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India Touted as Option to Ease US Chip Workforce Gap

May 22, 2024

Some experts have argued that introducing a special visa program that facilitates the circulation of chip industry talent between India and the U.S. would benefit both countries.

Most Indian tech workers in the U.S. are on H1-B visas, a category of work permits designated for professionals with highly specialized knowledge. But the annual cap for new H1-B visas, awarded on a lottery basis, is 85,000.

The H1-B visa lottery for fiscal 2025 drew more than 470,000 entrants, meaning that over 80% of them will not receive a work permit.

Stephen Ezell, vice president of global innovation policy at the Information Technology and Innovation Foundation (ITIF), said it might be politically feasible to establish a capped, time-limited visa for professionals in industries deemed important to the U.S.-India technology partnership, such as semiconductors and artificial intelligence, where there was a documented shortage of American talent.

But, "I'd posit that any such progress on this issue wouldn't be made until election cycles are complete in both nations this year," he said.

Among the investments in India announced by U.S. chipmakers last year, the most significant is Micron's new semiconductor assembly, test and packaging (ATP) facility in Sanand, an industrial city in the western state of Gujarat. Construction began in September, and the first phase of the project is expected to be operational by late 2024.

The Indian government will finance half of Micron's $2.75 billion project, with an additional $550 million financed by Gujarat. Micron is responsible for the rest.

Other investments by companies such as Applied Materials and Advanced Micro Devices include building facilities for chip research and development.

A recent ITIF report noted that most of the world's chip ATP work takes place in mainland China and Taiwan. Washington has used export controls and sanctions to curb China's chipmaking since May 2019 when the Commerce Department placed Huawei Technologies on its Entity List, forcing the Chinese company to get approval to buy American technology.

The U.S. last week announced an increase in tariffs on Chinese semiconductors to 50% from 25%, citing concerns about China's potential to dominate the market for legacy chips.

Konark Bhandari, a fellow at Carnegie India, described the move as "music to the ears of Indian policymakers" who wish to expand their country's market share in the production of less advanced chips.

American chipmakers have been diversifying their supply chains to other countries amid the U.S.-China semiconductor battle.

Semiconductor ATP is more labor-intensive than other segments of the industry, so India's combination of low-cost labor and government incentives could make the country attractive for more such investment, said Pranay Kotasthane, chair of the High-Tech Geopolitics Programme at the Takshashila Institution, a think tank in Bengaluru, India.

"Getting Micron's Sanand packaging plant up and running fast is the key here," Kotasthane said, noting that the project could pave the way for other chipmakers to make similar investments.

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