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July 11, 2022

The 2022 NDAA makes microelectronics supply chain a priority

The bill also aims to provide defense bodies with greater ability to adapt to shortfalls as and when they emerge.

By GlobalData

The National Defense Authorization Act (NDAA) is the official legislation that specifies the budget of the Department of Defense, The proposed 2023 NDAA, released in June, sets out funding plans that would address a number of supply chain problems. This funding will authorize the use of $1 billion for the acquisition of strategic and critical materials to address supply chain resilience, as well as enhancing the power of the National Defense Stockpile Manger to acquire these materials to address ongoing needs.

The bill also aims to provide defense bodies with greater ability to adapt to shortfalls as and when they emerge, with the $1 billion fund allocation key to this. This funding indicates that whilst the NDAA is clear about what shortfalls exist now, it anticipates new supply chain issues to emerge in the future and is preparing the US to address these problems as they emerge.

Whilst COVID-19 exposed cracks in the US’ supply chain, the conflict in Ukraine has demonstrated quite how fast active conflict can deplete a nations weapon reserves and leave defense primes scrambling to increase — or in some cases resume – production. The National Defense Authorization Act (NDAA) allocates funding for increased understanding of critical materials shortfalls, and highlights the US government view on rare earth elements and Microelectronics as a likely area of future supply chain weakness and a vital area of increased production. This increased funding will enable the Pentagon to act more quickly and effectively in identifying and addressing future supply chain problems as well as fixing existing problems.

Microelectronics are listed as a key area with proposals including the establishment of regional development hubs. The government is also seeking to address ongoing problems with parts including cables and connectors which have affected the supply chain for departments including the Space Development Agency (SDA). The Pentagon seeks to significantly strengthen the microeconomics industrial base, making them less reliant on imports and partner nations for the technology, in particular for microchips which are mostly produced in Taiwan and South Korea – and are critical for numerous systems utilized by the US military.

The Pentagon has gone out of their way to indicate that ensuring supply chain strength for key technologies is significant for ensuring technology advantages over adversaries. The US military is heavily reliant on microchips and other microelectronics systems. The US’s desire to be the most technologically advanced military will further stress manufacturers as all but a few systems are free from advanced electronics. In this bill The Pentagon clearly indicates that ensuring supply chain strength for key technologies is significant for ensuring technology advantages over adversaries.

Guided-missiles, like the type the US is donating to Ukraine in large quantities (such as Stingers and Javelins), rely on microchips and are likely to run into ongoing production delays due to shortages of key components. The US has provided over 6000 Javelins to Ukraine, the Centre for Strategic and International Studies (CIS) estimated that this could be a third of US Javelin reserves, further stating that it would take up to four years to replenish these reserves. More recent single use systems such as Loitering Munitions are also reliant on microelectronics and will need to compete against more established systems in the eye of defense planners to which systems get the priority in supply.

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