In 2024, new investments, sustainability demands, workforce needs, and regulations will transform high-tech manufacturing.
High-tech manufacturing will experience a significant industry transformation in 2024, driven by new federal investments, a growing emphasis on sustainability, and new government regulations. These trends will redefine business practices across the sector.
New tech hubs emerge
While a significant increase in U.S. semiconductor manufacturing capacity is still a couple years out, the CHIPS and Science Act is already influencing research and development.
In 2024 and beyond, the industry will begin to see new tech hubs emerge outside traditional hotspots like Silicon Valley. The CHIPS and Science Act provides significant incentives for companies to build manufacturing plants and research facilities in new locations across the country. The legislation also funds the creation of new regional innovation centers, bringing together academia, industry, and government to conduct research and development, create jobs, and build training programs.
By diversifying the research institutions eligible for funding, the CHIPS and Science Act will enable more universities to build high-quality STEM programs that rival established powerhouses like MIT and Stanford. The competition will push innovation and open educational and employment opportunities to new populations, resulting in a more diverse workforce.
Workforce needs grow
Experts believe the CHIPS and Science Act will create 115,000 new semiconductor jobs, but half of those openings risk going unfilled at the current graduation rates. The limited candidate pool has already delayed the production start date at the Taiwan Semiconductor Manufacturing Company’s new Arizona plant.
The CHIPS and Science Act aims to address the shortage by funding STEM education from kindergarten through high school. New tech hubs and expanded research funding will make training and employment more accessible to more people.
But manufacturers must be proactive as well. They should consider partnering with schools, universities, and communities to promote STEM careers, recruit students, and create robust training programs to build a larger, more skilled workforce.
Sustainability becomes critical
In 2024, high-tech manufacturers must prioritize ESG and sustainability in their business strategy. Governments, investors, and customers are demanding assurances that manufacturers are mitigating climate risks and reducing their environmental impact. California and Europe have already instituted climate reporting requirements, and the U.S. Security and Exchange Commission is poised to do the same. Such regulations will grow increasingly common. Businesses must build processes to comply with these and future standards.
Evaluating sustainability is also critical to long-term business viability. Manufacturers must optimize and future-proof their supply chain and revenue optimization processes to prepare for a low-carbon economy. Firms demonstrating ethical and eco-friendly practices will gain a competitive edge. According to sustainability management company Optera, more than half of manufacturing respondents named emissions reduction project implementation as the most pressing task in 2023, a number likely to rise significantly over the next several years.
ESG will influence industry pricing norms going forward. Currently, sustainable products are usually more expensive to produce. Manufacturers must determine how to price these commodities to account for higher costs, leverage the product’s value proposition, and drive demand for eco-friendly materials. We’ll see companies test these strategies in the marketplace over the next few years.
Regulations exert pressure
In 2024, high-tech manufacturers face the growing challenges of ensuring compliance with evolving trade regulations and preventing the sale of restricted products in specific geographies.
The White House implemented additional limits on sales of advanced semiconductors by American firms. The rules require more U.S. enterprises looking to supply China with chips or semiconductor manufacturing equipment to inform the government of their plans or secure a special license. These restrictions will likely halt most advanced semiconductor shipments to Chinese data centers.
As a result, manufacturers must increase their diligence in monitoring their inventory’s location, distribution, and end customers, which is difficult due to global supply chain complexity and the absence of direct relationships between manufacturers and retailers. Companies must leverage partner collaboration and data-sharing to manage their channel data.
Distributor data illuminates a product’s path to market, including channels, end customers, and geographies, to establish predictability, accountability, and transparency about channel activity. This visibility is instrumental in verifying regulatory compliance and pinpointing any violations.
Regulations evolve quickly, and more future changes are inevitable. Companies must proactively prepare. Channel data management can help manufacturers stay informed so they can quickly adjust to new rules. Now is the time to establish or improve practices.
Reshaping the industry
Technological advances, sustainability expectations, workforce challenges, and regulatory changes will converge to reshape high-tech manufacturing in 2024 and beyond. Navigating these trends will require visionary leadership and a proactive mindset. Manufacturers must adopt a forward-thinking approach to position themselves as industry leaders and shape a prosperous future for the sector.
About the Author
Chris Shrope leads High Tech product marketing at Model N. Chris has deep experience defining product market fit and related new product development activities. He has helped redefine value-driven conversations for a wide range of technologies. Chris received his MBA from the University of Colorado Boulder and holds certifications in Strategic Communications, Analyst Relations, Economics, Law, Product Management and Marketing. He is an advisory board member for the Inland Ocean Coalition.
