About the author: Charles Dunst is deputy director of research and analytics at the Asia Group and author of Defeating the Dictators: How Democracy Can Prevail in the Age of the Strongman.
Washington’s semiconductor spending spree isn’t working.
In the name of competing with China, President Joe Biden signed the Chips and Science Act into law last year. It aims to build a U.S. semiconductor supply chain by providing $52.7 billion for semiconductor research, development, and manufacturing, and workforce development. Private companies have since invested $210 billion in manufacturing across the country, starting 50 new semiconductor projects.
This is an important effort. But these investments are running into headwinds—namely, U.S. human capital deficiencies. Without urgent efforts to increase the number of semiconductor workers in the U.S., these investments could fail, leaving us in the dust in the global chip race.
Take the world-leading
Taiwan Semiconductor Manufacturing,
which plans to invest $40 billion in Arizona alone. TSMC’s new Phoenix plant—set to be its first advanced semiconductor manufacturing facility in the U.S.—has fallen far behind schedule. This is the same facility that Biden visited last year, promising that “American manufacturing is back.”
TSMC’s problem is that there aren’t enough Americans with experience in semiconductor production, let alone advanced production. “We are encountering certain challenges, as there is an insufficient amount of skilled workers with the specialized expertise required for equipment installation in a semiconductor-grade facility,” said TSMC Chairman Mark Liu on the company’s second-quarter earnings call.
The firm’s struggles are indicative of a broader problem. Deloitteestimates that the U.S. will face a shortage of 70,000 to 90,000 semiconductor workers over the next few years. McKinsey forecasts that the U.S. could be short 300,000 engineers and 90,000 skilled technicians by 2030.
The Biden administration’s “workforce hubs” to train workers are a good step but insufficient. In the short term, the U.S. could expedite the visas of foreign workers with specialized semiconductor experience. These workers will be mainly from Taiwan, but there are certainly some in Malaysia and South Korea who would be open to a stint in the U.S.
Politicians who prefer more-restrictive immigration policies may oppose such efforts. Framing these workers as necessary to U.S. national security—given the importance of chips to both military and daily-use technologies—would go a long way in countering such criticism. That framing has already won over some conservatives, such as Sen. John Cornyn of Texas, to support government investment in the semiconductor industry. Such spending is a “little bit of an adjustment for people like me that are sort of free-market conservatives,” he said last year. “But I think [it’s] absolutely critical to our economy and our national security.” A similar national security framing could prompt a similar “adjustment” on high-skilled migration.
Solving the problem in the long term will require new investments in vocational and trade schools. Doing so will create more workers not only for the semiconductor industry but also for the green transition—for jobs like wind-turbine service technicians and solar panel installers.
The Biden administration has rightly dedicated more funds to vocational education. But the issue is more cultural than financial. High school students across the country feel like failures if they don’t seek a four-year degree. They seek a bachelor’s degree rather than a vocational degree that would give them more-practical skills and perhaps even more job security. Parents and educators need to make clear that becoming a chip worker isn’t an embarrassing career choice, but a smart one.
Polls show that Americans are increasingly open to vocational education, suggesting that Washington could be pushing on an open door. A communications strategy framing the issue in national security and service terms—advancing the notion that those working on semiconductors are serving America’s national interest—could make vocational education more attractive, too.
Failure to make these reforms will starve the U.S. of the workers needed to reap the Chips Act’s rewards, leaving Washington behind both geopolitical competitors like China and partners like the European Union, South Korea, Japan, and Taiwan in the global semiconductor competition. Americans would remain dangerously reliant on the outside world for this critical technology.
But Washington has one key advantage, particularly over China and East Asia’s democracies: Would-be migrants still name the U.S. as their top preferred destination, with America continuing to pull on the world’s heart strings due to some combination of the freedom and prosperity we promise, and the values we strive to stand for.
Yet while the U.S. currently has the upper hand, there is no reason to think it will be that way forever. Australia, Canada, Germany, and other countries are all seeking to attract highly skilled workers, contrasting their welcoming approaches with the broken U.S. immigration system.
Betting against the U.S. is never a good idea, as Biden has declared. But to succeed in the chip race, the U.S. must bet more strategically on itself—both by welcoming more potential Americans and training those already here.
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