Taiwan Semiconductor Manufacturing Co (TSM), a leading chip manufacturer, is facing a critical workforce crisis that could hinder its recent success. Despite record sales reaching $7.9 billion in July, driven by booming demand for AI chips, the company is struggling to secure the highly skilled workers needed to maintain and expand its operations. This issue is not unique to Taiwan Semiconductor, as the global chip manufacturing workforce has shrunk by 43% since its peak in 2000. The industry is currently adding only about 1,500 engineers and 1,000 technicians each year, a stark contrast to the projected need for 75,000 specialized workers over the next five years.
The looming labor shortage is expected to become a major bottleneck for Taiwan Semiconductor and the broader industry. By 2029, the U.S. alone could face a shortage of up to 146,000 workers in the chip sector. Geopolitical tensions and demographic challenges further complicate the situation. In Taiwan and South Korea, where the majority of the world’s chip production occurs, declining populations and dwindling student enrollment in higher education exacerbate the issue.
Despite these challenges, Taiwan Semiconductor, a key supplier to companies like Nvidia Corp (NVDA), has seen its stock price surge over 80% in the past 12 months. Investors can gain exposure to the stock through the iShares Semiconductor ETF (SOXX) and the First Trust NASDAQ Technology Dividend Index Fund (TDIV).
Looking forward, Wall Street analysts have an average 12-month price target of $207.25 for Taiwan Semiconductor, with a high target of $250.0 and a low target of $168.0. A majority of analysts covering the stock have positive ratings, suggesting potential for further upside. While stock prices are volatile and don’t move in a straight line, the average analyst price target indicates that Taiwan Semiconductor could continue to perform well in the future.
Taiwan Semiconductor’s ability to navigate the workforce crisis and maintain its production capacity will be crucial for its continued growth and the future of the chip industry. The company’s success in attracting and retaining skilled workers will be key to meeting the increasing demand for AI chips and other advanced technologies.
