Labor shortages hit electronics makers as chip drought persists, causing delays

September 23, 2021

By Stephen Nellis

(Reuters) – Nearly four in five electronics manufacturers say that it has become harder to find qualified workers, compounding problems from an ongoing chip shortage and causing delays in shipping products, a trade group representing them said on Thursday.

IPC, which represents contract manufacturers such Foxconn, chipmakers such as Intel Corp, circuit board makers and other industry players, said about 80% of respondents in its most recent survey said they were having trouble finding workers. More than two-thirds of the companies surveyed said that their labor costs were also rising.

The labor woes come at a time when the industry is also dealing with a global chip shortage that started last year. More than half of the respondents said they did not believe the chip shortage would abate until at least the second half of 2022, with 90% of the companies saying their overall materials costs, which also include non-chip items, were rising.

The result had been increased delays and shrinking profit margins, the survey said. Less than a quarter of the companies surveyed said their profits were growing, with nearly a third saying they expected margins to shrink. And some 88% of companies said their lead times – the delay between receiving an order and fulfilling it – was going up, sometimes to as long as two months.

Shawn DuBravac, chief economist at IPC and lead researcher on the study, said the labor shortages were worst in North America and Europe, and electronics manufacturers would likely have to go beyond raising wages, which 44% said they were doing, to attract workers. More than a third of companies said they were providing more flexible hours or additional training and education.

“That becomes an important thing in manufacturing sectors. It won’t be just higher wages. It will also be, ‘We’re going to train you. If there’s other education aspirations that you have, we’ll work to help you with that,’” DuBravac said.

(Reporting by Stephen Nellis in San Francisco; Editing by Stephen Coates)

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