Pentagon officials are in discussions with technology industry executives to find a solution to a key question: how to secure future supplies of the advanced chips needed to maintain America's military superiority.
The talks, some of which predate the Trump administration, have recently become more frequent, according to people involved or briefed on them. Pentagon officials have encouraged executives from companies that supply the chips to consider creating new production lines for suppliers in the United States.
The discussions are driven by the Pentagon's growing reliance on chips made abroad, especially in Taiwan, as well as recent tensions with China.
One chipmaker, Taiwan Semiconductor Manufacturing Company, known as TSMC, plays a particularly important role in producing commercial chips that also have applications in aircraft, satellites and wireless communications. Because of unrest in recent months in the semi-autonomous Chinese territory of Hong Kong, some Pentagon officials and executives at chipmakers have considered cases where they could force suppliers in Taiwan to limit or cut off silicon shipments.
Mark Liu, TSMC chairman, said he had recently discussed the possibility of a new factory in the United States with the Commerce Department. The obstacle was money, as significant subsidies are required, he said, because it is more expensive to operate on American soil than in Taiwan.
“It depends on when we can close the cost gap,” he said in an interview.
The United States has long acquired its most advanced weapons by exploiting electronic components produced exclusively in Taiwan. The chips help tanks, aircraft, missiles and ships navigate, communicate with each other and intercept enemy targets.
But many domestic chip production lines have been moved out of the country for years, raising concerns about production disruptions in the event of political or military crises abroad. Those fears have been exacerbated by the high importance of certain components – such as the programmable chips designed for the F-35 fighter jet, which are designed by Silicon Valley company Xilinx and manufactured mostly in Taiwan.
“We at the Department of Defense don’t have the luxury of ruling out all of these possibilities,” said Lisa Potter, deputy secretary for research and technology.
Dr. Porter, speaking at a technology event in Los Angeles on Wednesday, said secure supply chains for both key components and software were a matter of collaboration between the Pentagon and the tech industry. She declined to discuss specific efforts to boost U.S. chip production.
In another sign of immediate action, Skywater Technology, a chip manufacturing service in Minnesota, said this week that the Defense Department will invest up to $170 million to increase its production and enhance technologies, such as the ability to produce chips that can withstand radiation in space.
Dr. Porter and other Pentagon officials have pushed for new safeguards, beyond guards and employee vetting, to keep sensitive chip designs safe, a strategy that would help the Defense Department use more advanced manufacturing plants. She called the idea a “zero-trust philosophy.”.
TSMC, which dominates build-to-order services, recently took the lead from Intel in shrinking chip circuits to give chips more application capabilities. Its productivity is one reason the company has continued to win business from major American chip designers such as Apple, Qualcomm and Nvidia, whose chips have become increasingly important for both defense and civilian applications.
The United States remains the leading supplier and innovator of most chip technologies, including the processors Intel sells for nearly all personal computers and server systems. However, the Pentagon’s research arm – DARPA, for Defense Advanced Research Projects Agency – has been trying since 2017 to advance chip innovations in a $1.5 billion electronics development initiative.
Its goals include finding alternatives to silicon for manufacturing and packaging small “chiplets” instead of creating large monolithic chips.
“We have vulnerabilities that we really need to address, but we are still the dominant electronics producer in the world,” said Mark Rosker, director of DARPA’s microsystems technology office.
Much of the recent urgency stems from China’s growing stature as an innovative chipmaker. Designers have been developing chips for sensitive applications like supercomputers. Many of the designers — including Huawei, a key target of the Trump administration in the trade war — also rely on TSMC for manufacturing.
Another reason for immediate American action comes from a recent turnaround at GlobalFoundries. The chipmaker, owned by investors in Abu Dhabi, has spent about $12 billion on a factory in Malta. But it announced last year that it would stop trying to make circuits smaller than existing manufacturing processes.
The company, which announced plans for a $10 billion factory in China in 2017, is reconsidering that project as promised demand from customers there now looks uncertain, said Thomas Caufield, CEO of GlobalFoundries.
It was easier to influence the chip industry when the U.S. Department of Defense accounted for a significant portion of chip sales. Now defense applications are being overshadowed by civilian uses, such as smartphones and personal computers. A large portion of the Pentagon budget now goes to chips whose designs are shaped by commercial needs.
