Over the course of the past 70 years, the U.S. government's microelectronics needs for national security applications and the semiconductor industry have been intimately entwined.
Beginning with radar and data processing, microelectronics has underpinned every military and national security system, from strategic command to field communications, transportation, weapon systems and platforms. It is not an exaggeration to say that national security depends on these tiny devices.
Since the invention in 1954 of the first commercial silicon transistor, industry efforts have been focused on increasing transistor density and lowering cost, the essence of Moore's Law. Commercial products also have tended to have shorter and shorter lifecycles.
In contrast the Defense Department requires advanced, highly customized state-of-the-art digital components for its systems, which are in use for many years more than commercial products. Warfare has changed dramatically over the years because of the capabilities cutting-edge microelectronics enable.
Indeed, the U.S. semiconductor industry in part grew out of government funded research and development. In recent decades, however, commercial applications and high-volume production have dwarfed government demand. In fact, government purchases--be it direct or through a third party--now account for a very small part of total production. The result is that commercial market forces drive the industry.
As noted by the most recent President's Council of Advisors on Science and Technology report: "The global semiconductor market has never been a completely free market: it is founded on science that historically has been driven, in substantial part, by government and academia; segments of it are restricted in various ways as a result of national-security and defense imperatives; and it is frequently the focus of national industrial policies. Market forces play a central and critical role. But any presumption by U.S. policymakers that existing market forces alone will yield optimal outcomes--particularly when faced with substantial industrial policies from other countries--is unwarranted."
National Defense Industrial Association members are dedicated to maintaining the technical superiority of U.S. defense and national security systems. The ability of US. corporations and government agencies to acquire advanced semiconductor devices is being severely undermined by the systemic changes in the semiconductor industry, which is now driven by commercial demands for consumer products, coupled with producer consolidation caused by profitability concerns.
Not only do potential adversaries now have access to the most modern technology, in some cases they have become the major suppliers of the very technology we have come to rely on to establish technological superiority. The question becomes, "Who can the military trust?" And if it can't trust the international producers of microelectronics, how does it mitigate the risk of using their products in highly sensitive national security systems?
The demand for consumer and business electronics skyrocketed with advances in consumer technology. Global sales reached $339 billion in 2016, according to the Semiconductor Industry Association. Demand for smaller and less expensive devices powers this growth, driven by consumer demand for smart-phones, tablets and the like. Indeed, the volume of smartphone shipments has risen exponentially since their initial introduction.
At the end of the 20th century the market for personal computers dominated demand for integrated circuits. This has begun to flatten as demand migrates to other devices, including those that are part...