Securing the Microelectronics Supply Chain

Four Policy Issues for the U.S. Department of Defense to Consider

by Jared Mondschein, Jonathan W. Welburn, Daniel Gonzales

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The ever-tightening financial constraints of semiconductor manufacturing have led to the business reality faced by U.S. consumers and leaders in 2021: The U.S. market share of global semiconductor manufacturing capacity has fallen from about 38 percent in 1990 to 12 percent in 2020 and is expected to decline to less than 10 percent by 2030. The growing realization of these economic trends and their implications for U.S. national and economic security has resulted in a national conversation and a growing chorus of academic, industry, and government stakeholders arguing for varying policy solutions. Out of this dialogue have emerged critical knowledge gaps that will hamper decisionmakers' ability to make informed policy. The authors have identified high-priority questions that should drive U.S. policy but that require additional data and insights, and they explore these questions in this Perspective.

Specifically, the authors analyze how the U.S. Department of Defense (DoD) could create a coordinated effort to mitigate microelectronics supply chain risk. They explore DoD's demand for microelectronics and reasons why supply chain risk management strategies are necessary to mitigate microelectronics supply chain disruptions. They also consider the appropriate mix of policy levers to promote a microelectronics technology ecosystem that is aligned with U.S. strategic goals. This Perspective is an initial attempt to explore these policy drivers and motivate future analyses.

This research was sponsored by the Office of the Secretary of Defense and conducted within the Acquisition and Technology Policy Center of the RAND National Security Research Divisionn (NSRD).

This publication is part of the RAND Corporation Perspective series. RAND Perspectives present expert insights on timely policy issues. All RAND Perspectives undergo peer review to ensure high standards for quality and objectivity.

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