DEI is hobbling the effectiveness large organizations throughout our economy.  Nowhere is this more evident and urgent than the semiconductor chip industry, which is vital to our competitiveness as an advanced economy and our military security.

Matt Cole and Chris Nicholson write in The Hill

The Biden administration recently promised it will finally loosen the purse strings on $39 billion of CHIPS Act grants to encourage semiconductor fabrication in the U.S. But less than a week later, Intel announced that it’s putting the brakes on its Columbus factory. The Taiwan Semiconductor Manufacturing Company (TSMC) has pushed back production at its second Arizona foundry. The remaining major chipmaker, Samsung, just delayed its first Texas fab.

This is not the way companies typically respond to multi-billion-dollar subsidies. So what explains chipmakers’ apparent ingratitude? In large part, frustration with DEI requirements embedded in the CHIPS Act.

Their article is a case study in bureaucratic strangulation.  

The law contains 19 sections aimed at helping minority groups, including one creating a Chief Diversity Officer at the National Science Foundation, and several prioritizing scientific cooperation with what it calls “minority-serving institutions.” A section called “Opportunity and Inclusion” instructs the Department of Commerce to work with minority-owned businesses and make sure chipmakers “increase the participation of economically disadvantaged individuals in the semiconductor workforce.”

The department interprets that as license to diversify. Its factsheet asserts that diversity is “critical to strengthening the U.S. semiconductor ecosystem,” adding, “Critically, this must include significant investments to create opportunities for Ameri subsidies cans from historically underserved communities.” 

The department does not call speed critical, even though the impetus for the CHIPS Act is that 90 percent of the world’s advanced microchips are made in Taiwan, which China is preparing to annex by 2027, maybe even 2025.

Speed is everything on the leading edge of chips competition. A new generation of chips starts out with very low yields, the percentage of the wafers that are usable. It’s up to the factories, the fabs, to finish the D part of R&D and drive yields from very low to very high. This requires workers who can become closely involved in process improvement.  They have to observe, measure, collect and analyze the factors that go into increasing the yield of usable chips. They have to be motivated, smart, and numerate.

Lamentably, these qualities are not equally distributed among all ethnicities and all the identity groups that must be catered to:

…requirements that chipmakers submit detailed plans to educate, employ, and train lots of women and people of color, as well as “justice-involved individuals,” more commonly known as ex-cons.

TMSC in Arizona evidently was unable to keep to an acceptable level of nimbleness:

Tired of delays at its first fab, the company flew in 500 employees from Taiwan. This angered local workers, since the implication was that they weren’t skilled enough. With CHIPS grants at risk, TSMC caved in December, agreeing to rely on those workers and invest more in training them. A month later, it postponed its second Arizona fab.

Other biggies re also bailing on production here:

Intel is also building fabs in Poland and Israel, which means it would rather risk Russian aggression and Hamas rockets over dealing with America’s DEI regime. Samsung is pivoting toward making its South Korean homeland the semiconductor superpower after Taiwan falls.

Without chip supplies, our manufacturing economy collapses, as we started to see when auto factories shut down when chip shipments from Asia were delayed.

Worse, without an ability to stay at the forefront of electronic military capabilities, we will ultimately lose whatever military pre-eminence remains.

Nurturing excellence (and speed) in the organizations that produce chips is a matter of national security. And DEI bullying degrades our ability to keep up with overseas competitors.

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