Clear Demand Signal Needed for CHIPS Success

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In July, the National Defense Industrial Association’s (NDIA) Electronics Division released a white paper titled "Clear Demand Signal Needed for CHIPS Success."

The paper highlights the importance of the CHIPS and Science Act’s $52 billion investment in revitalizing secure domestic semiconductor production, but also raises the alarm that the Act mainly addresses supply challenges and has not established mechanisms to ensure ongoing demand for U.S.-based microelectronics production.

According to the paper, to ensure long-term viability, market preferences need to be established for microelectronics to be produced domestically, particularly in the areas of defense, energy, healthcare, and transportation. Currently, costs are often higher from domestic sources compared to foreign suppliers.

The paper also calls for multi-tiered microelectronics assurance standards to be developed in collaboration with the government and industry, to define varying levels of supply chain security based on application. These standards would guide procurement decisions and reward the use of secure domestic sources.

NDIA suggests a multi-phase plan to create an industry-government group for developing and certifying assurance standards, which would be used in U.S. government policy for critical infrastructure. Without this, the paper notes, CHIPS investments are at risk of being undercut by low-priced, less secure imports, which would undermine U.S. economic and national security.