When it comes to semiconductors, the U.S. government has focused almost exclusively on restricting China’s ability to produce advanced chips, while ignoring legacy chips. Recognizing the American retreat, SMIC, China’s top manufacturer, is spending billions to conquer the legacy chip market, and is likely benefitting from Chinese government subsidies.
The national security and economic consequences of a Chinese-dominated legacy chip space would be profound:
- The U.S. would potentially be dependent on China for chips essential to various military technologies and critical infrastructure.
Former U.S. National Security Adviser Robert O’Brien has sounded the alarm on the dangers of Chinese chips in U.S. national security systems, writing: “The idea that “made in China” chips are embedded in U.S. defense and intelligence systems, national critical infrastructure, and government networks is both absurd and, unfortunately, our reality. A single compromised chip in the right place can provide our adversaries with unfettered access to critical platforms.”
Should the U.S. military enter into conflict with China in the future, then any supply of chips from China used in the manufacture of American military hardware would almost certainly grind to a halt. American warfighters should not be at the mercy of their adversaries for the technologies they need to fight and win.
- The world would be re-exposed to supply chain vulnerabilities associated with China-based chip production.
During the pandemic, the world economy suffered mightily, supply chains were in chaos, and inflation skyrocketed as exports from China – including components for semiconductors – slowed to a trickle. Those days gave the world an idea of the pain that could occur in a repeat scenario caused by another pandemic – or geopolitical developments involving China. From Australia, to Lithuania, to the United States, the Chinese government has already demonstrated that it will punish its trade partners for political stances that do not toe Beijing’s party line. Ceding the global legacy chip market to China would give it a powerful economic tool to weaponize against the world.
- The Chinese Communist Party would have more new conduits for spying on, hacking, and stealing from targets in the West.
The dawning “Internet of Things” era will present massive challenges in stopping the Chinese surveillance state. A world in which Chinese legacy chips are ubiquitous in 5G connected devices gives Beijing virtually unlimited conduits through which it can hack, steal from, and spy on Americans.
Tomorrow CTT will post a follow-up blog detailing the solutions policymakers can implement to address these threats. In the meantime, visit EveryChipMatters.com to learn more.