US semiconductor companies slow down hiring of Chinese employees, is the door closing?

Source: Content from The Wall Street Journal , thank you .

The United States has significantly slowed approval for domestic semiconductor companies to hire Chinese nationals for advanced engineering jobs, according to industry insiders, as part of a broader White House effort to protect American technological know-how, The Wall Street Journal reported.

The report pointed out that this phenomenon has begun to spread since last year and has affected hundreds of jobs in many American companies including Intel, Qualcomm and GlobalFoundries. People familiar with the matter revealed that this has prevented them from hiring Chinese employees or placing certain Chinese employees in core positions.

That’s important because among non-U.S. citizens, Chinese nationals hold a large share of those tech roles, and the supply of talent in the U.S. is often low. The slowdown in approvals also shows the conundrum that U.S. companies face over the U.S. stance on China in technology: Decisions designed to protect U.S. competitiveness in one way can hinder it in another.

Under regulations in past decades, companies had to get a license before assigning jobs to engineers of foreign nationality, such as the Chinese, Iranians and Russians. The Commerce Department considered such assignments to be exports because the companies were providing foreigners with technical knowledge that they could eventually take home.

Approval of so-called export licenses used to take just a few weeks, but now waits of six to eight months are not uncommon, one of the people said.

That is slowly happening as the White House becomes more committed to protecting American intellectual property.

The Trump administration has been engaged in months of often-acrimonious trade talks with China to stop forced technology transfers, and U.S. authorities have blocked several tech company acquisitions, including Broadcom Inc's hostile bid for Qualcomm Inc, citing concerns that the takeover would affect the U.S.'s ability to compete with China.

Now, negotiations on a trade deal are at an impasse. The Trump administration has also recently imposed higher tariffs on $200 billion of Chinese goods and added Huawei Technologies to a trade blacklist, making it more difficult for American companies to deal with the Chinese telecom giant. U.S. officials said on Monday they would provide some temporary exceptions to the export blacklist, allowing suppliers and customers of the Chinese telecom giant to temporarily avoid severe trade penalties.

The license adds another consideration when companies offer current and potential foreign citizen employees jobs on advanced semiconductors, telecommunications systems, encryption and other technologies. They need to review whether the technology is at risk of falling into the hands of U.S. adversaries. The license is now separate from the work visa, which employers also need to hire foreign nationals who are not permanent residents of the United States.

Industry insiders say such a move would be a blow to industries across the board, but would be particularly troublesome for chipmakers, as there is a dearth of talent for high-tech engineering jobs. Chip companies, already having to deal with higher import tariffs and a White House push for more sales to China, will now have to contend with a talent problem that they say will only further intertwine global supply chains with the country.

One industry insider said that while the hiring of Chinese nationals has not stopped completely, the slowdown in license approvals has affected which Chinese nationals could have been hired and who could have been assigned to important engineering projects. “The excessive delays have caused us to lose candidates we consider critical,” the person said.

According to the U.S. Commerce Department, Chinese nationals accounted for more than 60 percent of approved licenses from 2013 to 2017. The 1st and 3rd most common visual export categories in 2017 were related to chips. The second most common category involved telecommunications technology. The department has not yet released statistics for 2018.

The spokesman said the Commerce Department works with other government agencies, including the State, Defense and Energy departments, to carefully consider export applications. “This review often includes requesting additional information from companies seeking to make controlled technologies available to citizens outside the United States,” he said.

Kevin Wolf, an attorney at Akin Gump in Washington who served as assistant secretary for the Commerce Department’s export agency during the Obama administration, said that while technological changes may also be playing a role, the difference in the speed of export approvals could also reflect a changing political environment. If more applications involve particularly sensitive technologies, it could take longer to process them.

Foreign-born engineers have been important to staffing U.S. chip companies for years, said Linley Gwennap, president of the Linley Group, a semiconductor research organization in Silicon Valley. "People from these countries have started to start companies in the U.S.," he said. For example, Charles Liang, CEO of Advanced Micro Devices in San Jose, California, co-founded the company in the early 1990s after immigrating from Taiwan and studying in the U.S.

In addition to semiconductors, the restrictions include certain telecommunications equipment, nuclear and military technology.

Further restrictions on exports to China could come next year, when the Commerce Department redefines new technologies subject to export controls. Those definitions could cover areas such as artificial intelligence, a focus for chipmakers and technology companies and a major area of ​​U.S.-China technological competition.

The regulations suggest that these definitions should avoid stifling innovation and focus on technologies that could endanger national security if they fall into the wrong hands.

Chipmakers worry that the definitions will be too broad. The Semiconductor Industry Association wrote to the Commerce Department in January asking it to fully consider the economic impact of the definitions and limit them to technologies that involve national security issues rather than trade policy issues.