Establishing a semiconductor-manufacturing capability in Australia is a once-in-a-generation challenge that could determine the country’s place in the world. For Canberra, it’s an endeavour of the same magnitude as America’s historic ‘moonshot’ during the 1960s and 1970s.
Such a massive undertaking requires an equally massive investment, but there will likely never be a more important time for Australia to commit to it. Supply-chain security and advanced technologies are at the centre of today’s great-power competition.
With a strong semiconductor-manufacturing industry, Australia would be able to make chips relevant to the energy, transport, health, information technology and defence sectors. It could better execute its long-term plans for critical technologies such as quantum and artificial intelligence that are central to global strategic competition, and which the government has identified as vital for Australia. And it could reduce vulnerability to supply-chain disruptions from conflict or natural disasters, while sustaining highly skilled jobs.
Australian officials at the Quantum World Congress held in Washington in September acknowledged that encouraging advanced manufacturing, including semiconductor production, was in Australia’s strategic interest. To leverage this momentum, the government needs to formulate a clear strategy for growing Australia’s semiconductor-manufacturing industry, supported by a highly skilled talent pipeline.
The federal government’s commitment to AUKUS Pillar 2 acknowledges that allied collaboration is essential to ensure that like-minded nations maintain a technological edge. US export controls through the CHIPS and Science Act are driving China to rapidly develop its own advanced semiconductor-manufacturing capability. Its ambitious goals make it a strong competitor for a limited global pool of talent.
A new ASPI report, Australia’s semiconductor-manufacturing moonshot: securing semiconductor talent, outlines how Australia can step up its semiconductor device fabrication research and development to industry-compatible prototyping. With this capability and the support of government funding and incentives, Australia could attract the investment from a global semiconductor manufacturer it needs to eventually establish a mature-process-scale foundry in Australia, which can produce in the 90- to 130-nanometre node range. This generation of chip technology is still in high demand for defence applications, cars, household goods and medical devices, so there are significant economic and security benefits from producing in this range—and a comparatively low barrier to entry for Australia.
Access to human capital is a vital factor dictating whether Australia can achieve this goal.
The ability to grow and maintain a skilled workforce will be crucial in attracting investment and scaling the semiconductor manufacturing industry. Globally, by 2030 the industry will require at least a million more skilled workers than it had in 2021 to meet the forecast 80% growth in demand for chips.
For Australia, attracting investment from foreign semiconductor foundries is essential, and establishing public–private partnerships between government, industry and academia will be necessary to secure talent pipelines. Australia has a strong R&D base in semiconductor technologies and related fields but lacks the depth and scale in available talent to meet the moonshot requirements. How successful Australia is at positioning itself as an attractive place for investment from foreign foundries will be determined in part by the strength of government policy in signalling the industry’s growth as priority.
The talent required to support the semiconductor industry includes a wide range of STEM-related and professional skills, as well as specialised construction workers and engineers to build the facilities. Advanced manufacturing nations such as the US, Japan and Taiwan are already creating public–private partnerships, and partnerships between industry and academia, to address the acute global talent shortage in their fields.
Australia needs to learn from these countries’ experiences to determine best practice for establishing similar relationships between tertiary education providers and industry. A collaborative and iterative approach will ensure that industry experts are involved in curriculum development, students have access to cutting-edge facilities for training, and R&D and innovation ecosystems have a better chance of scaling into industry activities.
The partnership between US manufacturer SkyWater Technology and Purdue University in Indiana offers an example of scale and specialisation that ASPI’s report recommends Australia learn from. Supported by both state and federal government incentives, the partnership enables SkyWater Technology to leverage the R&D and innovation ecosystem at Purdue University to support its foundry activities.
State-level activities in New South Wales are already moving towards similar partnerships with an aim to advance semiconductor manufacturing and adjacent technology sectors, such as quantum, in which Australia has an outsized R&D and innovation capability.
The NSW government’s Semiconductor Sector Service Bureau is collaborating with leading Australian universities and actively engaging with the Taiwanese semiconductor industry to grow Australia’s sovereign semiconductor capability. This nascent talent pipeline complements the suitability of NSW and other states, notably Queensland, for investment through public–private partnerships to grow Australia’s semiconductor industry.
Australia has strong credentials across its advanced university and government agency semiconductor R&D facilities, enterprising start-up companies, infrastructure, and investment in critical technologies and talent pipelines by both federal and state governments.
The federal government must demonstrate to foreign industry the appeal of partnering with Australian industry, education providers and government. The first recommendation in ASPIs report is for increased signalling through a national semiconductor industry development strategy. It should include financial incentives and investment roadmaps that facilitate partnerships between domestic and foreign organisations. Australia should look to examples of such policies. The UK, for instance, published a national semiconductor strategy in May that outlines how the government will work closely with industry and build strong foundations in this vital technology.
Existing trusted alliance frameworks for technology collaboration, such as AUKUS, should be prioritised and, as ASPI’s report recommends, used to identify shared gaps in semiconductor manufacturing and talent supply chains and coordinate resource sharing to address them.
The US, a global leader in advanced semiconductor manufacturing, is an ideal source of investment. Such investment would have the benefit of diversifying US semiconductor supply chains with a trusted partner in a geostrategically important region. This would give the US access to Australia’s talent pipeline, helping develop it and connecting more directly with Australian innovation in critical technologies through industry-scale prototyping which is at the heart of AUKUS Pillar 2.
The cost of developing Australia’s semiconductor-manufacturing industry will be financially significant but the ramifications of failing to develop this capability will be greater.