The Looming Labor Crisis in Chip Design

Securities (Lux Capital), August 3, 2024. By Danny Crichton. Originally at luxcapital.com/content/the-looming-labor-crisis-in-chip-design, now redirecting to readsecurities.com.

Key Takeaways

• The real bottleneck is brainpower, not geopolitics. “The impending brainpower shortage in chip design is a critical bottleneck for the future of the chip economy” — while headlines stay fixed on Taiwan and ASML.
• Design cost is growing exponentially with transistor density, outpacing automation, which prices most companies out of custom silicon.
• The incentives are perverse: Cadence, Synopsys and Siemens profit from high design costs, so “those most profiting off the industry’s slow pace of innovation” are exactly the parties who would have to fix it.
• Generative AI is the plausible lever for code generation and verification — but incumbents hold the proprietary data advantage.
• The prize: cheaper design democratizes custom silicon across AI, automotive and beyond.

Connections

• In Chips For America - Research this is the counter-frame to the entire CHIPS-Act conversation: policy bought fabs, and the piece argues the scarce input is upstream of fabs entirely.
• Together with Inside TSMC’s Arizona Expansion it makes the labor case from both ends of the stack — designers and operators.
• The EDA-incumbent point connects to Modularization of Software: a tooling oligopoly that profits from friction is the same structure the malleable-software argument attacks.