WASHINGTON — With China sinking money into emerging technology, the U.S. government and its tech businesses need a new approach to stay ahead on artificial intelligence, microelectronics and other key military innovations, former Google CEO Eric Schmidt said.

While a free-market country isn’t going to underwrite technology development like China does, the U.S. needs a more assertive role, he said Thursday at a conference. And U.S. companies can’t keep pace with Chinese innovation on their own. Instead, he proposed a government-industry alliance to keep the country’s technical edge.

“Keeping things exactly the same however is not going to work. It’s not a winning strategy because large tech firms cannot be expected to compete with the resources of China or make a big nationwide investment in the United States,” said Schmidt, a chair of the National Security Commission on Artificial Intelligence. “We need some help. We need a hybrid approach that more aligns government and industry to win.”

For example, the U.S. could follow the AI commission’s recommendation to incentivize domestic manufacturing of microelectronics through refundable tax credits for investment and boost micro-systems research and development by $12 billion over the next five years, Schmidt said.

Leaders fear that China could threaten national security if the U.S. doesn’t increase investment in newer technologies. Schmidt argued that government is responsible for driving research and development priorities.

“[In] the changing landscape, government must take a hands-on approach to national technology competitiveness, promoting a diverse and resilient research and development ecosystem and commercial sector in a government responsibility,” Schmidt said Thursday at National Defense Industrial Association’s National Security Artificial Intelligence Conference. “No private sector company, no matter how successful, can really pull that off.”

Schmidt identified priority technologies that will define this century: artificial intelligence, 5G networks, biotechnology, quantum computing and microelectronics. The U.S must “strive for self-reliance in these industries,” he said.

The most critical is microelectronics because they underpin AI, quantum and 5G advances, Schmidt said.

The recent report from the National Security Commission on Artificial Intelligence said the U.S. needs to stay two generations ahead of China on microelectronics. But a significant problem the U.S. faces is that much of the microelectronics factories are in Asia, raising supply chain security concerns.

The government has to correct for any market failures that have led to underinvestment in some of these areas, he said. Government funding also has the power to focus researchers on a particular topic.

“In other areas, seizing a market opportunity may only be possible if the federal government does a focusing effort where it focuses the private sector and academia on a specific goal,” Schmidt said.

Earlier in the conference, lawmakers and the director of the Defense Innovation Unit echoed Schmidt’s comments and called for a boost in federal funding for basic research. Michael Brown, head of DIU, said that broad federal funding has immense benefits.

“I think one of the advantages of federally funded R&D is you get a longer-term time horizon and some willingness to take risk,” Brown said.

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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