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If you work with semiconductors, you’ll be well aware of the crisis that’s been ongoing since 2020. Unfortunately, the lack of microprocessors will remain a problem for the automotive industry and many other sectors until at least 2023 - and even then, it’s likely to be a mild improvement. 

As a recruiting expert in the field of embedded software, Dustin Hoeger presents everything you need to know about the events leading up to the crisis, the challenges of the current situation, the impact on the labour market for professionals and companies and the opportunities that can arise as new solutions are developed. 

The background to the chip shortage

Shortly before the pandemic outbreak in early 2020, the semiconductor industry was still able to celebrate successes: the prolonged downturn was thought to have been overcome. However, when COVID-19 emerged, this euphoria was quickly replaced by great concern. The automotive industry feared a collapse in demand - car companies worldwide abruptly cancelled their orders to the major chip producers.

As it turned out, this was a momentous mistake: although vehicle demand did indeed fall briefly in the spring of 2020 - it rose sharply again shortly afterwards. Semiconductors, the main component of microchips that are often responsible for the infotainment system in cars or, especially in the future, for autonomous driving, were suddenly not there. Instead, consumer electronics manufacturers had made use of the now missing microprocessors due to the digitalisation push of the pandemic. All over the world, laptops, smartphones and tablets were needed to work or study from home. Finally, an additional chain of unfortunate events, such as natural disasters in chip-producing countries like the US or Japan, worsened the situation.

Added to this in 2022 is the war between Russia and Ukraine that started in February: the price of neon, a noble gas needed for lasers in chip manufacturing, increased sixfold between December 2021 and March 2022 due to the COVID-19 pandemic and political tensions in Ukraine. Neon supplies were severely curtailed by the Russian invasion of Ukraine in 2022, most recently sparking fears that the conflict could exacerbate chip shortages.

How will the semiconductor crisis be overcome?

In 2022, the semiconductor crisis is still an omnipresent problem in many industries. And so, no overcoming of the chip shortage is predicted for the coming months either. Even if large manufacturers such as Infineon or Intel are currently increasing their production capacities, these multi-million investments take time: the expansion of an existing plant, or even the construction of such a highly complex new factory, can take several years.

This outlook meant that industries dependent on chips had to look for new, innovative ways to replace or even bypass the missing microprocessors.

The first approach to solving this problem was to increase supply chain transparency. Large producers like BMW, for example, want to ensure more transparency in their supply chains in the future so that chip producers can calculate better.

In addition, new semiconductor factories in Germany ensure a more independent market: currently, only 9% of global chip production is located in Europe, and manufacturing has shifted mainly to Asia. By comparison, in the 1990s, the figure was 44%. One of the largest independent contract manufacturers - TSMC - is currently negotiating with the German government. Manufacturing giant Bosch already began expanding German chip production in February. The EU also wants to boost further: with the European Chips Act, strategies for increasing production are to be presented in mid-2022. The goal is to achieve a 20 per cent share of global production by 2030.

Finally, as a further approach to circumventing the semiconductor crisis, some manufacturers are trying to adapt their software architecture so that it is processor-independent: this is, however, a complex and lengthy process, for which essential resources - such as specialists and executives with appropriate knowledge of the target architecture - are sometimes lacking.

What does the chip shortage mean for the labour market?

The chip shortage, therefore, not only affects the industry but also substantially impacts the labour market: The need for skilled workers in the software sector has clearly changed. Whereas development departments used to select microchips primarily based on the required functionality, nowadays it is much more important whether they are available at all.

The effects on embedded software development are far-reaching. Many companies are reacting to this uncertainty by trying to design the software in such a way that it becomes less dependent on the underlying hardware. This goes hand in hand with new software designs and architectures, which was often an unplanned process step forced by the current situation.

For professionals and experts, this means an additional investment of time and resources that must be invested in the realignment. Developers in particular, who can assist in the selection of assemblies, can create great added value for companies and excel here with technical finesse and an economic understanding of costs and benefits.

For juniors, the situation is a bit more tricky. Especially due to the fact that time resources have to be spent on the re-design, there is little time left for training. After all, the seniors are in the process of rethinking the architecture while the other day-to-day business continues. Graduates who show a high degree of initiative and motivation have the edge here. These behaviours inspire confidence in managers that their investment of time and resources will pay off in the medium term.

As before, an essential decision-making factor for suitable personnel is the extent to which the candidates have already had contact with the required hardware and software, as well as the common tools. Here, too, it is essential to be able to recruit a developer as soon as possible who is quickly trained and who can support the team.

It is obvious that candidates with very similar skills to those needed are to be found among the direct competition. Business relationships, agreements and contracts that apply between each other prevent companies from proactively approaching developers at the direct competition in the vast majority of cases. At the same time, the candidate market is not expected to suddenly become more active. Embedded software developers and engineers are still very passive and apply much less often than other occupational groups via job portals. Thus, many companies that rely purely on traditional channels lack a custom-fit solution to be able to grow in terms of personnel even during the chip crisis.

How do you as a company get hold of embedded software specialists?

As specialists in the embedded software sector are now in demand like never before, it is particularly challenging to acquire suitable candidates. So how do you get specialists with exactly the skills you need in such circumstances?

Turn to us: As a specialist personnel consultancy, it is our daily task to connect candidates with niche qualifications in the embedded software sector with companies. My team and I focus explicitly on this sector, so we not only have extensive market knowledge, but also a large network of people within the industry. Contact us today if you would like to find out more.

How do you get exciting projects as an embedded software specialist?

As 360-degree recruitment consultants, we at Amoria Bond are not just specialist service providers for companies and HR professionals. We also explicitly advise and place candidates in new projects and permanent positions - even in hard-to-reach positions in top companies in the industry. Our focus is not only on the placement process but much more on your wishes and requirements. We take care of many other services for you, such as interview preps or salary negotiations.

Your skills could be in demand like never before - take advantage of this opportunity and contact my team and me if you are looking for a new, exciting position in the embedded software sector. If you have any questions, we will be happy to help.

Want to learn more about the services and biases of a recruitment consultancy for your job search? Read my last article here.