America Bets On Semiconductor Development As Layoffs Leave Foreign H1B Workers Scrambling

Recent developments in the tech industry in the United States have raised questions about the future of skilled workers and U.S. immigration law. Many foreign workers with H1B work visas have been laid off lately and that has raised the question of what direction future U.S. immigration policies should be taking, especially since America has decided to bet on creating computer chips domestically instead of importing them.

Biden Sees A Field Of Dreams Full Of American-Made Semiconductors

As far back as in March, President Joe Biden in his then State of the Union address talked about where a new semi-conductor plant would be built on American soil calling it a “field of dreams.” He indicated that within three years the field would house two Intel-operated chip facilities together worth $20 billion. He added that Intel was promising to invest $80 billion more since Washington had sweetened the deal with subsidies. He summarized the effort as “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.”

Nancy Pelosi’s Trip To Taiwan

Then we faced furor over Nancy Pelosi’s visit to Taiwan that in part underlined the precarious situation of the U.S. chip supply, highlighting why Congress was moving to pass $52 billion in funding for U.S. semiconductor manufacturers promised under the CHIPS Act to shore up America’s domestic supply of semiconductors.

“Our dependence on Taiwan for chips is untenable and unsafe,” Commerce Secretary Gina Raimondo said at the Aspen Security Forum in July, arguing the case for Congress to pass funding for the CHIPS Act. Experts, however, disagreed about whether the CHIPS Act was enough to build a sustainable U.S. chip-making industry.

“Once you’re on this path, you have to commit billions… every year to have even a small chance at succeeding, which the [public] may not have the appetite for,” Rakesh Kumar, professor in electrical and computer engineering at the University of Illinois at Urbana-Champaign, told Fortune.

CHIPS Act Passed And 50,000 Jobs Added

Following the passage of the CHIPS and Science Act, Micron announced that it would spend up to $100 billion over the next 20 years to build up to four plants in upstate New York near Syracuse to make computer chips. The company estimated that the project will create almost 50,000 jobs generally over the next 20 years, with about 9,000 of those in the plants themselves. All these developments pointed in the direction of on-shoring more of the future computer industry in America and creating more new jobs here.

But First Layoffs Of H1B Visa Workers

Meanwhile, however, the recent spate of layoffs at Meta, Amazon, and Twitter has ensnared foreign workers on H-1B visas, who have 60 days to make tough decisions such as finding another job, exploring other visa options, or returning home. According to NPR’s Laurel Wamsley, “just this month 25,000 tech workers across 72 companies have been laid off, and some 120,000 tech jobs have been lost this year according to the tracker layoffs.fyi.” But for the most part, this is the market adjusting to current needs.

What appears to be happening is a short-term wipe out of foreign H1B skilled worker jobs but at the same time a long-term build-up of potential jobs in the computer industry, at least in the hardware field. In the short term, therefore, laid off H1B visa workers will need to transition to alternatives. Those may include cap-exempt H1B jobs (ie. jobs at universities or in non-profits related to universities, or in NGO or government research organizations), L-1 inter-corporate transfer jobs, TN USMCA professional jobs in the case of Canadians or Mexicans, O-1 extraordinary worker jobs, E-3 specialty jobs for Australians, possible employment-based-first preference research, extraordinary worker or inter-corporate jobs, or apply for EB5 investor visas, J-1 intern visas, or other options related to their spouse’s U.S. immigration status.

There are also more creative or perhaps tenuous entrepreneurial alternatives for H1B workers and employers. Indian, Chinese, and other specialty workers from countries with no investment treaty with the USA might invest in the Grenada citizenship-by-investment program and then later apply for U.S. E-2 work visas. All of that can be implemented, in say, less than six months. Alternatively, H1B visa holders might consider taking advantage of near-shoring, that is to say, establishing themselves to work in Canada but essentially working virtually for an American employer. Canadian start-up visas or Express Entry options come to mind.

Why Domestic Workers Are Always Best

As the industry picks up steam again, however, the market and not government should be left to decide how many new foreign workers should be employed and when. In this sense, the needs of the marketplace and not the arcane H1B visa rules, are the best regulator of the entry of foreign talent into the U.S. That is because importing workers takes extra time, costs more money, and involves the cultural adaptation of the foreign talent. That cost is not paid when hiring domestically and therefore why domestic skilled workers will always have an advantage and normally be the best choice.

Foreign Workers Bring Economic Benefits

However, in large part because of the rules restricting foreign worker recruitment, increasingly foreign workers are being employed abroad by virtual hiring. But studies have also shown that bringing foreign workers to the U.S. has created more jobs than are taken by them. In other words, employers get the benefits of skills from overseas but with outsourcing they do not attract the extra economic impetus those workers can bring to America. Whether we like it or not, American workers are competing in the international marketplace but our rules restricting foreign workers from coming to America are working against the intended goal of protecting the domestic workforce since those extra economic benefits foreign workers can bring are lost.

In the longer term, with the build-up of the computer industry in the USA, more talent will be needed, both domestic talent but also foreign talent. A wise move America could make now is to revamp the unworkable H1B work visa program, particularly the caps and lottery system, to better adapt it to the needs of America’s future economy. The current H1B work visa program is a 20th-century tool being used to decide 21st- century labor needs. It is a needless impediment to America’s competitive positioning in the scramble to recruit the best and the brightest in the international marketplace.