Tilt! US Security, Industry Dangerously Dependent on Foreign Sources for Critical Electronic Components

(Washington, D.C.): A distressing little secret about U.S. national security and technological competitiveness awaits the Clinton Administration: The United States is dangerously dependent on foreign sources for key components critical to advanced electronics, computers, communications — and, therefore, virtually every modern weapon system in the inventory. Unfortunately, this is not the only area in which such dependence exists — but it is a particularly shocking and potentially strategically significant one.

Ceramic Packages

The components in question are called "ceramic packages," devices that serve to connect integrated circuits (ICs or, in layman’s parlance, "chips") to computer boards or substrates. These packages are, in short, what makes the chips usable. Importantly, the absence of a secure indigenous source of supply for such packages seriously erodes the value of the self-sufficiency this nation constantly strives to maintain in the field of design and manufacture of sophisticated ICs.

Worse yet, under such circumstances, the viability of weapon systems that utilize foreign-produced ceramic packages becomes questionable at best should the foreign supply be interrupted. Conceivably, such inordinate dependence upon a supplier nation could even translate into granting foreign powers de facto veto rights over U.S. defense policies and initiatives.

Japanese Veto on Critical American Capability

Incredible though it may seem, the United States may be in just that position today since the Department of Defense is estimated currently to rely upon Japanese sources for 95-98% of its supply of ceramic packages. Virtually every front-line U.S. weapon — from the M-1 main battle tank to the F-14, -16, -18 and -22 fighter aircraft to the AEGIS cruiser and Trident submarine — is critically dependent upon foreign-manufactured ceramic packages for its guidance, sensors, command and control or other essential subsystems.

While the general public is blissfully ignorant of this reality, such an astounding degree of U.S. dependency has been well-documented and is widely known in official circles. At least two different studies performed by the General Accounting Office in January and September of 1991 and an analysis by the Commerce Department’s Office of Industrial Resource Administration in March 1992 have established that there is an alarming degree of American dependence on Japan for ceramic packaging materials.

Furthermore, the GAO noted in a report submitted a year ago to the man picked by President-elect Clinton to be his Treasury Secretary, Sen. Lloyd Bentsen (D-TX), that concerns about the reliability of foreign sources were well-founded: "The items most frequently mentioned [by government and industry sources] as being difficult to obtain from Japanese suppliers included semiconductor…packaging materials…"

Not A Hypothetical Problem — Lessons from the Gulf War

That such difficulties with overseas suppliers have extended to vital military subsystems — with potentially deleterious consequences for U.S. national security — has recently been documented in an important new book by Martin and Susan Tolchin entitled, Selling Our Security, the Erosion of America’s Assets. The Tolchins recount how, during the Persian Gulf War, American officials were obliged to "beg" their counterparts in Tokyo for help in securing spare parts and replacement components no longer manufactured by American companies. Without such cooperation, weaponry vital to the war effort could have become unsustainable.

Protect Vital U.S. Equities

If that experience were not sufficiently alarming to prompt the national security community to redress critical foreign dependencies in such areas as ceramic packaging, perhaps an initiative by one of the few remaining domestic manufacturers of these electronic components will rouse the U.S. government to action. On 10 November 1992, the Coors Electronic Packaging Company filed what is called a Section 232 petition with the Department of Commerce. This action has triggered an inter-agency review of the condition of the U.S. ceramic packaging industrial base and the degree to which the defense sector is dependent on foreign suppliers of ceramic packages.

A finding that such dependence threatens to impair U.S. national security would oblige the President to consider steps to halt and diminish it. Such steps could include swift revision of DoD’s procurement practices, funding for domestic research and development of advanced ceramic packaging techniques and other measures.

Refinements to the present acquisition process should not be meant to prevent or even discourage foreign investment in the United States or free trade. Rather, they should aim at safeguarding vital U.S. equities from possible predations by foreign entities. In addition, they should ensure that levels of dependency upon foreign suppliers and governments for critical defense-related technologies and materiel are not permitted to give rise to dangerous vulnerabilities.

The Civilian Dimension

While the imperative of reducing the Defense Department’s current, excessive dependence on foreign producers of ceramic packaging surely will be one upshot of the Section 232 review now underway, a competent analysis ought to reveal another, larger national interest: Innovation and technological breakthroughs appear more likely to be made in design and manufacture of such packaging than through further, quantum improvements in chip performance. If so, ceramic packaging could become a key driver to further advances in such highly leveraged areas as miniaturization of electronic components and streamlining of computer processing.

In short, if the United States moves aggressively to redress its past abdication to Japanese leadership in the field of ceramic packaging, it stands to benefit across-the-board from the advances in commercial as well as defense products that new ceramic packaging technologies will make possible. If, on the other hand, it does not, the U.S. risks compromising — and possibly imperiling — its current resurgence in the closely associated semiconductor industry. Were that to occur, America’s overall economic competitiveness would be sure to suffer, to say nothing of the national security.

The Bottom Line

The idea that a foreign supplier nation would be in a position to have enormous — perhaps decisive — influence over U.S. defense policies and even the weapons technologies in which the United States might invest is simply intolerable. America cannot remain the leader of the free world if it loses its technological edge and depends unduly on other nations for technology vital to its military security.

As the responsibility for addressing the issue raised by the Coors’ Section 232 petition lies with the Commerce Department, the conduct of this investigation may be an early test of the impartiality and independence of the Department’s new Secretary-designate, Ron Brown. Given Mr. Brown’s past representation of Japanese electronic concerns, his son’s recent employment with Global USA — a paid foreign agent for a number of Japanese companies — and his reported refusal to date to recuse himself from dealing with issues, like ceramic packaging, that may be of direct interest to his former clients, his performance in what may become a politically super-charged Section 232 review will warrant close scrutiny.