WASHINGTON — The microelectronics industry is at an “inflection point, and the U.S. government must implement policies to entice companies to do more manufacturing within American shores, the Defense Department’s chief weapons buyer said Thursday.

Ellen Lord, the undersecretary of defense for acquisition and sustainment, said on a webinar that her office is taking a look at how to entice companies to bring microelectronic production and testing work back to the United States, where the Defense Department can more easily verify the security and reliability of the hardware.

Microelectronics are the cornerstone to advancing emerging technologies like artificial intelligence, quantum computing and 5G wireless networks, as well as critical components of weapons systems. But the Pentagon is concerned that the current market — where the majority of production and testing takes place outside the United States — allows for adversaries such as China to introduce backdoors that will harm U.S. national security.

“We can no longer identify the pedigree of our microelectronics,” Lord said at the Defense Advanced Research Projects Agency’s Electronics Resurgence Initiative summit. “Therefore we can no longer ensure that backdoors, malicious code or data exfiltration commands aren’t embedded in our code. While we develop the ability to identify the technical path to ensure all components, circuits and systems are clean regardless of their manufacturing location, we need to find a path to domestic sources to provide a secure and resilient supply of legacy, state-of-the-present and state-of-the-art microelectronics.”

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The United States is one of three countries with advanced microelectronics manufacturing capabilities. Increasingly, American microelectronics manufacturers have moved microchip fabrication plants abroad, according to a 2016 report from the Congressional Research Service. To pull the microelectronics manufacturing back within U.S. shores, Lord proposed creating public-private partnerships.

“The U.S. government can provide a demand signal and can also infuse some capital to overcome some of the activation energy, if you will, to get the whole process rolling — of manufacturing, packaging, testing here in the states,” Lord said. “And then we partner with other industrial sectors to sustain that.”

Lord listed several reasons why companies had gone abroad, such as environmental regulations, local and state taxes, and economic pressures such as a wages.

Adam Boehler, the CEO of International Development Finance Corporation, a U.S. government entity that funds development projects, said on the same webinar that his organization will be a “spark” in bringing the industry back by providing loans to get business started again in the United States.

“We don’t want to prop up industries forever,” Boehler said. “That’s not appropriate, that’s not what we do and that doesn’t create sustainability. Sustainability is to me identifying a policy gap, putting together the right tools so that private market can succeed.”

Successfully bringing back and sustaining microelectronics production and testing in the United States will require a “wholistic approach,” Lord said, including the Pentagon providing dollars to graduate schools, colleges and trade schools to develop the future workforce.

“If you take a wholistic approach, I think we can create a sustainable microelectronics industry, but it’s not just about that first plant with some equipment in it,” Lord said. “It’s about the workforce, all the policy nationally to make this attractive.”

About Andrew Eversden

Andrew Eversden covers all things defense technology for C4ISRNET. He previously reported on federal IT and cybersecurity for Federal Times and Fifth Domain, and worked as a congressional reporting fellow for the Texas Tribune. He was also a Washington intern for the Durango Herald. Andrew is a graduate of American University.

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