Hudson Institute: The Importance of the Defense Industrial Base

On January 14, The Hudson Institute hosted a virtual discussion entitled “A Discussion on the Defense Industrial Base with Government Leaders.”

The panel featured leaders from the Defense Department including Ellen Lord, Under Secretary of Defense for Acquisition and Sustainment and Robert Work, Former Deputy Secretary of Defense. Senator Mark Warner (D-VA) and Bryan Clark, Senior Fellow & Director, Center for Defense Concepts and Technology at Hudson Institute, also joined the conversation that was moderated by Jeb Nadaner, Deputy Assistant Secretary of Defense for Industrial Policy, Office of the Secretary of Defense for Acquisition and Sustainment at the U.S. Department of Defense.

From the outset, the theme of the conversation centered on the need to address threats to our defense and manufacturing base from our ‘peer competition,’ China. Mr. Work noted that as part of our defense strategy, the US must start thinking about, and acting on, ways in which we can organize our technology industries for long-term competition, particularly in the semiconductor space.

With the rise of Chinese technological power, particularly in standard setting and innovation, all panelists agreed that we must work to boost US capabilities and security. Ms. Lord noted that this must be done by improving our supply chain ecosystem, potentially through the reshoring of key industries. She also suggested we must focus on upping our commitment to R&D and workforce reskilling. “I am absolutely concerned about Chinese infiltration in every sector of the U.S. economy… We are not only playing defense, we are playing a bit of offense as well,” Undersecretary Lord testified before Congress last year.

All panelists talked specifically about the semiconductor industry and its importance for the defense industrial base at large. Sen. Mark Warner, the top Democrat on the Senate Intelligence Committee, spoke to some of the great work that Congress has been doing in this space. He mentioned his CHIPS Bill, which he said would allow “America real skin in the game” in the semiconductor sector, by increasing federal incentives to stimulate advanced chip manufacturing. He specifically mentioned plans to increase investment in factories for companies such as TSMC, in order to bring their production onshore. “America’s innovation in semiconductors undergirds our entire innovation economy,” Senator Warner said upon the bill’s introduction last year. He also emphasized the need for “multilateral engagement with our allies” to strengthen security around global supply chains.

Bryan Clark built on this point by noting that by bringing part of the semiconductor supply chain back to the US, we can create value for both economic and national security.

As China Tech Threat has previously stated, without real action the US stands to fall behind China on a variety of key technological issues. Yesterday’s panel was a great discussion to illuminate some of the work that has already been done, as well as the large steps that still need to be taken to combat this growing threat.