If you are one of the Americans on a waiting list to get a new car due to a shortage of semiconductors, you understand firsthand how this tiny component has taken on an outsized role for global economic and national security policymakers.

The importance of protecting the semiconductor supply chain is why we wrote a paper for the Center of the Study of the Presidency and Congress (CSPC) titled: The Race for Semiconductor Supremacy: China Versus an Emerging Democratic Technology Alliance.

Leading nations of the world, including the United States, have identified semiconductor integrated circuits, or “chips,” as a critical national security commodity and are undertaking key actions to secure their own supply chains. The CSPC paper offers our analysis of this critical sector and shares recommendations on how an emerging democratic technology alliance can push back on China’s predatory economics, ultimately protecting U.S. and allied economic and national security interests.

China via the Chinese Communist Party (CCP) is marching down a state-directed effort to dominate critical technologies including semiconductors through its “Made in China 2025” policy and scores of other central plans, including its National Integrated Circuit Plan. Some reports indicate that China will be the world’s largest chip maker by 2030. And unlike in the United States, there is little if any separation between industry and government in China. This civil-military fusion is undergirded by law, including the 2017 National Intelligence Law of the People’s Republic. As American Enterprise Institute Senior Fellow Klon Kitchen wrote: “you cannot do business in China without totally capitulation to the CCP — by law.”

Given this, as we begin a new year, we offer the five key recommendations below on what Washington can do to avoid reliance on China for this critical national security commodity found in everything from the phone in your pocket to the most complex military weapons systems.

1. Add YMTC and CXMT to the Entity List. Yangtze Memory Technologies Co. (YMTC) and ChangXin Memory Technologies (CXMT), which have ties to the Chinese Communist Party leadership, should be added to the U.S. Department of Commerce’s trade blacklist. Similarly, China’s Manufacturing International Corporation (SMIC) was previously added to the entity list in 2020.
2. Finalize Commerce Department Export Controls, Including on U.S. Toolmakers. The Bureau of Industry and Security should finalize its rulemaking for its export restrictions of foundational technologies to include the listing of high-end semiconductors and semiconductor manufacturing equipment (SME) for state-backed enterprises of adversarial nations like China, Russia, and Venezuela. Applied Materials, Lam Research, and KLA/Teradyne ought to be subject to export controls given YMTC’s reported reliance on them as an SME supplier and CXMT as a “Problematic Chinese Company.” The United States should not provide cutting-edge technology to our adversaries who may use it against us on the battlefield.
3. Multilateral Export Controls/Democratic Technology Alliance. The North Atlantic Treaty Organization, the European Union, Japan, Australia, and New Zealand should continue to collaborate on ways to share critical technologies amongst each other while working on ways to limit its’ members key technologies — including advanced semiconductors and SME — from falling into the hands of adversaries like China, Russia, and North Korea. The Quadrilateral Security Dialogue, made up of the United States, India, Japan and Australia, should build on its supply chain initiative announced last month.
4. Congress Should Fully Fund the CHIPS for America Act. CHIPS for America Act was included in the FY 2021 NDAA and provides for investments and incentives to support U.S. semiconductor manufacturing and research and development efforts. As a first step, $52 billion in incentives was included in the legislation approved by the Senate earlier this year called the United States Innovation and Competition Act (USICA).
5. Congress Should Increase Federal Funding for Basic R&D. Legislation to do this was also included in the USICA. Federal research should also include diagnostics of currently embedded semiconductors to help identify potential anomalies and threats.

We believe the United States and China are in a multi-generational competition for global leadership. To ensure success, reducing America’s dependence on our foremost geopolitical adversary for such a critical national security component now and into the future is essential.