Strategic Thinking and China Chips

Changes in China’s military posture profoundly influence the global semiconductors market.

“China is particularly focused on dominating a range of emerging, dual-use technologies that promise to be both disruptive and foundational for future economies,” read the Military and Security Developments Involving the People’s Republic of China, a 2023 Department of Defense document for Congress.

Although experts assess Beijing’s efforts, the civil-military integration and the country’s lack of transparency impair full understanding of the figures supporting the country’s attempts to catch up with the West.

“China is investing heavily to produce advanced chips that can power weapons systems that could threaten the U.S. and its allies and partners, as well as technoauthoritarian surveillance that violates human rights,” wrote Saif Khan and Carrick Flynn, for the Brookings Institution, a Washington, D.C.-based think tank.

Still, if the United States beats its partners and allies in securing the investments necessary to build chip factories, or fabs, employment in the nation’s defense is still far from guaranteed.

“The U.S. military has a vested interest in some of this program working in order to get chips that they feel are secure for military systems and so on. We don’t know whether that will meet the threshold that they need. This all just has to be built in order to figure out, so that’s kind of one point we’re in,” said Vishnu Kannan, a former advisor to the president of the Carnegie Endowment and semiconductor industry researcher.

On a smaller scale, other players are involved in semiconductor manufacturing for military use.

Draper, a nonprofit researcher, is already working toward securing military grade semiconductors in the country.

“Right now, they talk about defense-specific parts being less than 1% of microelectronic demand,” said Geremy Freifeld, technology portfolio leader and laboratory fellow at Draper.

Part of this funding comes from the $1.6 billion earmarked for research.

Microelectronic Commons is a national network of prototyping and innovation hubs funded by the CHIPS Act. It is aimed at reducing U.S. reliance on foreign microelectronics by accelerating domestic prototyping, expanding semiconductor talent and transitioning new technologies to U.S. manufacturers, according to its website.

“If the CHIPS Act stays purely about silicon, we’re gonna miss a big portion of what gives us a competitive advantage, which is the high-performance semiconductors, the three to five semiconductors: the nitrides, all of those, I think are a critical component of systems,” said John Dallesasse, associate dean at the Grainger College of Engineering.

The University of Illinois is affiliated with the Microelectronic Commons and receives funding for their research from CHIPS Act appropriations.

“Seeing at least some emphasis on that is encouraging; we need to make sure that we don’t miss that as a whole, I mean, as we focus on building capacity,” Dallesasse explained.

In the meantime, China tries to delay the effects of serious trade restrictions on technology by stockpiling cutting-edge chips before the embargo enters full effect. In the meantime, U.S. officials continue to plan the next steps to delay Beijing’s rise of military AI in the country.