Microelectronics –
Strengthening U.S. semiconductor production capabilities is a clear and present challenge impacting national security, economic health, and global competitiveness. Intensifying Great Power Competition with China highlights the importance of this critical industry. Over the past several decades, much of the United States’semiconductor production has shifted overseas, ceding ground to allies and rivals alike. Additionally, the Department of Defense’s (DoD) demand for semiconductors has dwindled to just a small portion of the market, with limited influence over industry-wide trends. Availability of semiconductors is a critical issue for the DoD and the nation. This paper explores four decisive challenges for strengthening U.S. capabilities, with recommendations on how to overcome key challenges.
The first section discusses critical production inputs, including materials and equipment, that represent imperatives for national security. The paper analyzes the industry using the SCP model (Structure, Conduct, Performance), acknowledges U.S. achievements, and summarizes DoD efforts to secure supply chains. It recommends five policy changes to ensure that the United States will regain its lead and secure the supply chain of semiconductors in the future.
The second section discusses labor challenges. A key finding is that the US needs a more coordinated national-level approach. The paper establishes five core objectives, for example, actions regarding basic education, higher education, training, and immigration, identifies the impact on national interests, and recommends five policies to ensure an adequate, skilled labor force.
The third section highlights the importance of assembly, testing, and packaging (ATP), which historically has not received as much attention in the United States as design or wafer production. The section summarizes a decades-long trend of offshoring and outsourcing before exploring how new packaging technologies are key to continuing advances in semiconductor performance. The paper recommends four policies to bring increasingly important advanced AT capacity back to the United States.
Finally, the fourth section addresses security of microelectronics. It emphasizes structural reforms for DoD and the nation regarding, emphasizing the shortcomings of the fragmented policies that exist today. The paper recommends creating a unified policy framework, strengthening enforcement, and improving integration with allies to ultimately deliver the security the United States needs.
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