Semiconductors are critical for modern weapons. The Lockheed Martin [LMT] F-35 has more than 3,000 computer chips, while the company’s CH-53K helicopter for the U.S. Marine Corps has more than 2,000, and the Javelin anti-tank missile has more than 250.

U.S. policy makers, DoD, and U.S. industry officials hope that the CHIPS and Science Act, signed into law by President Biden on Aug. 9, will be a building block to reshoring the semiconductor supply chain, including packaging and testing. The U.S. has the lead in the design of semiconductors, but builds just 12 percent and packages and tests even less. In addition, artificial intelligence (AI) relies on semiconductors smaller than 14 nanometers (nm), and just two companies–South Korea’s Samsung Electronics and Taiwan-based Taiwan Semiconductor Manufacturing Company (TSMC)–have built chips below 10 nm. TSMC has finished construction of a $12 billion chip plant–or “fab”–in Arizona.

“Unfortunately, we produce zero percent of these advanced chips now,” Biden said in a CHIPS and Science Act signing ceremony at the White House on Aug. 9. Lockheed Martin CEO Jim Taiclet was one of the attendees, along with Intel Corp.‘s [INTC] and HP, Inc.‘s [HPQ] CEOs.

The $280 billion act includes $52.7 billion to bolster domestic semiconductor manufacturing capacity and $200 billion for science and technology efforts to beat Chinese competition (Defense Daily, July 28). Section 103 of the law prohibits “the recipients of federal [semiconductor] incentive funds from expanding or building new manufacturing capacity for certain advanced semiconductors in specific countries that present a national security threat to the United States.”

“To ensure that these restrictions remain current with the status of semiconductor technology and with U.S. export control regulations, the Secretary of Commerce, in coordination with the Secretary of Defense and the Director of National Intelligence, would be required to regularly reconsider, with industry input, which technologies are subject to this prohibition,” per the new law.

Of the $52.7 billion in the CHIPS portion, $39 billion is to expand and improve domestic semiconductor manufacturing capacity, covering $19 billion in fiscal year 2022 of which $2 billion would go toward legacy chip production, followed by $5 billion annually from FY ‘23 to ‘26.

The bill also includes $2 billion for chip production related to DoD-unique requirements, $11 billion for microelectronics research and development and steps to bolster the workforce and a 25 percent investment tax credit covering manufacturing of semiconductors and associated equipment in the U.S.

“Taiwanese semiconductor firms make the chips used in our military’s Joint Strike Fighter, the F–35, artificial intelligence, and other military grade devices,” Sen. John Cornyn (R-Texas) said in a Senate floor speech on July 21.

Cornyn said that the near-term threat China poses to Taiwanese sovereignty makes U.S. reshoring of its semiconductor supply urgent.

Chinese President Xi Jinping “has made no secret of his desire to unify Taiwan with the mainland, saying he wants to be ready to do that by 2027, just five years from now,” Cornyn said. “But, as we have learned from Putin’s invasion of Ukraine, when one person makes a decision, you can’t depend on any particular timeline because it could happen in the blink of an eye. It is tough to overestimate the impact this lack of access to these advanced semiconductors would have on the United States and our allies. To be sure, our cars, televisions, refrigerators, and washing machines would be impacted, but that is only the beginning. Those would be mere inconveniences. How would we manufacture Javelin missiles that are used in Ukraine? Well, we couldn’t because they all run on semiconductors.”

Through the Defense Microelectronics Activity’s (DMEA) Trusted Foundry Program, which certifies U.S.-based computer chip suppliers for varying levels of secure access. DoD has had partnerships with IBM [IBM] and GlobalFoundries, Inc. [GFS], which bought IBM’s chip business in 2014, to build semiconductors domestically. In May, 2020, Mark Lewis, the Pentagon’s then director of defense research and engineering for modernization, said that the Trusted Foundry model has “failed from a business standpoint,” and must change its approach to take advantage of commercially available technology (Defense Daily, May 19 2020).

A RAND study earlier this year advocates that DoD undertake supply chain risk management to minimize supply chain disruptions.

“DoD has a complex demand for microelectronics,” the report said. “In certain use cases, access to the latest generation, state-of-the-art microelectronics technologies confers tactical and operational advantage over competitors. Applications that require significant speed at minimal energy inputs, such as artificial intelligence, require integration with state-of-the-art microelectronics. However, DoD requires a diverse array of microelectronics technologies that includes node sizes that can be readily manufactured by less advanced facilities located within the United States and obsolete components that must be manufactured by DoD to ensure access. Regardless of manufacturing location or process, DoD aims to ensure secure access to domestic manufacturers via a supplier certification program managed by the Defense Microelectronics Activity.”

Last year, Heidi Shyu, the under secretary of defense for research and engineering, said that her plan for microelectronics would take a new approach to the Trusted Foundry model by having DoD leverage the latest commercial chip designs while working with industry to ensure that the DoD chips are secure (Defense Daily, Dec. 6, 2021).

“We’re moving forward really rapidly…both in physical world technologies like hypersonics, really advanced space sensors, stealth aircraft like the F-35, et cetera, but we’re also inserting what we call 21st century digital technologies into the system as well–things like 5G, AI, distributed cloud computing,” Taiclet told Biden during the latter’s virtual meeting on July 25 with industry and government officials, including Deputy Defense Secretary Kathleen Hicks, to discuss the CHIPS legislation.

“We need the latest in sub-10 nanometer chips, and we need them to be trustworthy to be able to introduce those kinds of capabilities,” Taiclet said. “So we’ve got a lot of emphasis and a lot of importance on those latest technology chips because they are the building blocks of those defense systems of the future.”