Last August, Congress passed bipartisan CHIPS and Science Act of 2022, which will strengthen American manufacturing, supply chains, and national security, and invest in research and development, and science and technology to keep the United States the leader in nanotechnology, clean energy, quantum computing, and artificial intelligence. Since then, the State Department has been hard at work devising programs to implement the funds provided in this legislation.
Embedded within the CHIPS Act is the International Technology Security and Innovation (ITSI) fund, which provides the Secretary of State $100 million per year over the next five years to fund programs that bolster global security in key technology sectors. The semiconductor industry is a major focus in the Fund’s priorities in addition to the development and adoption of secure information and communication technologies (ICT). Bureaus from across the Department of State are now pouring ITSI funding into programs that address resiliency and security in ICT and semiconductor supply chains.
Enhancing the Semiconductor Supply Chain
As President Biden said in September 2022, semiconductors are essential to smartphones, the Internet, cars, the electric grid, national security, NASA’s Moon mission and more.
The most important semiconductor product is the computer chip— often described as the brain of a computer. If you’re reading this on a computer or smart phone, then several chips are working simultaneously to process and display your webpage.
Semiconductors can be found at all levels of the economy. Simple consumer goods like calculators require just a single chip, but the newest electric vehicles require thousands. As technology grows more and more complex, our demand for semiconductors will grow along with it.
Semiconductor technology also reaches far beyond the consumer-goods realm. Cutting-edge computer chips are considered “dual-use goods,” meaning they have applications in both civilian and military products. Many of today’s advanced semiconductors are found in modern warfighting technologies and weapons modeling systems.
Yet today’s semiconductor supply chain is fragile. The industry has clustered around a small number of chip foundries within just a few countries. Supply chain fragility is more problematic for the most advanced chips; in some cases, singular companies are the only ones that can fabricate the most advanced semiconductors or manufacture the machines that can make them.
Semiconductors are both crucial to the international economy and difficult to produce. Building resiliency into the supply chain is crucial to global economic security. The $500 million provided in the ITSI Fund will fund projects dedicated to working with international partners and allies in this collective effort.
“Promote” and “Protect”
Broadly speaking, the projects the Department is developing under ITSI Fund advance two key goals: “promoting” the resilient global production of semiconductors, and “protecting” advanced semiconductor technologies against illicit acquisition by strategic adversaries. “Promote” and “protect” projects are inherently interconnected. To be resilient to shocks, the semiconductor supply chain needs to expand out from the current, limited number of producers. At the same time we need guard rails to safeguard these technologies to make sure strategic adversaries acting in bad faith cannot illicitly acquire these technologies. Simply put, “promote” and “protect” projects must move in parallel to ensure responsible growth.
To tackle this issue, the State Department has made national security an ITSI Fund priority. Tens of millions of dollars per year will support semiconductor “protect” lines of effort. As the supply chain diversifies, the State Department’s Bureau of International Security and Nonproliferation (ISN) is implementing “protect” programs that curb the illicit acquisition of powerful emerging technologies.
Semiconductor “Protect” Efforts
ISN is spearheading the effort to coordinate ITSI funding to protect the semiconductor supply chain. These efforts can be grouped in two broad categories: strengthening export control coordination and international capacity building. Both lines of work will rely on international coordination with U.S. allies and partners. The Bureau plans to use ITSI funds to support capacity-building projects that ensure partner countries have the necessary measures in place to safeguard leading-edge chips and technology from diversion and misuse. Key among these projects are efforts to improve policy coordination amongst allies and partners to reduce the risk of the diversion and misuse of advanced chips and emerging technologies.
Leading the Way on Semiconductor Security
ISN will act as the key partner on all ITSI Fund semiconductor “protect” project proposals going forward. The passage of the CHIPS Act gave the opportunity for the State Department to implement $500 million over the next five years to enhance international security and resilience in key technology sectors. Cutting-edge semiconductors are powerful dual-use goods, and the protection of these advanced chips from illicit acquisition is a critical task. The Bureau of International Security and Nonproliferation is leading the way forward on this issue.
Matthew Schleich is an intern in the Office of the Under Secretary for Arms Control and International Security.