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Illustration by Security Management; photos by iStock

Semiconductor Slowdown: The National Security Threat

Semiconductors are essential to make the devices and technologies that power modern society and infrastructure—including military assets, util­ities, and everyday devices like smartphones and computers.

Maintaining—or obtaining—a leading edge in the research, development, and production of semiconductors has been highlighted as a national security priority for numerous nations, including China and the United States.

In 2017, then-U.S. President Barack Obama created the President’s Council of Advisors on Science and Technology (PCAST). It released a report on semiconductor innovation, competitiveness, and security.

“PCAST found that the U.S. semiconductor industry faces major challenges with broad implications for the economy and national security,” according to a White House blog post on the report. “Innovation is already slowing as the semiconductor industry faces fundamental technological limits and rapidly evolving markets. Now a concerted push by China to reshape the market to favor their needs threatens the competitiveness of U.S. industry and the national and global benefits that an innovative U.S. industry brings.”

Maintaining a leading edge in the research, development, and production of semiconductors has been highlighted as a national security priority for numerous nations.

The report recommended a three-pillar strategy, including helping catalyze transformative semiconductor innovation during the next decade, pushing back against China’s industrial policy, and improving the business environment for U.S.-based semiconductor producers.

The United States has taken some of these steps, such as reforming the U.S. Department of Treasury’s Committee on Foreign Investment in the United States’ (CFIUS) review model to limit foreign investment in technologies—like semiconductors—in the United States; the Defense Advanced Research Projects Agency’s (DARPA’s) $1.5 billion, five-year investment into the U.S. semiconductor industry; enacting the CHIPS for America Act; and the U.S. Senate’s passage of the U.S. Innovation and Competition Act, which provides $52 billion to implement the CHIPS Act.

“The continuing impact of the chip shortage—epitomized most recently in the news that GM will be forced to idle plants across North America—speaks to the urgency of passing bipartisan legislation to fund new semiconductor production in the United States,” said U.S. Senator Mark Warner (D-VA) chair of the U.S. Senate Intelligence Committee and co-chair of the Senate Cybersecurity Caucus, in a statement sent to Security Management. “While the impact of this funding will not solve the global semiconductor shortage overnight, the longer we wait, the worse this supply chain crunch will become.”

The delay in investment and subsequent ramp-up of U.S. production is posing major ramifications for U.S. manufacturing and could create ripple effects throughout the supply chain as U.S. firms increasingly rely on foreign suppliers for semiconductors.

And if this continues, there is the threat that the United States will slowly lose its advantage in researching and designing cutting edge semiconductors and become even more dependent on foreign suppliers.

“This is a case where there is no free lunch,” said Victoria Coleman, former director at DARPA and current chief scientist for the U.S. Air Force, in a March 2021 Wilson Center panel. “You’re walking into a national de-scaling that will preclude the United States from even participating in research and design.”

Megan Gates is senior editor for Security Management. Connect with her at [email protected]. Follow her on Twitter: @mgngates.