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Eli Kantor is a labor, employment and immigration law attorney. He has been practicing labor, employment and immigration law for more than 36 years. He has been featured in articles about labor, employment and immigration law in the L.A. Times, Business Week.com and Daily Variety. He is a regular columnist for the Daily Journal. Telephone (310)274-8216; eli@elikantorlaw.com. For more information, visit beverlyhillsimmigrationlaw.com and and beverlyhillsemploymentlaw.com

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Monday, October 23, 2023

The American semiconductor boom faces a massive obstacle: A lack of immigrants

The US is experiencing a boom in semiconductor production after the passage of the CHIPS Act, but that progress could be impeded by a serious labor shortage in the industry. According to a July report from the Semiconductor Industry Association, an industry trade group, and Oxford Economics, there will be 85,000 new technical jobs in the industry by 2030. But the report's projections indicate that nearly 80% of those jobs could go unfilled. And crucially, one-third of the semiconductor industry workforce is foreign-born — meaning that immigration hurdles are exacerbating the shortage. In July, Taiwan’s TSMC (TSM), which was scheduled to open its first plant in Arizona in 2024, announced that the semiconductor behemoth would be delayed another year due to a shortage of specialist workers. “While we are working to improve the situation, including sending experienced technicians from Taiwan to train the local skilled workers for a short period of time, we expect the production schedule of N4 process technology to be pushed out to 2025,” TSMC chairman Mark Liu said on the company's Q2 earnings call. The US semiconductor industry workforce was 33% foreign born in 2021. (Chart: Brookings) The US semiconductor industry workforce was 33% foreign born in 2021. (Chart: Brookings) Many foreign-born skilled workers are already studying in the US, but current immigration laws make it difficult for them to stay. “It’s incredibly, incredibly hard to imagine that we’re going to be able to build the semiconductor industry in the future if we don’t reform our immigration law,” Todd Schulte, president of immigration and criminal justice reform advocacy organization FWD.us, told Yahoo Finance. A new analysis by FWD.us found that about 5,000 international students in the US will graduate in the next academic year with advanced degrees in semiconductor-related computer science and engineering fields. At least 4,000 of those students have expressed interest in staying in the US. “If you need to build these semiconductor fabs, you need a particular set of workers,” Schulte said. “You can have that in the United States, or you can have that in other places here. The idea that jobs are a fixed entity — that if they don’t exist for one person, they’ll exist for someone else — it just isn’t true.” “I think you’re seeing that,” he continued. “You’ve seen chip manufacturers saying, 'We need this workforce. We want to build in the United States for a lot of reasons here, but we need an immigration system that isn’t built from the middle of the 20th century,' meaning an immigration system that allows our country to respond to the economic needs in the middle of the 21st century.” An immigration system 'designed in the 1950s' Work authorization is a key challenge. For example, the US government allocates an H-1B visa to around 65,000 qualified individuals per year, plus an additional 20,000 for those with master’s degrees. That cap has been in place since 2006. According to the American Immigration Council, if the United States Citizenship and Immigration Services (USCIS) “receives more registrations than there are visa numbers available, the agency will run a lottery to determine who can file an H-1B petition. … The agency selects more registrations than there are visa numbers available based on its projections of how many selected employers will file petitions and receive USCIS approval.” Aside from limited slots, other immigration hurdles include slow processing times, regulations and paperwork, and the cost to sponsor a visa. A March 2023 report from Envoy Global, a global immigration services provider, found that 94% of companies would be willing to sponsor foreign nationals for a work visa if they encountered fewer challenges, while 80% of companies relocated employees to work remotely outside the US because of visa-related issues. "The last time we had a real substantial update for our legal immigration system [was] in 1990,” Schulte said. "That’s prior to the end of the Cold War. It’s prior to the advent of the World Wide Web. It’s prior to the rise of China and India and a global middle class in so many ways here. We have an immigration system that basically was designed in the 1950s and '60s and tweaked in 1990 before so much of the economic needs we had today were clear." 'No option except' relaxing immigration policies Overhauling the US immigration system wouldn't just help the semiconductor industry: Research shows that it would be a boon to the overall US economy as well. According to Boundless, an immigration tech company, immigrants paid more than $330.7 billion in federal income taxes in the US in 2019 and over $492 billion in total taxes. “The broader story is that over the past decade, the only reason that the US population has been growing is because of immigration,” Greg Wright, a nonresident fellow at Brookings and associate professor of economics at the University of California at Merced, told Yahoo Finance. He added, “Across the developed world, you see a population shrinking, particularly in southern Europe and Japan. There are countries that really have these problems with population decline and the inversion of the demographic pyramid. You could call it aging populations. The US has not really had that problem yet, but it’s only because of immigration.” President Biden talks to workers during a visit to TSMC AZ’s first semiconductor fabrication plant) in Phoenix, December 6, 2022. REUTERS/Jonathan Ernst President Biden talks to workers during a visit to TSMC AZ’s first semiconductor fabrication plant in Phoenix, Dec. 6, 2022. (Jonathan Ernst/REUTERS) (Jonathan Ernst / reuters) Between 2005 and 2022, the US immigrant population grew nearly 30% to over 46 million people, according to the US Census Bureau. As of 2022, foreign-born Americans make up 13.9% of the overall population. Meanwhile, native-born Americans are having fewer kids, while many older individuals are aging out of the workforce, further widening the labor gap in the country. "It already is coming to a head, but people are going to realize there’s no option except probably to relax immigration policies," Wright said. Talent retention and the CHIPS Act Without an overhaul to the immigration system, FWD.us's Schulte warned that prospective talent will choose places other than the US, especially in the semiconductor space, an industry that's increasingly becoming more in demand. After the bipartisan CHIPS Act was signed into legislation last August, companies invested $210 billion in more than 50 new semiconductor projects by the end of last year. "We are not going to be able to attract the top talent from around the world by default anymore," he said. "That was the case for a really long time. But if you look at what other economic competitors of ours have done in a lot of cases, they've modernized their immigration laws, their immigration system, in a way to try to compete with the United States." The US is home to seven of the top 10 semiconductor companies in the world by market cap, including the top company, Nvidia (NVDA). Taiwan’s TSMC (TSM) is second, while South Korea’s Samsung is fourth. “We are clearly at the cutting edge of a number of really potentially revolutionizing scientific efforts right now — artificial intelligence, biomedical research building, clean energy, decarbonized economy,” Schulte said. “These are things that in different ways have the ability to transform the world for decades to come.” To Schulte, the key question is whether the US can design a system that "allows us to have a workforce to be able to lead the world in education and innovation moving forward in these spaces." "I think that's what we’re really, really focused on trying to highlight is this won’t happen by default," he said. For more information, visit us at https://www.beverlyhillsimmigrationlaw.com/.

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