The Business Cost of the Shrinking STEM Research Pipeline

The United States’ dominance in STEM research and innovation is at a critical crossroads as the country’s STEM research industry faces unprecedented erosion that will be difficult to reverse. At the heart of this challenge lies a growing crisis in human capital: the weakening pipeline of international doctoral talent that has historically powered both university research graduate programs and U.S. technological innovation. While U.S. businesses have long relied on immigrants with doctorate degrees to drive breakthroughs in fields such as artificial intelligence and pharmaceuticals, this vital talent flow is now drying up in the face of growing challenges. Global competition for top researchers is intensifying just as U.S. immigration barriers are mounting, creating a perfect storm that threatens the country’s competitive edge and the ability of U.S. businesses to remain at the cutting edge of technology. Although the drivers of this decline are primarily in the realm of public policy, swift action from the business community can help protect and strengthen this talent pipeline.

In this article, we outline five concrete steps U.S. businesses can take to protect their access to critical science, technology, engineering, and math talent. But first, it helps to understand the causes of the current decline.

Factors Affecting the STEM Talent Shortage

There are two key issues affecting U.S. universities’ access to graduate students from abroad and, in turn, industry’s access to innovative ideas and R&D talent.

The talent pool of STEM doctoral graduates in the U.S. is shifting. The transformation in America’s graduate school STEM demographics over the past four decades tells a compelling story about the role of immigrant talent in the country’s R&D success. Since 1977, the total number of people who have earned doctorates in science and engineering in the U.S. has nearly tripled. (See “Total STEM Doctorates in the U.S.”) During this same period, the proportion of non-U.S. citizens in these programs has doubled from 20% to 40%. In recent decades, the role of Chinese nationals has become especially significant, accounting for 35% of that international pool of STEM doctoral candidates and 16% of all of the 36,000 foreign and domestic STEM Ph.D. seekers.1 In AI fields, Chinese nationals’ share of this pie is an even more striking 27%.2

This reliance on international students is grounded in a persistent reality in American education: U.S. citizens with STEM bachelor’s and master’s degrees typically pursue attractive industry jobs rather than the often arduous, decade-long path to a Ph.D. The resulting gap has historically been filled by talented international students who view a U.S. doctorate degree as a pathway to opportunity and professional success.3 This helps explain the aforementioned increase of the proportion of non-U.S. citizens in these programs doubling from 20% to 40% in recent years. However, the ability to retain such international talent once it arrives is showing troubling signs of erosion.4 The share of Chinese doctoral students intending to stay in the U.S. has declined from 90% at its peak in the early 2000s to 76% as of 2022.5 This is due to a combination of factors, including heightened geopolitical tensions, career uncertainty, and quality-of-life concerns in the U.S., as well as growing recruitment efforts by competitor nations and China’s own expansive efforts to retain STEM talent.6 This is a decline that cannot be reliably compensated for with students from other countries.7 Increased immigration barriers are also a major factor that deters international students from coming to or staying in the U.S.

The federal research and funding landscape has shifted. The 2024 U.S. presidential election and subsequent political transition have brought major changes to federal funding for research. Under President Donald Trump, budget freezes and a reduction in National Science Foundation (NSF) staffing by up to half threaten the agency’s ability to fund and manage critical research nationwide. There has even been talk of slashing the NSF’s annual budget from approximately $9 billion to $3 billion. Similarly, the National Institutes of Health recently announced plans to cap future reimbursement for indirect expenses incurred by research grant recipients at 15%. Such expenses include overhead costs such as universities’ expenses for ongoing maintenance and operation of research programs and facilities.8 Research universities have few options to replace this funding source.

The threat of the cuts to federal grants and reimbursements has left many research universities with no choice but to scale back their research programs and accept fewer international graduate students, or to halt admissions altogether.9 These dynamics are playing out while China is ramping up investment in science and technology and global STEM competition is intensifying.

Is the Business Community Aware and Listening?

The business implications of the deteriorating immigrant STEM talent pipeline should concern every business leader interested in accessing needed human capital to help drive their innovation.

Such cuts also create a double-bind for American business. U.S. companies have long relied on university labs for breakthrough research that powers their innovations.10 They may see this R&D pipeline drying up at the same time that their supply of doctorate-level talent narrows.

Consider this: Of foreign-born STEM Ph.D. recipients who remain in the U.S., approximately 46% enter private industry/business sectors, compared with roughly 27% of U.S.-born STEM Ph.D. recipients.11 The immigrant STEM pipeline is also vital to America’s startup ecosystem. Globally, immigrants are more likely to launch companies than are native-born populations (29% for immigrants versus 19% for nonimmigrants), and 55% of America’s billion-dollar startups have at least one immigrant founder.12 Almost 80% of America’s unicorn companies (privately held startups valued at $1 billion or more) have an immigrant founder or an immigrant in a key leadership role, such as CEO or vice president of engineering.13 In health care, immigrants represent 28% of physicians and 24% of dentists.14 There are even venture capital firms that specifically bet on immigrant founders with doctorate degrees.15

In short, as companies compete globally in emerging technologies ranging from batteries to electric cars to AI to quantum computing, access to STEM talent coming out of U.S. graduate schools is more critical than ever. Yet the current trajectory threatens to create competitive disadvantages that could manifest in slower innovation cycles, reduced patent output, and a diminished ability to compete in emerging technological fields.

How Business Can Help Protect and Strengthen Talent Pipelines

Despite these challenges to the talent pipeline powering American technological competitiveness, U.S. businesses have tools at their disposal to protect and shore up their access to valuable immigrant talent. Here are five steps businesses can take.

1. Strengthen their comprehensive support services for international talent. This means moving beyond basic recruiting and relocation assistance to provide comprehensive support for cultural integration, community connection, and long-term career development. Successful programs must include mentorship initiatives, family support services, robust legal and visa application support, and clear pathways to leadership positions.

Amazon’s Welcome Door program is such an example. Launched in 2022, Welcome Door provides refugee and “humanitarian-based” immigrant employees with support that extends beyond basic visa processing, including access to citizenship assistance, free legal resources, comprehensive reimbursement for employment authorization document renewals, specialized mentorship, and other aid. IBM’s Global Citizen’s Portfolio is another program offering support for international hires, including family integration services, spousal career assistance, and cultural transition coaching. Holistic approaches like those of Amazon and IBM provide a creative snapshot of how companies can approach the creation and improvement of structured pathways for international talent integration.

2. Diversify their talent acquisition strategies. Businesses can do this by establishing research centers in targeted countries, creating virtual research teams, or participating in global research networks. While these approaches don’t completely solve the immigration challenges, they can help companies mitigate their impact and maintain access to global talent pools. Microsoft’s research laboratory model offers an instructive case study. Microsoft has established a network of research laboratories across multiple continents, including facilities in Beijing; Bengalaru, India; Montreal; and Cambridge, England. Its Beijing lab, in particular, has become a powerhouse for AI research, employing roughly 200 researchers and producing a number of influential papers annually at the time of this writing. But Microsoft’s approach goes beyond simply establishing overseas facilities. It has created an integrated research ecosystem where teams collaborate virtually across borders, and researchers can move between locations while maintaining project continuity.

Similarly, Google has established a global network of AI research facilities in cities like Zurich; Paris; Tel Aviv, Israel; and Accra, Ghana.16 Its Accra facility represents a strategic investment to tap into African AI talent, allowing it to build diverse teams while navigating immigration challenges. The examples of Google and Microsoft illustrate how technology companies can maintain access to top STEM talent, regardless of immigration headwinds, while also fostering innovation through diverse perspectives and closer connections to regional technology ecosystems.

3. Collaborate with colleges and universities. Business leaders often serve on university advisory boards, which means they also have unique opportunities to work with higher education to develop better pathways to attract international STEM talent that will stay in the U.S. after earning a degree. This can include the development of expanded internship programs, research partnerships, and early-career development initiatives specifically designed for doctoral students and postdoctoral researchers.

Intel already does some of this through its PhD Fellowship Program. The program not only provides financial support to doctoral candidates at top U.S. universities but also pairs each fellow with an Intel technical mentor and offers robust internships that provide clear pathways to full-time research positions after graduation. The program specifically emphasizes supporting international students by providing dedicated visa application assistance and long-term career planning. While the retention rate for Intel’s PhD Fellowship Program isn’t publicly available, industry feedback and Intel’s overall employee retention strategies indicate that it has been successful, with many fellows choosing to stay on with the company after completing their fellowship. The company’s competitive compensation, valuable research opportunities, and strong career development pathways are other factors that support retention.

Qualcomm’s Innovation Fellowship is another example of industry-education collaboration. Qualcomm provides substantial funding to doctoral students at leading universities, focusing on wireless technology, AI, and semiconductor research. Recipients also receive mentorship from Qualcomm engineers, internship opportunities, and potential pathways to employment. Its program includes provisions for international students, with dedicated visa support and relocation assistance.

4. Aggressively lean in to help fill the funding gap left by recent and/or future federal budget cuts. To help fill the funding gaps created by federal budget cuts, more forward-thinking companies and leaders should consider starting or expanding existing grant programs to universities as a means of securing access to international talent and breakthrough innovations. Such funding initiatives can be modeled on existing corporate programs that provide grants to universities. Nvidia, for example, provides substantial grants to university research labs and faculty members, including those with significant international student populations. Google launched its own $25 million program last year to support computer science departments in providing cybersecurity training for students. Reed Hastings, the cofounder of Netflix, recently donated $50 million to Bowdoin College for research into AI.

Fellowships and additional funding for doctoral work and university research activities are broad incentives that not only help draw in and retain immigrant STEM talent but also attract more U.S. citizens to pursue doctorates in critical STEM fields.

5. Become more involved in the immigration policy debate. Business leaders will need to stick their heads out of the proverbial political foxhole and become more visible and louder in making their immigration needs known. This issue gained renewed attention when Elon Musk posted on social media about the importance of H-1B visas for the tech industry. Maintaining leadership and market share in STEM fields will require a comprehensive immigration approach to attracting and retaining global talent across all levels.17 This includes advocating for dedicated and accelerated visa categories for STEM researchers and their spouses and children, and supporting streamlined processes for transitioning from student visas to work visas. Further, the policies and priorities of federal departments such as Commerce, Homeland Security, and Defense also need to reflect the challenges faced by the U.S. business and technology community.

The companies that thrive in coming decades will be those that successfully navigate this labyrinth by identifying and building diverse, global research teams while working to strengthen the U.S. innovation ecosystem. As we highlight above, the window for preventive action is closing. Business leaders must act now to secure the needed access to future STEM talent that drives innovation and helps maintain America’s competitive advantage.