Adjustments to H-1B visa program could help keep highly qualified engineers in the U.S.
Governments around the world are racing to train workers to design, manufacture, and package chips, but they are facing a talent shortfall that is expected to continue despite their best efforts — particularly for those engineers capable of designing and producing the most advanced chips.
The Semiconductor Industry Association (SIA) predicts a U.S. chip worker shortfall of 67,000 by 2030, and Deloitte expects an additional 1 million workers will be needed globally by then. In the meantime, the global semiconductor ecosystem is hardly standing still, examining multiple avenues to meet that shortfall. Those approaches include boosting the domestic workforce through upskilling, apprenticeships, and incentive schemes, among others. But it still won’t be enough.
“The government recognizes there’s a talent shortage specific to our industry, and that it’s going to take a combination of both efficient immigration policy, as well as investing in STEM programs and other programs, to help grow a workforce,” said Royal Kastens, director of public policy and advocacy at SEMI, working in Washington D.C. “I don’t think it’s one or the other.”
Challenges with the H-1B visa system
As most semiconductor companies are international, if there aren’t enough people in one country, they’ll go find two people in another country. “That’s been happening for a long time,” observed Geoff Tate, CEO of Flex Logix. “If you came to our office, or if you went to any high-tech office in Silicon Valley, what you would see is a lot of engineers from India. The next largest group would be from China, Taiwan, Singapore, Hong Kong, or other places. Then there are some Americans. I haven’t counted lately, but in my company, there are probably only a few people who were actually born in the U.S. All the rest were born somewhere else and have emigrated, and that’s true of most of Silicon Valley. So without immigration, Silicon Valley would not exist in its present form.”
Many of these international workers enter the U.S. on a company-sponsored H-1B visa, which typically is valid for three years and extendable to six. They then enter a Green Card lottery for permanent residency. A worker can stay on indefinitely while waiting for a Green Card via an i-140 petition, but it leaves them in limbo without the rights afforded by a Green Card or citizenship. Another challenge for STEM fields and the semiconductor industry is that many skilled workers are from India and China, but the U.S. system has a 7% cap on the number of visas that can be allocated to each country.
Relatively high wages and good living conditions still make the U.S. an appealing destination for many international workers. But if conditions significantly improve elsewhere — or deteriorate in the U.S. — workers may be less willing to tolerate the long road to permanent residency.
“Our visa system only works because we have the best universities and the best high tech companies, so foreigners are willing to put up with this system,” said Tate. “The first thing the government should do, out of all fairness, is remove the country cap. There are Indians who have been here decades and don’t have permanent residency. If the U.S. ever became a less attractive place to work, we would see how our visa system would cause us huge difficulties, because the supply would drop very quickly.”
The other issue is the 65,000 total annual cap on H-1B visas. “We should, if we can, have more visas,” said Tate. “If you have an infinite supply of them, then you wouldn’t need a lottery system. You would at least have predictability that you would get a visa if you had certain characteristics. And if there was no country cap, everyone would have predictability that in a few years they’d get permanent residency. Then you’re closer to the Canadian system.”
Canada and the UK have a points-based immigration system awarded for factors such as education level, work experience, job sponsorship, language ability, and whether the person is seeking a role in an industry with a worker shortage. Provided a person meets the criteria, there is a predictable path to permanent residency.
Others agree the system is flawed. “H-1B visas are awarded by lottery tickets, which in no way ensures they go to the best use, or to occupations where we have pressing national security and geopolitical concerns, which is the case with semiconductors,” said Adam Ozimek, chief economist at the Economic Innovation Group (EIG). “The way they award the visas, based on lotteries, incentivizes firms to try to hire for the most replaceable roles, not those with highly specialized skills, because you don’t want to put your eggs in one really important basket and then find that you didn’t win the lottery. It’s more like, let’s try to hire this replaceable cog in a wheel type position.”
In the U.S., the H-1B Specialty Occupations Visa faces several challenges:
To address the last point, the U.S. Department of State recently announced a pilot program to allow eligible H-1B holders to renew their visas in the U.S. instead of needing to leave the country to do so. The program is open to current H-1B visas that were issued by Mission Canada from Jan. 1, 2020 through April 1, 2023; or by Mission India from Feb. 1, 2021 through Sept. 30, 2021.
How the U.S. loses engineering graduates
Another issue closely related to the engineering workforce shortage in the U.S. is that many graduate level students are from outside the U.S., and must leave once their degree is complete unless they have secured an H-1B. According to a recent report from Purdue University, international students make up just 11.2% of the total undergraduate body, but they comprise 42.9% of graduate and professional students. The College of Engineering has the highest percentage of students from abroad, at 41.5% of total international student enrollment. Last year, India surpassed China for the first time in providing the most international students, followed by South Korea and Taiwan. All of these regions are important to the chip industry.
Although the U.S. has some of the best engineering teaching mechanisms, the classes are not typically filled with U.S. students, said Flex Logix’s Tate. “And when really smart people from other countries graduate, we make it hard for them to stay. Most of them would love to say, of course.”
International students have an F1 visa while studying, but they need to enter the H-1B lottery if they want to stay on and work for a U.S. company. “We will not hire somebody out of university with just the F1 visa,” Tate said. “Our technology is very different, and it takes them a long time to come up the learning curve. We cannot afford for them to be the unlucky one who doesn’t get the H1 visa. Once they get an H1 visa, then we’ll hire them because we know they can stay in the country, and they eventually will get to permanent residence.”
To build a workforce, Tate proposes a two-step solution. “If we want more STEM students to fill our talent pipeline, we need to start teaching more of it earlier,” he said. “This will take a long time, and we need to start training kids in junior high school. Step two is to keep the people graduating from the best U.S. universities by attaching a work visa to their master’s degree or Ph.D. for any of the STEM items that are in short supply.”
Grace period too short
The H-1B visa has a number of components that need to be advanced or addressed but we are narrowly focused on the grace period at this point, said SEMI’s Kastens. “Currently, it’s set at 60 days, meaning if an H-1B visa holder loses their position, they have 60 days to find another one, or they have to leave. That’s simply inadequate. There are a million reasons why people can lose their jobs, most of which are totally out of their control. This is very skilled talent. It takes years for people to become qualified to do a lot of these highly specialized jobs.”
The 60-day grace period applies to the whole H-1B program, which caters to a wide range of roles, including architects, biologists, and civil engineers. “But we are feeling it most acutely in the semiconductor industry,” said Kastens. “On average in this country for a tech mechanical engineer or logistics specialist, it takes 41 to 51 days to find a new job. In our industry, those same staff are taking 83 to 92 days. On average, a role takes around 87 days to fill. That includes mechanical engineers, distribution specialists, production operators, and logistics specialists. So at 87 days on average, they are already 27 days past the statutory cap of 60 days, which means this talent cannot stay here. Legally they have to leave.”
To change the visa system, bipartisan support is needed. Kastens believes the grace period is the pain point that has the most chance of making it over political hurdles. “In D.C., there are two stakeholders,” he said. “There’s the administration, and then there are Republicans and Democrats on the Hill. People may disagree on caps, they may disagree on where the H-1B visas are being allocated as far as different countries, but they generally all agree 60 days is really tight to find a new position. How that evolves into a solution is a work in progress. Right now there’s an open comment period being held by the Department of Homeland Security and the U.S. Citizenship and Immigration Service on modernizing the H-1B visa, in addition to providing flexibility in the F1 program and other H-1s.”
Why a chip-specific visa could succeed
While SEMI works on extending the H-1B grace period, the Economic Innovation Group (EIG) is proposing a new Chipmaker’s Visa. “We have an industry with extraordinarily urgent needs and extraordinarily high importance for national security and geopolitical concerns,” said EIG’s Ozimek. “Yes, the U.S. needs to improve and expand the H-1B and Green Card system, but it takes a long time. You need to forge a bipartisan consensus, which we don’t have yet. We should take advantage of the urgent bipartisan understanding about the importance of the semiconductor industry.”
The CHIPS Act passed through the U.S. Congress with relative ease because it was led by a Democrat-Republican coalition. “That’s why we made our proposal narrowly tailored to specific bipartisan national security priorities,” Ozimek said. “In contrast to some of the other bigger ideas — to totally overhaul the entire visa system, which we also should do — this probably has a shorter time horizon.”
Ozimak noted that EIG will be working to draft a policy this year with members of Congress who are interested in taking the lead on this. EIG has several reasons for wanting to get the chipmaker’s visa off the ground. “We should always let the industry have access to the best people,” he said. “Part of that will be U.S. colleges focusing on producing skilled semiconductor researchers. Some of the best people are going to come from there, and some are going to come from other countries. We shouldn’t strive to micromanage semiconductor producers. We should strive to empower them and make the U.S. the most desirable place in the world to produce semiconductors. Sometimes there can be an attitude of wanting semiconductor companies to succeed in the U.S. but only on specific terms. I don’t think we have the capacity to do that. We have to do everything we can to enable these companies.”
For example, Ozimek thought there was nothing wrong with TSMC bringing experienced workers from abroad to work on its Arizona fab. “The fact that they’re willing to do that is a good sign. That’s part of learning by doing, trying to figure out what it’s like to build in this country. We want them to be invested here. And we want them to be trying to build here in the most efficient, high productivity, low-cost way so they’re incentivized to build more in the future. Unfortunately, companies that are building large fabs in this country are mostly learning bad lessons. ‘Oh my gosh, it’s more expensive than we thought. It’s harder to find workers than we thought. There’s more bureaucracy and regulation than we thought.’ That’s really bad news for the future of the industry in the U.S.”
The Chipmakers Visa could help turn that around. “It’s not just about sidestepping the lengthy, difficult visa process. It’s also about creating assurance so there’s a dedicated number of visas for this industry,” he said. “We want companies to know that they are going to be able to find the immigrants they need to give them the competence to invest and expand.”
Key points of the proposed Chipmaker’s Visa include authorizing the issue of 10,000 new visas per year with an expedited path to a Green Card. Every quarter, 2,500 visas would be auctioned off to qualifying firms, with visa ownership immediately transferred to the sponsored worker; the 5-year visa would be renewable one time to give firms certainty they will have sufficient time to scale up their investments in the U.S. and train domestic workers. It also would dedicate visa auction fees to training American workers and provide domestic scholarships for students and workers up and down the semiconductor supply chain.
Short- and long-term solutions
The H-1B Specialty Occupations Visa has a number of issues. The quickest fix may be to extend the grace period that a skilled worker has to find a new job if they lose their position. Currently, that period is only 60 days, which is longer than the average time it takes to fill a semiconductor role, according to SEMI’s Kastens. This solution likely has the greatest chance of winning bipartisan support.
Increasing total annual caps (65,000) and per-country caps (7% of the total) seems like an obvious solution, but it’s more politically fraught. “The higher the cap, the more talent you have. That’s very simple. And having more talent would obviously be better for the workforce,” said Kastens. However, raising the caps is likely to run into challenges on Capitol Hill due to immigration being a hot-button topic. It’s unclear if the parties could agree on raising either limit.
Another option would be to attach a work visa to an engineering master’s or doctorate degree from a U.S. college so these students don’t need to enter the H-1B lottery, providing an easier path to employment in the U.S. However, Kastens hasn’t heard this idea come up in D.C. to date.
Finally, a new visa catering to the semiconductor industry could win bipartisan support based on the broad support for the CHIPS Act, but the EIG is in the early days of spreading the concept and creating a formal bill. “I have not heard of it with from anyone in government,” said Kastens. “It’s hard to predict. There are certainly people on the Hill who would appreciate the idea. There are some who would have questions.”
What everyone agrees on is that the way to build a workforce and fill the talent gap is to make it easier for international workers to enter the country and stay, alongside a far-reaching effort to grow children’s interest in STEM so they are more likely to pursue advanced engineering degrees or seek technician-level jobs via apprenticeships or vocational schools.
“The immediate low-hanging fruit is to fix our immigration policies,” said Ajit Manocha, president and CEO of SEMI. “That will help us retain some of the smartest people we bring into the U.S. from foreign countries for masters and Ph.Ds, so we can keep them here upon graduation. There is definitely a great deal of awareness and appreciation that the government needs to do something. They are linking national security to the CHIPS Act, so hopefully they can get something through.”
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Immigration reform will never happen until the two branches of government parties stop bickering with each other. The problem is not only in Semiconductors, it is all over. I can’t believe our government would let us get to this point. Our demographic situation is becoming like many places in Europe and Asia. That will quickly affect the economy as well as social security.
DOJ vs Facebook 2020 (and now apple 2023) 2600+ cases of discrimination against better qualified local engineers. Better qualified than foreign workers undergoing Green Card certification at Facebook for similar jobs. This is what Facebook’s own HR employees told Federal Investigators. Facebook did a sham Green Card certification in order to foreign workers from better qualified American. This happens all over Silicon Valley, and it is massive discrimination against local engineer, because we have right to leave the job. Any company that claims it can’t find local engineers, is just not even trying, or worse (as in the case of Facebook and Apple) actively discriminating against local candidates.
Intel just laid off 250 locals, any talk of retraining them? Anyone trying to recruit them? No. 250,000 U.S. engineers were laid, while there were 400,000 applications for H-1b visas. Managers at these companies have every incentive to hire foreign workers over Americans (OPT 15% discount, H-1b stuck at the company until green card day(will never ask for a raise or leave the job)). We need to extend the OPT discount to all students and unemployed (end the discrimination cycle where it start). Companies must be made to post all jobs (including those that might go to an H-1b worker) on the internet, and interview local candidates first and tell us why they are not qualified. No more protectionism for lesser qualified foreign worker that are mostly freshers out of college. BTW, if you fail the Green Card test right now you get an infinite number of retries, retries should be 2 after which the better qualified local gets the job.
While agreeing with the issue definition and several of the suggested solutions, in particular the extension of the grace period, the concept of a ‘chip specific visa’ I find quite concerning and fraught with risk. Who is to say that 10 or 20 years from now we won’t have a different technology that is ‘critical to national security?’ As we all know, once a narrowly focused, specific system is in place it becomes essentially impossible to remove or change it. Therefore, I would not at all support such a narrowly focused visa process regardless of the perceived initial benefits. IMHO this is just another opportunity for politicians to make a decision for the short term that has very dangerous long-term implications. Soon we would have multiple ‘technology specific’ visa programs creating a menagerie of fraud and deception. Even such valuable programs as Medicare are constantly being defrauded, largely due to unnecessary complexity and specificity. Let’s keep the visa system relatively simple and straightforward so as to properly solve this issue.
We can solve the real problems (and hint it isn’t a shortage of skilled engineers, tech laid off 250,000 engineers while applying for 400,000 H-1b visas for mostly freshers out of a foreign college). Literally, right now, there are hundreds of applicants for every tech job. But, according Facebook’s own HR employees in DOJ vs Facebook 2020, this has been true for decades. Give tech what it really wants, it isn’t H-1b visas, they want an indentured workforce. If locals can indenture themselves like foreign workers do, they would stop whining are start training locals. The only people who benefit from the back logs in immigration are immigration lawyers. And we cannot afford to be idiots, immigration lawyers write the immigration laws, rules, and regulations. Immigration lawyers fought against changing the H-1b program to a salary based allocation. The massive backlogs mean lucrative, repeat, yearly business, for immigration lawyers.
My late father, Raymond Meixner, said this often to his children when he was in his late 40’s and 50’s.
“Never believe them when they say there’s a shortage of engineers. They mean a shortage of cheap engineers.”
Michael S. Teitelbaum’s book “Falling Behind? Boom, Bust and the Global Race for Scientific Talent” offers a deep scholarly review of claims of ‘shortages’ of engineers and scientists.
Often there’s scant evidence when CEOs and HR vice president’s claim there’s a shortage.
I applaud efforts to train entry level operators, technicians and engineers. As a holder of a PhD in engineering my training was sponsored by a fellowship. These efforts should all continue.
However, as a few people have already commented there’s a drop-off in the value of a technical education. Seems talent that was deemed so important in our 20’s is now too expensive in our 40’s, 50’s and 60’s.
Talent is not just knowledge but experience and the entry level workers in the semiconductor industry are missing out on the wisdom of the more experienced.