Industry Consolidation Brings Workforce Considerations

February 18, 2016

Over the past few years, the semiconductor industry has experienced massive consolidation that hit an overwhelming high in 2015. The reported volume of mergers and acquisitions among chip manufacturers, tool suppliers, and outsourced semiconductor and test service (OSATS) providers is expected to exceed $160B this year.

This trend is not unusual for an industry as it matures. For example, the automobile industry experienced a similar evolution, as over the past 100 years automobile manufacturers have consolidated from well over 100 companies to a market dominated by fewer than 10. The solar industry has also gone through a similar consolidation as it shifted from Europe to Asia. While the LED market is still relatively young, it is likely to go through a similar growth process.

We expect the current wave of mergers and acquisitions to continue into 2016, as it is the semiconductor industry’s answer to reducing costs while still scaling quickly. Consolidation often results in asset relocation, and this is something NSTAR has helped a number of clients handle successfully with our proprietary asset relocation program; a unique solution that protects the value of used manufacturing equipment and guarantees the production worthiness at its new location.

While we can expect consolidation to drive best practices and focus the industry on providing the best value, fall-out is to be expected. Fewer players translates to less CapEx, increased volatility in investments, and an even higher focus on reducing operating expenses. Additionally, an aging semiconductor workforce goes hand-in-hand with this maturing industry, and in the current US business climate, it is difficult to find skilled engineers and technicians. Both IDMs and OEMs will need an even more flexible workforce solution to weather the volatility in the market.

NSTAR has a proven track record of providing clients with cost-effective and flexible workforce solutions around the globe. We strongly believe in exciting career opportunities and job creation in the coming years, both in the US and overseas.

Whether it is asset relocation or workforce solutions, NSTAR is prepared to support all of our customers through 2016 and beyond.

By Hardev Grewal, Vice President of Business Development, NSTAR Global Services

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