The Chips Act Needs Immigration Reform or the U.S. Could Lose to China

Already, the United Kingdom and Canada are feeling the weakness. Both countries have adopted policies to recruit highly qualified foreigners from outside the United States. This week Canada started to offer work permits aimed directly at attracting US H-1B visa holders.

The United States should not be complacent on the issue. Immigration has been the lifeblood of the rise of the semiconductor industry. Hungarian immigrant Andy Grove served as a shepherd

Intel

(symbol: INTC) into a giant chip. A Taiwanese immigrant duo—

Nvidia

(NVDA) co-founder Jensen Huang and

Advanced micro-systems

(AMD) CEO Lisa Su have played a pivotal role in maintaining America’s technological leadership and dominance over the global chip industry.

Recently, the government has realized that Taiwan’s near-monopoly on manufacturing advanced chips could become a national security risk if geopolitical tensions with China escalate. Policymakers decided that the United States needed closer and more reliable access to the semiconductors needed to run military systems and the economy. So Republicans and Democrats cheered when President Joe Biden signed the CHIPS and Science Act last year, which provided about $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 United States must bring in many foreign workers with the requisite knowledge of science, technology, engineering, and mathematics (STEM). Intel has only announced the initial phase of building two chip factories in Ohio will require 3,000 new skilled workers.

The main route for science graduates, the H-1B system, needs to be better designed. Incredibly, it’s based on a random lottery that’s not merit-based while being capped at the same annual low of 85,000 for decades. Although both sides of the aisle agree that changes are needed, the current political atmosphere has paralyzed Congress from passing essential reforms.

Barron’s Tech spoke with Jeremy Neufeld, senior fellow at the Institute for Progress, a Washington, D.C.-based nonpartisan think tank, about how to implement smarter immigration policy and the risks of falling behind China if the United States doesn’t act.

Here are the edited highlights of our conversation with Neufeld:

What is the story of immigrant talent driving technology innovation in the United States?

Neufeld: International talent was an essential ingredient of American technological leadership in the post-World War II era. In semiconductors, in particular, they have been central to the history of many companies, both on the manufacturing side and on the design side. If you look at the electronic component manufacturing industry in Census Bureau data, well over 50% of advanced STEM talent is foreign born.

How important is immigration reform to the success or failure of CHIPS?

Many of these investments will only bear fruit if Congress addresses 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 experienced people. Currently, due to the nature of the global chip market, most people with this required experience do not live in the United States, especially for high-end chips.

We’re seeing on the ground that some of the staffing issues are starting, and that’s before a lot of the investment (Chips Act) comes online. This will become a growing problem.

What are the problems with the current system, especially 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 assigned by lottery. This creates a huge amount of uncertainty and risk.

The semiconductor industry has no way of being prioritized. The government cannot prioritize talent that is in the national interest. Many visas are gobbled up by (less critical) companies that basically use them as outsourcers for IT services.

There’s no way to prioritize the smartest people based on their skills and merit?

Exactly. The lottery is an interesting area with support from both sides of the political aisle to get rid of it. People who are very concerned about the competition facing American workers don’t like it. The Biden administration and the progressive caucus favor its removal. Proponents of merit-based immigration want to get rid of it.

Why is it not reformed?

There is an agreement between the partisans. But it is rooted for several reasons. There is concern about adopting something strict on this subject without addressing other immigration issues. And there is a direct interest of companies that benefit from the current system (not based on merit).

What policy changes would you advocate?

Green card cap exemptions for STEM talent, especially doctorates and masters, would be the critical first step. The idea of ​​stapling a green card with a degree would have been huge for the semiconductor industry.

Second, fix the problems with the H-1Bs (the lottery), so more of them can go to the chip industry. Finally, clarify how “extraordinary capacity” counts for the semiconductor space for uncapped visas.

If we don’t fix our system, what could happen?

The (current) US immigration system is not designed to grow or evolve. If we remain complacent, we run the serious risk of deterring much of the talent that makes the United States the world leader in science and innovation. It will also cripple the possibility of being a leader in chip manufacturing.

Our science and technology leadership against China will suffer and, by extension, our security will suffer.

Thanks for your time, Jeremy.

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Write to Tae Kim at tae.kim@barrons.com or follow him on Twitter at @firstadoptant