By Mike Dodd, USMC (Ret.)
I remember as a kid “duck and cover” drills. The idea was that, in the event of a nuclear attack from the Soviet Union, Americans should find cover somewhere. Of course, the drills, portrayed in public service announcements featuring Bert the Turtle, were as ridiculous as they sound. No one stood a chance of surviving an atomic bomb explosion. But the fear during the Cold War was very real and the nuclear arms race all but guaranteed that if one side pushed the button, there would be Mutually Assured Destruction (MAD). As described by the computer in the 1983 blockbuster, WarGames, “the only winning move is not to play.”
Fast forward 40 years. The threat may not be nearly as dramatic, however, the consequences of a conflict with China may be as grave as what we feared in a potential war with the U.S.S.R. And now, we’re not stockpiling nukes, this is a test of cutting-edge, microscopic technology. That’s why we must focus on the race for who owns microelectronic superiority as an existential issue. The Wall Street Journal put it best, “(micro) chips are the new oil”. Chips are in virtually every piece of electronics we own and, perhaps more importantly, in every weapon system, computer, or communication device used by our military.
And while the U.S. is steadily pumping billions into designing, producing, and packaging chips—more than $50BN via the CHIPs and Science Act, thanks to the tireless efforts of my friend and fellow Marine, Senator Todd Young – the Chinese are squarely in the race. The Communist Chinese Party (CCP) has pledged $81BN in subsidies to Chinese chip-making companies. Recently, China established its largest-ever semiconductor investment fund worth $47.5BN.
The U.S. approach to reshoring is working. For example, Entegris has pledged to build a $600M fab in Colorado after receiving $75M under the CHIPs and Science Act. Other companies like chip producer SkyWater Technology is working to create cutting-edge radiation hardened chips for hypersonic and space applications and doing so with a trusted, domestic supply chain. SkyWater and other U.S. companies are also now producing, or will soon be producing, the kind of chips needed in drones and other high-demand military applications—and they are doing it here at home.
The microchips race has devolved into a cold war of sorts with a tit-for-tat strategy by both sides; the U.S. prohibiting the export of advanced chips and chip-making equipment, the Chinese preventing raw materials from reaching American semiconductor manufacturers.
Eurasia Group analysts have gone so far as to call China’s raw materials export controls move a “warning shot.”
While currently that term is purely metaphoric, the U.S. has been on heightened alert for years about the potential – and very real – invasion of Taiwan by China. U.S. intelligence reports that China’s President Xi Jinping has instructed his military to be ready for an invasion as soon as 2027. That’s why U.S. Indo-Pacific policy remains to deter major conflict or have a technological advantage if forced to fight.
The Defense Innovation Unit (DIU) has been busy working on the technological advantage piece. Yes, attritable autonomous systems at scale, i.e. drones, counter-drone technology and unmanned surface vehicles (USVs) are a big part of that, but so are microchips. So critical, in fact, that DIU’s new “emerging technologies” portfolio includes microchips as an area of focus.
The U.S. has strengthened already strong ties with the United Kingdom and Australia via the AUKUS trilateral agreement to increase and expedite submarine production and deployable technologies in the Indo-Pacific region. We’re also working with other allies like Japan and the Netherlands to strengthen coordination of sanctions and export controls to inhibit Beijing’s ability to gain any semiconductor technological or production advantage.
On the domestic front, we must continue to provide a carrot to industry to produce cutting-edge chips. This doesn’t mean just subsidies and tax credits, which have their place. I’m talking about the DoD working collaboratively with industry to expedite contracts and ensure trusted and assured microelectronics are being used in all defense applications. And that current contracts aren’t delayed by red tape. The stakes are just too high.
While China has spent $150BN in its semiconductor industry including research and development facilities since 2015 – more than any other economy –it still lags behind in its own goal of increasing chip self-reliance and production.
As with other tensions and conflicts involving authoritarian regimes, the U.S. has a decided advantage—our people who have a free-market capitalist mindset, that encourages inventors and entrepreneurs to push the envelope and create new technologies.
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