At DefenseOne Maseh Zarif and Mark Montgomery take note of a proposed expansion of Section 889 of the National Defense Authorization Act, summarizing one of the provisions tartly:
you can do business with the federal government or you can have a significant dependence on Chinese chips, but you cannot do both
and another nearly as much so:
The first element will prevent the federal government from purchasing and using goods that contain Chinese chips made by Semiconductor Manufacturing International Corporation, or SMIC; ChangXin Memory Technologies; or Yangtze Memory Technologies Corp., or YMTC. Given the evolving nature of China’s semiconductor industry and its proclivity to “re-imagine†named entities and provide them with new names, the provision also includes “any subsidiary, affiliate, or successor†of these companies.
That’s something relatively few Americans recognize. While there may be dozens or even hundreds or thousands of brands, there are certainly far fewer distinct providers than brands.
Three observations. First, this seems like a good but long overdue start to me. It cannot be overemphasized. If our defense supply lines are dependent on a single country other than the U. S. it creates a bottleneck, a vulnerability, a potential point of attack. That doesn’t just apply to China. It applies to Germany. Or Israel. It’s simply too great a risk.
The second observation is that I wonder how they plan to enforce it? Take the vendors’ word for it?
The third should be clear from the second observation. While necessary I suspect that ensuring that our defense supply chains don’t run through China will be far harder and take far longer than they realize.
The overt, in-your-face attempts by the US to cripple the Chinese economy will not have a happy ending. It didn’t 80 some years ago with Japan.
About one-sixth of all Chinese exports go to the US, and that amounts to 3 or 4 % of the Chinese GDP. (Maybe, financial data in dollars is suspect.) Losing exports to the US would be painful, equivalent to a severe, long-term recession, but hardly catastrophic. And it will not stop China’s ascendancy to world hegemony. The US Ruling Caste doesn’t know it, but the US has lost its economic war on China (and Russia, too). Hopefully, they will not try a hot war, although our extremely provocative posture on Taiwan is headed in that direction.
PS. In the meeting between Biden and Xi in Bali, Biden is supposed to have promised that the US does not seek Taiwan independence, and still excepts the One China policy of the Nixon administration. Whether Biden can speak for the neocons, who are patently trying to overturn the One China policy, and who seek Taiwan independence, remains to be seen. Trump couldn’t control his administration, not even his close aides. Biden seems even weaker.
On semiconductors; the sexy news is the US government attempt to strangle the Chinese semiconductor industry; of which this defense procurement ban is part of.
But I think the more ominous news is the industry may have a oversupply issue. Don’t laugh, from a shortage that spurred Congressional subsidies; less then 6 months later it looks like there’s a big excess capacity building up. Micron has already announced multiple cutbacks in capacity; it could take years to fix.
Difficult and expensive. Current domestic sourcing requirements are already a non-trivial reason for the high cost of defense-related equipment.