In The Age Of AI, Engineering Talent Is Like Nvidia’s Chips—Scarce

In the post-pandemic era, the global economy has been bedevilled by shortages and supply chain dislocations. While global trade and investment flows continue to hum along despite these challenges, countries are beginning to feel the pinch of a different commodity altogether: human talent, especially that of top-flight engineers needed to fuel the investment boom in AI, and as a result of industrial policy in America and Europe, which is placing a premium on home-shoring of strategic sectors like semiconductors.

This has set off a race for engineering talent—from chip designers to data experts—which is likely to see dislocations and shortages seen in more conventional supply chains. To use the metaphor of the moment, engineers have become like the prized graphic chips produced by chip design firm Nvidia, sending its share price to stratospheric levels. In the case of engineering talent, surplus countries will hoard talent and those with a deficit will, against considerable odds, attempt to import them.

America is the epicentre of both the boom in AI, as Big Tech majors accelerate development and roll-out of advanced chatbots, and in semiconductor manufacturing, as the Biden administration hands out generous subsidies to TSMC, Samsung and Intel to produce high-end chips at home.

Under the U.S. Chips Act, the administration is handing out an estimated $30 billion in generous subsidies for the chipmakers to accelerate domestic manufacturing. “We don’t manufacture or package any of the leading-edge AI chips needed to fuel the innovation ecosystem and power our most critical defense systems” Commerce Secretary Gina Raimondo said earlier this year. “We cannot build the next generation of technological leadership on such a shaky foundation.”

TSMC has already indicated a delay in the roll-out of chips from its Arizona facility, which has been pushed out to 2025. TSMC’s outgoing chairman, Mark Liu, told analysts in July that the company is “encountering certain challenges” as there was an insufficient amount of skilled workers “with those specialised expertise required for equipment installation in a semiconductor-grade facility.”

The problem in America, according to global consulting firm BCG, is that there is a mis-match between available and in-demand skills. Much of the engineering gap expected in the U.S. over the next decade will involve unfilled positions in core areas like software, electrical and industrial engineering. In a more immigration-friendly era, America could have simply filled the gap by importing talent from the rest of the world, as the contentious H1-B visa program set out to do. Toxic domestic politics has poisoned the well and no administration, current or future, can risk angering their political base by advocating for more immigration. To be sure, American universities still lead the world in STEM education but the race has become tighter because other countries and regions are catching up.

Which brings us to Asia, where much of the surplus global engineering talent resides, concentrated in markets like China, India, South Korea, Taiwan and Japan. According to research firm Macro Polo, China already produces a sizeable portion of the world’s top AI researchers—rising from 29% in 2019 to 47% in 2022—and it is “no surprise” that more Chinese talent are working in domestic industry. The firm noted that India had also raised its game in developing AI talent with one significant difference—in 2022, at least one-fifth of graduates ended up staying at home rather than emigrating, which was the well-established trend of the past.

The limited outward mobility perhaps signals that China and India are hoarding AI talent to meet national priorities. This will inevitably set off a war for global talent with engineer-surplus countries in Asia facing off against engineer-scarce countries in America and Europe. Despite advances in AI, no program has yet been developed which seeks to replace the need for human engineers altogether.

Until that time, top-flight engineering graduates will be a prized commodity, eagerly sought after by countries and companies. In a fragmenting world where global cooperation on weighty issues like trade and climate is fraying, it is fanciful to imagine that an accord on sharing engineering talent for the common good would ever be possible.