Any restrictions on expertise will have far-reaching effects in the semiconductor industry.
Good help is hard to find. It’s about to get harder—and more expensive.
The U.S. tech industry’s solution until now has been to leverage expertise from around the world, drawing top graduates and entry-level professionals under the H-1B visa program. Last year, there were 85,000 H-1B visas issued, of which 20,000 are required to hold a U.S. master’s degree or higher.
There are some exceptions to these rules. There are no limits for non-profit or government research organizations. And there are special visas for people with extraordinary or exceptional abilities in sciences, arts, education, business or athletics, and for advanced degree professionals with at least 5 years of experience.
The U.S. Citizenship and Immigration Services (USCIS), an arm of the Department of Homeland Security, in the past has held a lottery for H-1B visas. In 2016, there were more than 236,000 petitions filed for those visas, according to USCIS. The visas were granted using a “random selection process, or lottery.”
Once workers receive those visas, they can petition to extend their time in the United States, change employers, and employers can petition to change the terms of employment.
President Trump said he plans to crack down on misuse of visas. How exactly that plays out is anyone’s guess, but it has set off a scramble to reset the rules. According to multiple reports, Senators Dick Durbin (D.-Ill) and Chuck Grassley (R-Iowa) plan to re-introduce a bill that would give priority to foreign students educated in the United States. Another submitted by California Rep. Zoe Lofgren (D-19th District, which includes Silicon Valley), would change the lottery system into one where those paying the highest salaries get first priority.
The visa program has been a political hot potato for years. Companies and technical organizations have cried foul about how those visas are distributed, and labor organizations have complained the visas limit the demand and pay for U.S. graduates. In the semiconductor industry, in particular, the big complaint is that top talent is absorbed by companies like Google, Facebook and Apple. But there is one point that nearly everyone seems to agree on—any changes to the visa program would increase the cost of hiring graduates. That, in turn, would push up salaries for experienced engineers, which would raise the cost of goods and services.
It also could add some rather unpleasant overtones to international relations. According to India’s Hindustan Times, the Indian government considers the visa program to be a key component of India’s IT exports, and any attempt to curtail it would be interpreted as a protectionist measure. In the United States, meanwhile, there is growing pressure to hire locally, even though tech companies insist there are too few graduates of engineering schools.
The argument is that basic supply and demand will raise salaries enough to draw more students into math, science and engineering. That takes time, though. But what will happen in the meantime? This is a particularly important question for the semiconductor and EDA markets. The average age of engineers and scientists working in this market is rising, and there clearly are not enough being trained in the United States to fill new jobs, let alone replace those who retire.
This may be good news for EDA in the short term, because more companies will be forced to rely on automation tools. But at the leading edges of design, where these kinds of tools already are widely used, it also could slow progress significantly. As with any industry, rationing of resources is never a good thing, and in the semiconductor industry skilled people are by far the most valuable resource.
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The vast majority of the applications come from outsourcing firms, and they receive at least half of the visas. If the system was changed to priority based on salary, there would be little impact on U.S. companies hiring U.S. graduate students or experienced engineers. In a meeting with the president, tech company executes were asked about a salary-based priority scheme, and they said it would have little impact on them. It would have a large impact on outsourcing firms.
We’ve spoken with a lot of executives around the industry and one of the issues that comes up repeatedly is getting enough engineering school graduates and retaining them. If you look at starting salary comparisons between companies like Apple and Google and semiconductor companies, there’s a pretty significant difference–sometimes 2X when you consider stock options and stock growth potential. So while tech as a whole pays very well, there are significant gradations within tech. Being able to get jobs after graduation has a big role on core curriculum choices for those students
The harm of the H-1B is not which firms get them but rather that foreigners get jobs that should go to Americans and the employer pays significantly less for an H-1B than he would have to pay an American. Americans get a double hit fewer jobs and lower pay.