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Biden wants an industrial renaissance. He can’t do it without immigration reform

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A sense of urgency is starting to outweigh the reluctance of companies, like Patrick Gelsinger's Intel, to advocate directly for immigration reform. | Andrew Harnik/AP Photo

Just 15 minutes outside of downtown Columbus, the suburbs abruptly evaporate. Past a bizarre mix of soybean fields, sprawling office parks and lonely clapboard churches is a field where the Biden administration — with help from one of the world’s largest tech companies — hopes to turn the U.S. into a hub of microchip manufacturing.

In his State of the Union address in March, President Joe Biden called this 1,000-acre spread of corn stalks and farmhouses a “field of dreams.” Within three years, it will house two Intel-operated chip facilities together worth $20 billion — and Intel is promising to invest $80 billion more now that Washington has sweetened the deal with subsidies. It’s all part of a nationwide effort to head off another microchip shortage, shore up the free world’s advanced industrial base in the face of a rising China and claw back thousands of high-end manufacturing jobs from Asia.

But even as Biden signs into law more than $52 billion in “incentives” designed to lure chipmakers to the U.S., an unusual alliance of industry lobbyists, hard-core China hawks and science advocates says the president’s dream lacks a key ingredient — a small yet critical core of high-skilled workers. It’s a politically troubling irony: To achieve the long-sought goal of returning high-end manufacturing to the United States, the country must, paradoxically, attract more foreign workers.

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Within three years, Johnstown, Ohio will house two Intel-operated chip facilities together worth $20 billion. | Brendan Bordelon/POLITICO

“For high-tech industry in general — which of course, includes the chip industry — the workforce is a huge problem,” said Julia Phillips, a member of the National Science Board. “It’s almost a perfect storm.”

From electrical engineering to computer science, the U.S. currently does not produce enough doctorates and master’s degrees in the science, technology, engineering and math fields who can go on to work in U.S.-based microchip plants. Decades of declining investments in STEM education means the U.S. now produces fewer native-born recipients of advanced STEM degrees than most of its international rivals.

Foreign nationals, including many educated in the U.S., have traditionally filled that gap. But a bewildering and anachronistic immigration system, historic backlogs in visa processing and rising anti-immigrant sentiment have combined to choke off the flow of foreign STEM talent precisely when a fresh surge is needed.

Powerful members of both parties have diagnosed the problem and floated potential fixes. But they have so far been stymied by the politics of immigration, where a handful of lawmakers stand in the way of reforms few are willing to risk their careers to achieve. With a short window to attract global chip companies already starting to close, a growing chorus is warning Congress they’re running out of time.

“These semiconductor investments won’t pay off if Congress doesn’t fix the talent bottleneck,” said Jeremy Neufeld, a senior immigration fellow at the Institute for Progress think tank.

Given the hot-button nature of immigration fights, the chip industry has typically been hesitant to advocate directly for reform. But as they pump billions of dollars into U.S. projects and contemplate far more expensive plans, a sense of urgency is starting to outweigh that reluctance.

“We are seeing greater and greater numbers of our employees waiting longer and longer for green cards,” said David Shahoulian, Intel’s head of workforce policy. “At some point it will become even more difficult to attract and retain folks. That will be a problem for us; it will be a problem for the rest of the tech industry.”

“At some point, you’ll just see more offshoring of these types of positions,” Shahoulian said.

A Booming Technology

Microchips (often called “semiconductors” by wonkier types) aren’t anything new. Since the 1960s, scientists — working first for the U.S. government and later for private industry — have tacked transistors onto wafers of silicon or other semiconducting materials to produce computer circuits. What has changed is the power and ubiquity of these chips.

The number of transistors researchers can fit on a chip roughly doubles every two years, a phenomenon known as Moore’s Law. In recent years, that has led to absurdly powerful chips bristling with transistors — IBM’s latest chip packs them at two-nanometer intervals into a space roughly the size of a fingernail. Two nanometers is thinner than a strand of human DNA, or about how long a fingernail grows in two seconds.

A rapid boost in processing power stuffed into ever-smaller packages led to the information technology boom of the 1990s. And things have only accelerated since — microchips remain the primary driver of advances in smartphones and missiles, but they’re also increasingly integrated into household appliances like toaster ovens, thermostats and toilets. Even the most inexpensive cars on the market now contain hundreds of microchips, and electric or luxury vehicles are loaded with thousands.

It all adds up to a commodity widely viewed as the bedrock of the new digital economy. Like fossil fuels before them, any country that controls the production of chips possesses key advantages on the global stage.

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The Chinese government has also been pouring billions of dollars into a crash program to boost its own lackluster chip industry. | Chen Yuxuan/Xinhua via AP

Until fairly recently, the U.S. was one of those countries. But while chips are still largely designed in America, its capacity to produce them has declined precipitously. Only 12 percent of the world’s microchip production takes place in the U.S., down from 37 percent in 1990. That percentage declines further when you exclude “legacy” chips with wider spaces between transistors — the vast majority of bleeding-edge chips are manufactured in Taiwan, and most factories not found on that island reside in Asian nations like South Korea, China and Japan.

For a long time, few in Washington worried about America’s flagging chip production. Manufacturing in the U.S. is expensive, and offshoring production to Asia while keeping R&D stateside was a good way to cut costs.

Two things changed that calculus: the Covid-19 pandemic and rising tensions between the U.S. and China.

Abrupt work stoppages sparked by viral spread in Asia sent shockwaves through finely tuned global supply chains. The flow of microchips ceased almost overnight, and then struggled to restart under new Covid surges and ill-timed extreme weather events. Combined with a spike in demand for microelectronics (sparked by generous government payouts to citizens stuck at home), the manufacturing stutter kicked off a chip shortage from which the world is still recovering.

Even before the pandemic, growing animosity between Washington and Beijing caused officials to question the wisdom of ceding chip production to Asia. China’s increasingly bellicose threats against Taiwan caused some to conjure up nightmare scenarios of an invasion or blockade that would sever the West from its supply of chips. The Chinese government was also pouring billions of dollars into a crash program to boost its own lackluster chip industry, prompting fears that America’s top foreign adversary could one day corner the market.

By 2020 the wheels had begun to turn on Capitol Hill. In January 2021, lawmakers passed as part of their annual defense bill the CHIPS for America Act, legislation authorizing federal payouts for chip manufacturers. But they then struggled to finance those subsidies. Although they quickly settled on more than $52 billion for chip manufacturing and research, lawmakers had trouble decoupling those sweeteners from sprawling anti-China “competitiveness” bills that stalled for over a year.

But those subsidies, as well as new tax credits for the chip industry, were finally sent to Biden’s desk in late July. Intel isn’t the only company that’s promised to supercharge U.S. projects once that money comes through — Samsung, for example, is suggesting it will expand its new $17 billion chip plant outside of Austin, Texas, to a nearly $200 billion investment. Lawmakers are already touting the subsidies as a key step toward an American renaissance in high-tech manufacturing.

Quietly, however, many of those same lawmakers — along with industry lobbyists and national security experts — fear all the chip subsidies in the world will fall flat without enough high-skilled STEM workers. And they accuse Congress of failing to seize multiple opportunities to address the problem.


STEM help wanted

In Columbus, just miles from the Johnstown field where Intel is breaking ground, most officials don’t mince words: The tech workers needed to staff two microchip factories, let alone eight, don’t exist in the region at the levels needed.

“We’re going to need a STEM workforce,” admitted Jon Husted, Ohio’s Republican lieutenant governor.

But Husted and others say they’re optimistic the network of higher ed institutions spread across Columbus — including Ohio State University and Columbus State Community College — can beef up the region’s workforce fast.

“I feel like we’re built for this,” said David Harrison, president of Columbus State Community College. He highlighted the repeated refrain from Intel officials that 70 percent of the 3,000 jobs needed to fill the first two factories will be “technician-level” jobs requiring two-year associate degrees. “These are our jobs,” Harrison said.

Harrison is anxious, however, over how quickly he and other leaders in higher ed are expected to convince thousands of students to sign up for the required STEM courses and join Intel after graduation. The first two factories are slated to be fully operational within three years, and will need significant numbers of workers well before then. He said his university still lacks the requisite infrastructure for instruction on chip manufacturing — “we’re missing some wafer processing, clean rooms, those kinds of things” — and explained that funding recently provided by Intel and the National Science Foundation won’t be enough. Columbus State will need more support from Washington.

“I don’t know that there’s a great Plan B right now,” said Harrison, adding that the new facilities will run into “the tens of millions.”

A lack of native STEM talent isn’t unique to the Columbus area. Across the country, particularly in regions where the chip industry is planning to relocate, officials are fretting over a perceived lack of skilled technicians. In February, the Taiwanese Semiconductor Manufacturing Corporation cited a shortage of skilled workers when announcing a six-month delay in the move-in date for their new plant in Arizona.

“Whether it’s a licensure program, a two-year program or a Ph.D., at all levels, there is a shortfall in high-tech STEM talent,” said Phillips. The NSB member highlighted the “missing millions of people that are not going into STEM fields — that basically are shut out, even beginning in K-12, because they’re not exposed in a way that attracts them to the field.”

Industry groups, like the National Association of Manufacturers, have long argued a two-pronged approach is necessary when it comes to staffing the high-tech sector: Reevaluating immigration policy while also investing heavily in workforce development.

The abandoned House and Senate competitiveness bills both included provisions that would have enhanced federal support for STEM education and training. Among other things, the House bill would have expanded Pell Grant eligibility to students pursuing career-training programs.

“We have for decades incentivized degree attainment and not necessarily skills attainment,” said Robyn Boerstling, NAM’s vice president of infrastructure, innovation and human resources policy. “There are manufacturing jobs today that could be filled with six weeks of training, or six months, or six years; we need all of the above.”

But those provisions were scrapped, after Senate leadership decided a conference between the two chambers on the bills was too unwieldy to reach agreement before the August recess.

Katie Spiker, managing director of government affairs at National Skills Coalition, said the abandoned Pell Grant expansion shows Congress “has not responded to worker needs in the way that we need them to.” Amid criticisms that the existing workforce development system is unwieldy and ineffective, the decision to scrap new upgrades is a continuation of a trend of disinvesting in workers who hope to obtain the skills they need to meet employer demand.

“And it becomes an issue that only compounds itself over time,” Spiker said. “As technology changes, people need to change and evolve their skills.”

“If we’re not getting people skilled up now, then we won’t have people that are going to be able to evolve and skill up into the next generation of manufacturing that we’ll do five years from now.”

Read the complete report at Politico

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by Brendan Bordelon and Eleanor Mueller

Politico
anio scalabrinian 2021-2022

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