While the shortage of semiconductors has garnered intense attention lately, other risks and potential disruptions are lurking in the U.S. defense electronics supply chain. These include a dangerous reliance on foreign sources for key raw materials and components; a growing gap between the U.S. and other nations when it comes to manufacturing capabilities; and a chronic shortage of skilled workers.
Rather than wait for these problems to become acute crises, the U.S. government should take steps now to identify and deal with them. Efforts to fix these problems will require much less capital than solving the semiconductor shortage, yet they are essential to ensuring U.S. defense readiness and supply chain resiliency.
The electronics supply chain starts with the raw materials needed to make and assemble a printed circuit board, or PCB, and the many components mounted on that board. The materials range from specialized metals, plastics and glasses to resins and films. The components include resistors, capacitors, inductors, interconnects, memory, integrated circuits and more. All these items must come together in the right time and place — and in the right quantity and quality — to ensure that electronics-based systems work perfectly for years to come. And many are difficult or impossible to source from U.S. suppliers.
But since PCB manufacturers are often buried deep in the electronics supply chain, U.S. government agencies have very little visibility into where the raw materials originate and what risks they may entail.
Electronic components pose similar challenges. There are thousands of different types of connectors, and many of them cannot be bought in the U.S. This makes the Department of Defense reliant on foreign sources, including China. Capacitors also can be difficult to source in the U.S., which is one of the reasons they are the second-most counterfeited electronic component.
While the cost of these materials and components may be a tiny portion of the assembled electronic systems, any constraints or compromises in the supply chain can halt deliveries and undermine trust in entire systems. These kinks may be costly and stressful for manufacturers and U.S. government customers, but they could be deadly in the field.
There are still many U.S. companies and organizations that could ramp up their output of these items with modest government investment. The government funding could take the form of a Defense Production Act Title III program to support industry modernization, or other types of federal subsidies, low- or no-interest loans, or tax incentives, including an extension of the bonus depreciation tax credit expiring in 2023.
Beyond funding, what U.S. companies need most is a clear policy direction and a commitment to more government orders from trusted suppliers.
Another problem in the defense electronics supply chain is the growing gap in advanced manufacturing capabilities. For example, as more and more computing power is packaged into smaller and smaller form factors, it is becoming more important for the “traces and spaces” on circuit boards to be tinier as well, while maintaining flawless reliability.
U.S. manufacturers generally use “subtractive” technology (i.e., masking and etching) to produce PCBs with metallic traces and spaces that are just 75 microns wide. But leading Asian and European manufacturers are using “additive” technology (i.e., similar to 3D printing) to produce traces of just 30 microns, and they’re aiming to reach just 7-15 microns within a few years.
Industry experts believe the United States is lagging at least 10 years behind other nations in developing and adopting these advanced electronics packaging capabilities. Manufacturers with thin profit margins cannot afford the research and development costs, and federal R&D funding is woefully insufficient. The R&D gap increases the likelihood of a future in which U.S.-produced chips and bare boards are shipped to other countries for packaging into advanced PCBs, and then those modules are shipped to third countries for final assembly into products. This is not the future sought by anyone who wants to rebuild the U.S. defense-industrial base.
Likewise, despite decades of talking about the skilled workforce challenge, the United States has yet to create a policy framework that aligns state and local educational offerings with industry needs. The DoD-sponsored and Purdue University-led Scalable Asymmetric Lifecycle Engagement Microelectronics Workforce Development Program is geared toward increasing the number of engineering graduates for defense technology work. But equally needed are public-private programs to train more technicians and operators for well-paying jobs that don’t require college degrees. Industry groups like IPC and SMTA have developed such programs based on input from employers, but government recognition and support could turbocharge their performance.
In an oft-told story, the French general, Hubert Lyautey, once asked his gardener to plant a tree. The gardener objected that the tree was slow growing and would not reach maturity for 100 years. “In that case,” the marshal replied, “there is no time to lose. Plant it this afternoon.”
Likewise, America’s dependence on other nations for many of the most crucial links in the defense electronics supply chain is a long-term problem that requires industry-government collaboration now on an unprecedented scale. If the DoD truly wants to rebuild that supply chain, it will require immediate and sustained attention to the entire length of that chain, not just a few links.
Chris Peters is executive director at the U.S. Partnership for Assured Electronics.