Prof. ST Hsieh
Director, US-China Energy Industry Forum
July 21, 2023
Myopia is not limited to Washington, DC or US politicians. The US Chip Act pushed by President Biden faces major challenges on the shortage of skilled labor forces should not be sudden shock. Because the US knew the deficiency of STEM students for many years and many ideas have been advanced to remedy this challenge. Unfortunately, the problem persisted without any good news in sight.
The US also has a lousy immigration problem: legal immigration laws need reform as pointed out by the attached report. On the one hand, the US is not able to attract high quality immigrants to support a modern industry. On the other hand, illegal immigrants from south of the borders flood the US is a major challenge of US societal resources.
However, it would be a major blunder to modify the immigration system just for the purpose of fixing the challenge of shortage of skilled workforce in the US. It would be like to bring in a “foreign legion” to the home and charge them with the responsibility of defending the US. Any highly skilled workforce from foreign nations will take time to be assimilated in the US society. A modern high-tech facility is successful because of an optimally integrated management team and skilled workforce. A “foreign legion” of high-tech professionals with different cultural backgrounds assembled in a US town will not be productive or competitive instantly.
Money may buy hard work and bravery, but money cannot buy loyalty. The US needs to build up an indigenous skilled labor force for her sustainability.
Barron: The Chips Act’s Big Problem
By Tae KimFollow
Updated July 20, 2023 9:30 am ET / Original July 19, 2023 6:32 pm ET
No Brainer. The immigration of the world’s brightest scientists and engineers has always been America’s unassailable advantage. It has helped drive incredible technology innovation, strengthened our national security, and created an economic growth machine that has become the envy of the world.
But the prospects for all those things are now at risk due to myopia in Washington, D.C.
Already, the U.K. and Canada smell weakness. The two countries have been enacting policies to recruit highly skilled foreigners away from the U.S. This week, Canada started offering work permits directly aimed at attracting America’s H-1B visa holders.
The U.S. shouldn’t be complacent on the issue. Immigration has been the lifeblood of the semiconductor industry’s rise. Hungarian immigrant Andy Grove shepherded Intel (ticker: INTC) into a chip giant. A duo of Taiwanese immigrants— Nvidia (NVDA) co-founder Jensen Huang and Advanced Micro Devices (AMD) CEO Lisa Su—have played pivotal roles in maintaining America’s technology leadership and its dominance of the world’s chip industry.
Recently, the government has realized Taiwan’s near monopoly for advanced chip manufacturing could become a national security risk if geopolitical tensions with China get worse. Policymakers decided the U.S. needed closer, reliable access to semiconductors required to keep military systems and the economy running. So, Republicans and Democrats cheered when President Joe Biden signed the CHIPS and Science Act last year, which included roughly $52 billion in funding to boost domestic chip manufacturing.
But the plan won’t work without reforming our archaic immigration system. For the Chips Act to succeed, the U.S. must bring in numerous foreign workers with the requisite science, technology, engineering, and mathematics (STEM) backgrounds. Intel has said just the initial phase of building two chip factories in Ohio will require 3,000 new skilled workers.
The primary avenue for science graduates, the H-1B system, needs to be better designed. Incredibly, it is based on a randomized lottery that isn’t merit-based while being capped at the same low 85,000 annual level for decades. Even though both sides of the aisle agree changes are needed, the current political atmosphere has paralyzed Congress from passing essential reforms.
Barron’s Tech talked to Senior Fellow Jeremy Neufeld at the Institute for Progress—a non-partisan Washington, D.C.-based think tank, about how to implement a wiser immigration policy and the risks of falling behind China if the U.S. doesn’t act.
Here are edited highlights of our conversation with Neufeld:
What’s the history of immigration talent in driving technology innovation in the U. S.?
Neufeld: International talent has been a critical ingredient for U.S. technological leadership in the post-World War II era. In semiconductors, specifically, they have been at the center of the story at a lot of firms, both on the manufacturing side and design side. If you look at the electronic component manufacturing industry in the Census Bureau data, well over 50% of the advanced STEM talent is foreign-born.
How important is immigration reform for whether the CHIPS Act will succeed or fail?
Many of these investments will not pay off unless Congress addresses the talent bottlenecks through immigration reform. Obviously, we want to train the next generation of semiconductor talent here in America, but they need to be trained by people with experience. Right now, by the nature of the global chip market, most of the people with that requisite experience do not live in the U. S.—especially for cutting-edge chips.
We are seeing on the ground some of the workforce staffing issues are starting, and that’s before a lot of the [Chips Act] investment has come on line. This is going to be an increasing problem.
What are the problems with the current system, specifically the H-1B visa rules?
The largest high-skilled talent immigration program is the H-1B. There are 85,000 visas available per year with 800,000 applicants. They are awarded through a random lottery. This creates a huge amount of uncertainty and risk.
The semiconductor industry has no way to be prioritized. The government can’t prioritize talent that is in the national interest. Many of the visas are eaten up by [less critical] firms that essentially use it as outsourcing for IT services.
Why doesn’t it get reformed?
There is cross-partisan agreement. But it is entrenched because of a few reasons. There is concern about passing something narrowly on this without addressing other immigration issues. And there is vested interest from companies who benefit from the current (non-merit-based) system.
If we don’t fix our system, what could happen?
The [current] U.S. immigration system isn’t designed to grow or scale. If we stay complacent, we run the serious risk of deterring a lot of the talent that makes the U.S. the world leader in science and innovation. It will also cripple the possibility of being a chip manufacturing leader.
Our science and technology leadership against China will suffer, and by extension, our security will suffer.