Both?

AI is good enough to generate a first pass for an increasingly large number of projects. An engineer using AI can create an even larger amount.

But muscle memory and expertise are not fixed. They fade over time without use. If you're no longer writing code yourself, you'll get rusty on syntax in the short term. In the long term, you'll get rusty on code structure and layout.

But many engineers are no longer reviewing code either. Reviewing code written by an AI is now the bottleneck, so you're expected to allow AI to review it as well.

So we have a group of people who are no longer engaging in either the writing of the code, or the analysis of the code that's written.

Obviously, this would lead to skill loss.

Many would argue that they're not truly losing skills, because they're more engaged in the grander architecture of the code. To that I would say--your job title says engineer, not architect.