How Computer Chips Became Essential To National Security

January 18, 2023
U.S. Flag on microchip background

Since 1996, the industry of computer chips has seen tremendous growth. By as much as 35 to 60% four times, in fact. The global market for semiconductors is on target to grow revenue by 13.7%.

While the microchip supply is seeing a dramatic rise in supply and demand, it still becomes muddy waters for national security and international relations.

Smartphones, Ring Video Doorbells, and much more have set the tone for people’s love affair with technology and how it is making everyday life better. The real challenges of computer chips are ones that national security faces. There is much room for innovation and improvement, and it is important for the United States to act quickly.

Computer Chips and National Security

There are some pieces of our economy that, while important to U.S. citizens, it is that much more critical to our national security. The federal government must protect and nurture its microchip supply.

For a U.S. citizen, a computer chip helps to run their smartphone, computer, and car. Now, how about a smart bomb?

National security relies on computer chips.

Electronic devices need semiconductors to operate. If the recent chip shortage resulting from the pandemic did not teach a lesson about their importance, what else could? Auto factories shut down because of it and skyrocketed prices.

The chip shortage taught a painful lesson, and leaders overseeing national security took note.

A History of Awareness

U.S. leaders have long recognized the importance of computer chips and the supply chain for national security. President Reagan in the mid-1980s spoke of the United States needing leaders as experts in computer chips to counter advancements made by the Soviets, including cruise missiles and satellites.

Today Is a Greater Challenge

Again, the recent automotive chip shortage was an unexpected display and realization of how the country’s capabilities are eroding. While it may have affected the auto industry, it is not that far off from national security. Therefore, it is a major wake-up call for national security. The United States struggles to stop and reverse what it has lost, which is taking the lead in manufacturing microelectronics.

Onshore Capability Decline

The semiconductor industry in the United States, as far as onshore capability, has tremendous gaps in production. On one hand, the U.S. is unmatched in semiconductor design, serving as a world leader in this area.

The United States controls approximately 85% of the EDA (electronic design automation) world market tools. For the most advanced computer chips, this is essential. Although, despite serving as a world leader, there are important factors to consider.

U.S. Companies Still Depend on South Korea and Taiwan

The United States has declined to about 10% of the total amount of global chip manufacturing. Also, the U.S. lacks the onshore capability to manufacture the most advanced devices, including five- and seven-nanometer (nm) nodes.

For the most sophisticated of designs, the United States depends on countries like South Korea and Taiwan. Not only that, but the U.S. also has little onshore capability for the testing, outsourced assembly, and packaging (OSAT) of semiconductor devices. For these essential functions, the U.S. holds less than five percent of the share.

China, Singapore, and Taiwan conduct most OSAT operations.

The Change to Offshoring Creates Risks

Since significant elements of the semiconductor production chain for the U.S. is now off-shored and disaggregated, there is an increased risk to national security. This includes intellectual property theft and the possibility of counterfeit devices.

Geopolitical conflicts and natural disasters can cause significant disruption to an already fragile computer chip supply chain.

China Emerges as a Challenger

From the perspective of the U.S., production gaps create enormous challenges for national security. Meanwhile, a major strategic challenger rises. The country of China is investing heavily, and it’s on the United States’ radar.

China is developing its defense industrial base and its military power. They are prioritizing it, intending to overtake what the United States and U.S. allies have. This includes semiconductor technology.

The leadership of China has set goals they wish to complete by 2027. This includes a military that is fully modern. They are doing this by investing in the following areas:

  • Artificial intelligence
  • Hypersonics
  • Microelectronics
  • Quantum computing

Of all these areas of concern, AI is at the top of this list for good reason. AI helps computers to solve challenges and tackle tasks that would otherwise require a human brain. Further, it achieves these goals at performance levels and speeds that exceed what a human could do.

With artificial intelligence, there are no human errors. Robots don’t take sick days, complain, or forget. There is no emotion, just work.

The old saying goes, fight fire with fire. To defend the United States against adversaries who have AI technology, it is best to employ AI for the sake of national security. Human operators cannot make several decisions as quickly as artificial intelligence can.

Anything AI-enabled from drone swarms to missile attacks to firepower strikes cannot be countered without also leveraging artificial intelligence. That is why if the United States does not begin to kick start its AI initiatives, and an adversary strikes with artificial intelligence, the U.S. may be overwhelmed and not able to defend the nation.

AI Systems Rely on Computer Chips

The foundation of artificial intelligence is driven by having cutting-edge computer chips to operate it. The key here is cutting edge, because conventional CPUs will not be enough, as the U.S. needs advanced AI chips.

National security needs computer chips that can operate tens to thousands of times quicker than a conventional CPU. Advanced artificial intelligence systems need computer chips with seven-nanometer to five-nanometer design rules. They do not manufacture such semiconductor chips in the United States yet.

However, Intel makes an FPGA, which is a field-programmable gate array. These can incorporate into an artificial intelligence system. FPGA is based on design rules of ten nanometers, which is a generation behind seven-nanometer.

Intel plans to produce seven-nanometer chips.

Around 2024, TSMC (Taiwan Semiconductor Manufacturing Co.) in Arizona will have a fab operating at the five-nanometer node. While this seems like good news, by 2024, state-of-the-art technology for computer chips will be at three nanometers. The country of Taiwan will be able to make three nanometers.

Reliance on Taiwan

Presently, for the most advanced semiconductors powerful enough to operate artificial intelligence, the United States relies on Taiwan to produce them. The United States maintains good international relations with Taiwan, a country with a stable democracy.

Taiwan has a few ambiguous security guarantees to be able to continually exist as an entity that is politically independent by the rule of the Chinese Communist Party. Because of this, the government of Taiwan or TSMC would not want to willingly manipulate or restrict the continuing flow of advanced computer chips to allies like the United States and Japan.

Right now, China is behind the technology of the United States semiconductor industry by two or more generations. Currently, it is almost impossible for China to leapfrog the U.S. That is unless they gain foreign technology.

This is an aim for China in they are actively pursuing. This makes the Taiwan semiconductor production facilities a tremendous vulnerability. While there is a lot of talk of geopolitical risks, there is more to it.

Consider the potential for natural disasters occurring in Taiwan. Pandemics, droughts, and earthquakes that have recently taken place could once again shut down semiconductor production in Taiwan.

China could coerce the government of Taiwan or TSMC to support their AI computer chip development. Military actions by China are a looming concern.

It’s Not Just About AI

There is more than TSMC produces its computer chips for beyond artificial intelligence. They also produce semiconductors for the DOD (U.S. Department of Defense) for their many military-grade devices, including F-35 fighters.

Numerous U.S. defense systems use FPGA. They are like commercial versions but have features that apply to military applications. This includes high levels of radiation tolerance and heat.

The biggest designers of FPGAs are firms from the United States. They depend on Taiwan for their production.

There are still numerous unknown factors about how the United States depends on Taiwan for manufacturing its advanced computer chips for its military applications. For these many critical reasons, there is pressure on TSMC to produce military devices on U.S. soil.

Meeting the Demands of the DOD

The United States has been struggling now for a few decades to ensure a production base is secure and domestic, particularly for computers that military applications need. However, even so, there are advancements in computer chips for commercial devices. To maintain a competitive marketplace, United States organizations that sell computer chips opt to move their production, packaging, assembly, and testing offshore.

When companies are outsourcing these services over a long period, this means that foreign companies are developing and refining such competencies, exceeding that of U.S. firms. It’s a catch twenty-two in the end. Because the commercial side is outpacing the military end, it will ultimately limit the ability of the government to control, access, and use leading-edge technology.

The Lifespan of Computer Chips

Commercial computer chips can be too fast with innovations at times, and the DOD must turn back to find legacy microelectronics. Obsolete devices that those commercial suppliers no longer make are necessary, and the government must make special arrangements to get them.

The DOD will require state-of-the-art computer chips while also demanding ones that a commercial production company made and seem archaic.

Some devices that the DOD requires are so application-specific that they can require exotic compounds, materials, and techniques. This includes gallium nitride, gallium arsenide, and silicon carbide, as examples. Large commercial production companies that are silicon-based do not possess such materials.

National security, international relations, and computer chips are complex. There is no one-size fits all answers or solutions for outpacing foreign adversaries.

U.S. Defense Only Requires a Fraction

Compared to that of the commercial market, the United States’ defense only needs a fraction of the computer chips. Because the United States only needs a small batch, it is not very attractive for a commercial producer to want to help them.

Further, the DOD does not have one strategy department-wide strategy, but it is fragmented and complicated. This makes it challenging to keep up with the proper technological pace.

There are ways to fix the challenges that national security faces, but it will take a unifying effort with the industry, along with support from resources, and a push to re-shore semiconductor manufacturing, and nurture it.

Revolutionizing Government Innovation

The United States of America is a proud home to some of the most creative innovators in world history. Meanwhile, there is still a problem today, which is that there are outdated processes that can make delivering mission-critical technologies, like computer chips, for the DOD, extremely challenging.

We at NSTXL are changing this, with a focus on igniting this great nation and accelerating its national security.

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