) in 2020 and 2021, and nearly Rmb80 billion was raised in the first half of 2022, according to data released by ITjuzi, a research company.

“The country will continue to invest in the chip ecosystem, but for start-ups or those that have no proven track record, it’s difficult,” Ng said, adding that the government and private equity would always support promising companies in new areas.

Surveys show that talent in the field of semiconductors is scarce while the domestic industry is developing rapidly. According to the China Semiconductor Association, the deficit in the number of required chip workers will exceed 250,000 this year and reach 300,000 by 2025.

Attempts to close the gap by lowering barriers to entry seem to have created more problems than they solved. In the recent past, chip companies have hired job seekers with no related backgrounds. “The industry has recruited many under-qualified R&Ds over the past few years, lay people going through crash courses,” the HR manager said.

“They could only do minimal work,” said Jerry Wu, a veteran chip design engineer who has received hundreds of questions about careers in the chip industry on his active WeChat blog. “It’s getting harder and harder to change careers after months of intensive lessons now.”

At the other end of the scale, industry veterans are still highly sought after, but difficult to attract. A semiconductor headhunter in Shanghai said companies remained keen on experienced chip experts with overseas backgrounds, but few suitable candidates were willing to move to China due to geopolitical tensions. heightened and restrictions of the zero Covid policy.

Large, well-funded public companies remain best positioned to grow and are even ramping up campus recruiting this year. Such measures are in line with President Xi Jinping’s recent call to focus on advanced technologies.

SOEs are also benefiting from improved training courses and more qualified applicants after the expansion of semiconductor-focused schools and departments in Chinese universities. A talent acquisition manager at a major state-owned chipmaker said he was busy hiring more engineers for new manufacturing lines and factories. “I’m happy that the overall quality of applicants has improved a lot this year,” they said.

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