They are producing less talent as industry defines it. It is because a large percentage of the people who could teach them anything useful (to industry) are actually employed by industry, and don't want to work in academia.

Another complication is academia simply does not have the resources to remotely compete with the likes of Google, OpenAI, Anthropic, xAI, etc.

Sure but that's new as of a few months. The university I went to still accepts the same number of students per year as it has for many years. Those numbers don't change much without significant land / program expansion which is certainly being cut now.