INDUSTRIAL BASE
JUST IN: Taiwan Viewed as Achilles’ Heel of U.S. Microelectronics Supply Chain
3/24/2021
By Jon Harper
By Jon Harper

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A potential Chinese takeover of neighboring Taiwan would pose a catastrophic threat to the United States supply of microelectronics, and Washington needs to take steps to reduce that vulnerability, former Deputy Secretary of Defense Bob Work warned March 24.Microelectronics are critical for a wide range of military and non-military systems that the U.S. defense establishment and economy depend on, including artificial intelligence capabilities.
“Our reliance on imported microelectronics represents a growing national security risk,” Work said at the National Defense Industrial Association’s National Security AI Conference and Exhibition.
Work served as the No. 2 official at the Pentagon during the Obama administration and the early months of the Trump administration. He was the architect of the Defense Department’s “third offset” strategy, which including using AI, autonomy and unmanned systems to maintain the United States’ military edge against high-tech adversaries.
Work is currently serving as a member of the National Security Commission on Artificial Intelligence, which recently released its final report to Congress that included a sweeping set of recommendations to bolster the nation’s posture to compete with geopolitical rivals such as China.
Taiwan, along with South Korea, are currently world leaders in advanced chip production, and the United States relies on overseas fabrication, Work noted at the conference.
U.S military planners have long been concerned about the possibility of a Chinese invasion of Taiwan, a self-governing island which Beijing views as a rogue province that should be brought back into the fold. Pentagon leaders now view China as the “pacing threat” that the United States needs to defend against.
“We think we're 110 miles from losing access to the vast majority of cutting edge microelectronics, which power many of your companies and our military,” Work told members of industry, referring to the distance between mainland China and Taiwan.
Work said microelectronics is “absolutely critical” for U.S. leadership in AI. Artificial intelligence will soon be “the definitive dual-use technology,” and AI-enabled systems are likely to become “weapons of first resort” for authoritarian regimes who seek to undermine democratic nations, he added.
Hardware such as microelectronics is one of six building blocks of the “AI stack” that enables many artificial intelligence capabilities, Work noted. The others are: algorithms, applications, data, integration and talent.
“We currently have a two-generation lead over China in hardware,” he said. “If China was to seize and incorporate Taiwan, we would lose our ability to have access to the chips that are fabricated [in] Taiwan and China would gain them. So we would go from two generations ahead to two generations behind.”
To reduce that vulnerability, the United States needs to revitalize domestic semiconductor manufacturing. The nation currently lacks the facilities to manufacture cutting edge microelectronics at the 3- and 5-nanometer level, Work noted.
Meanwhile, “China is aggressively trying to develop the capability to do so and is sparing absolutely no expense to try to get there,” he said.
To stay ahead of the pack, the United States needs to implement a national microelectronic strategy, which should include incentivizing the creation of multiple leading-edge fabrication facilities. The nation must also “double down” on advanced microelectronics research, he added.
That will come with a high price tag of at least $35 billion in new funding, Work said.
“This is going to be expensive and the government is going to have to help in a big way,” he said. “But the alternative, which is remaining reliant on foreign sources of chips to fuel our industry and the military, poses an unacceptable risk to our economic and national security. That's something that we need to address.”
Topics: Defense Manufacturing, Suppliers
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