The U.S. semiconductor industry’s supply chains face significant vulnerabilities, according to a report issued by the White House and informed by use of the Commerce Department’s SCALE supply chain risk assessment tool that debuted last year.
In its nearly 350-page inaugural Quadrennial Supply Chain Review conducted by using the Commerce Department’s SCALE tool – which was released in September and uses 41 different sensors to detect vulnerabilities in supply chains across industries – the White House said that the semiconductor industry must invest in domestic and allied capabilities to secure critical technology supply chains reliant on mature-node chips which are used in defense, communications, and medical devices.
Currently, vulnerabilities faced by the industry can be attributed to limited fabrication capacity at advanced technology nodes, dependence on adversarial nations for critical supply chain components – like wafer production – and the rapid expansion of China’s legacy chip production capacity.
“To remain resilient, U.S. supply chains for critical technologies that use mature-node chips … will require continued investment domestically and in allied countries that may be undermined by other countries’ nonmarket policies and practices,” said the White House. “The U.S. Government must continue to address the lack of transparency in the supply chain and continue to assess and ultimately leverage its trade and supply chain analysis tools to prevent risks associated with the geographic overconcentration of production.”
SCALE found that fiber optic cable manufacturing shows low levels of resiliency and high vulnerability to industrial strategy, making it highly susceptible to market fluctuations. It also identified low sustainability for printed circuit boards – meaning that few, if any, alternatives are available if the supply chain is disrupted.
Wafer manufacturing is somewhat at risk for dependence on foreign adversaries, and at a significant risk in its resilience while fabrication equipment for both adversary dependence and resilience is at high risk, the report details.
Other industries that face significant vulnerabilities, according to the report, include information and communications technology, pharmaceuticals, electric vehicles, aerospace manufacturing, and the defense industrial base. Reliance on foreign suppliers – particularly on China – for critical materials and components is a major vulnerability that could compromise national security and increase the likelihood of supply chain disruptions, the report notes.
The Federal government can support advanced manufacturing by developing a skilled workforce, implementing technology-agnostic policies, enhancing supply chain visibility and resilience through advanced tools, fostering innovation in open networks, and promoting cybersecurity in technology and software, the report says.
Increasing domestic production capacity can also improve industries’ exposure to risk, the report says. It also calls for enhancing supply chain transparency, promoting the adoption of advanced manufacturing technologies, and creating a comprehensive and coordinated approach to strengthening supply chain resilience.
“This review underscores our commitment to partnering with industry to proactively address supply chain challenges, develop innovative solutions, mitigate future disruptions, and bring back American manufacturing,” said U.S. Secretary of Commerce Gina Raimondo in a statement. “By working together, we are bolstering economic and national security and building supply chains that can meet the demands of tomorrow—particularly in critical sectors like information and communications technology and semiconductors.”
