Strategic Silicon

Overview

Semiconductors stand at the very center of U.S.-China competition, and the contest for leadership in semiconductor technologies will impact U.S. economic and national security. CNAS experts are leading the conversation on how the United States, working with its allies and partners, can develop a strategic vision for global leadership in this critical technology area and implement smart policies that balance national security risks and economic opportunities.

Major Research Efforts

• Geoeconomics: The United States and its allies and partners are increasingly using geoeconomic tools (e.g., export controls, inbound investment screening, outbound investment controls) to manage the strategic competition with China. Semiconductors are at the center of this geoeconomics competition, as new restrictions put pressure on complex, globalized supply chains. CNAS has been a leading voice in advocating for smart geoeconomic policies that address areas of national security risk while avoiding unintended consequences on U.S. competitiveness.
• Industrial policy: The United States has embarked on a new era of industrial policy, including with the CHIPS and Science Act incentives for the semiconductor industry. CNAS launched a major research effort to make the national security case for semiconductor industrial policy, and CNAS researchers are now leading efforts to assess the effectiveness of industrial policy implementation. A core tenet of this work is that the United States must coordinate its domestic policies with allies and partners to achieve the intended benefits of its new industrial policy.
• Computing hardware: The increasing importance of advanced computing for national security in areas such as AI and biotechnology highlights that high-end computing resources (chips, datacenters, and networking technologies) require strong governance mechanisms. CNAS researchers are exploring policy paths for securing these assets, while retaining U.S. global competitiveness in computing. A governance regime built on robust tracking of powerful computing resources and a transparent set of rules around their usage will likely provide more regulatory clarity and predictability in areas such as chip export controls. Current research is focused on exploring technology and policy solutions for governing large-scale computing resources. Hardware security and tracking can ensure powerful chips do not end up in the wrong hands. On-chip mechanisms may be vehicles to enforce rules on AI training runs (e.g. ensuring that AI cyberweapons cannot be created) and to help prevent the proliferation of dangerous AI capabilities to bad actors.
• AI competition: Like prior industrial revolutions, the AI revolution is changing global power. Whichever nations successfully harness the data, computing hardware, and human talent driving AI innovations will lead an AI-driven future. The United States must reinvest in U.S. competitiveness at home by harnessing U.S. advantages in talent and marshaling federal resources for data and computing hardware.

Prior Research

Geoeconomics

Sand in the Silicon: Designing an Outbound Investment Controls Mechanism

Senior Fellow and Director of the Energy, Economics, and Security Program Emily Kilcrease co-authored the report “Sand in the Silicon: Designing an Outbound Investment Controls Mechanism” with Sarah Bauerle Danzman. The report lays out the national security case for establishing outbound investment controls and advances pragmatic recommendations for iteratively building out government capacity to institute such controls.

The Role of Investment Security in Addressing China’s Pursuit of Defense Technologies

Senior Fellow and Director of the Energy, Economics, and Security Program Emily Kilcrease provided testimony before the U.S.-China Economic and Security Review Commission on how to implement an outbound investment screening mechanism and update CFIUS while maintaining the U.S. commitment to open investment markets.

Challenging China’s Trade Practices

Senior Fellow and Director of the Energy, Economics, and Security Program Emily Kilcrease provided testimony before the U.S.-China Economic and Security Review Commission on the range of trade tools available to the United States as it seeks to confront unfair Chinese trade practices, including the appropriate role of export controls and investment security in an overarching strategy to manage the bilateral economic relationship.

The Illusion of Controls

“Building a shared strategy to responsibly manage the technology competition with China has never been more urgent,” write Senior Fellow and Director of the Energy, Economics, and Security Program Emily Kilcrease and Sarah Bauerle Danzman in Foreign Affairs. “Beyond export controls, the Biden administration and Congress are considering a range of new tools to address the perceived dangers of economic entanglement with China, including unprecedented regulations of U.S. investment in China. The ultimate objective may be to stem the flow of critical U.S. technology, capital, and expertise into China’s advanced technology sectors. But just as the United States cannot effectively weaponize its nondominant position in chip supply chains, it equally will not succeed in slowing China’s indigenous technology advances more broadly if it simply acts alone.”

Can Russia Rebuild Its Tech Sector with China's Help?

“The far-reaching export controls the United States and others imposed in response to Russia’s further invasion of Ukraine were meant to have long-term erosive effects, but their impact on Russia has already been tangible,” argue Emily Kilcrease, Senior Fellow and Director of the Energy, Economics, and Security Program, and Maria Shagina, in War on the Rocks. “This is particularly true in the semiconductor sector. Moscow’s attempts to kick-start homegrown production of semiconductors and electronic components, which started in 2021, have unsurprisingly produced meager results, and the Western technology required to launch an indigenous chip sector is now further out of reach. China will thus play a crucial role in the future of Russia’s tech sector, but a complicated one. While China’s geopolitical sympathies lie with Russia, active support would likely run afoul of the allied export controls and put China’s own chip ambitions at risk.”

Industrial Policy

Rewire: Semiconductors and U.S. Industrial Policy

The U.S. government has played a major role in the semiconductor industry since the invention of the first integrated circuit, via funding scientific research and military procurement, which drove early development of the technology. However, though government—and specifically, the Defense Department—has had deep connections with the chip industry, today it plays only a supportive role in building America’s semiconductor industry, with the key innovations emerging from private-sector expertise. The Energy, Economics, and Security Program, with the Technology and National Security Program, released a U.S. national industrial policy strategy case study by Tufts Fletcher School Associate Professor and American Enterprise Institute Jeane Kirkpatrick Visiting Fellow Chris Miller, in which he explores lessons the United States could learn as it considers industrial policy for the chips sector.

Reboot: Framework for a New American Industrial Policy

The United States and key allies have reinvigorated industrial policy efforts across a range of sectors seen as critical for economic and national security objectives. This report, by Martijn Rasser, Megan Lamberth, Hannah Kelley, and Ryan Johnson of the Technology and National Security Program, lays out a coherent and comprehensive framework for successful government engagement with industry to ensure long-term economic competitiveness while safeguarding U.S. national security.

Rebuild: Toolkit for a New American Industrial Policy

As a follow-on to the framing work in the CNAS report “Reboot: Framework for a New American Industrial Policy,” this report by Emily Kilcrease, Senior Fellow and Director of the Energy, Economics, and Security Program, and Emily Jin, Research Assistant, provides analysis and recommendations on the specific tools that the United States has – or should develop – to implement industrial policy effectively, including defensive, proactive, and emergency response industrial policies.

How Congress Can Ensure CHIPS Act Funding Advances National Security Interests

Prior to the passage of CHIPS and Science Act, Emily Kilcrease and Sarah Stewart of Silverado Policy Accelerator published recommendations for ensuring that incentives for the chips industry came with appropriate strings attached to ensure that taxpayer dollars were being effectively spent to bend supply chains away from China. Their recommendations included developing “strategic net benefit” and “necessary offsets” tests to determine which projects would advance U.S. national security objectives.

Semi-Protecting Semiconductors Poses a Risk to National Security

“Ultimately, the benefits of strengthening design go beyond the United States,” observes Associate Fellow for the Technology and National Security Program Alexandra Seymour in The Hill. “Indeed, it will enable more confident collaboration with international partners who want to participate in the U.S. research ecosystem but hesitate because of undefined rules, or who want to build trusted and resilient supply chains from the start. As the United States makes significant investments in semiconductor manufacturing as a long-term solution, it cannot forgo its existing strengths. The next Congress should work with the White House to prioritize semiconductor design protectionism so that the U.S. can secure its supply chain from idea to application, from now into the future.”

The Gaming Lab at CNAS

Dangerous Straits: Wargaming a Future Conflict over Taiwan

In this CNAS report by the Defense Program, authors Stacie Pettyjohn, Becca Wasser, and Chris Dougherty, outline findings from a recent strategic-operational wargame exploring a fictional war between China and the United States over Taiwan, set in 2027. The wargame, hosted by the Gaming Lab at CNAS, in partnership with NBC’s Meet the Press, illuminated the dilemmas that U.S. and Chinese policymakers might face if China were to invade Taiwan, along with the strategies they might adopt to achieve their overarching objectives.

When the Chips Are Down

The Defense Program and the Technology and National Security Program released a report that examines how China could influence Taiwan’s semiconductor industry, and describes policy options that the United States and Taiwan could use to counter China’s predatory actions. Fellow of the Defense Program Becca Wasser, Senior Fellow and Director of the Technology and National Security Program Martijn Rasser, and Research Assistant for the Technology and National Security Program Hannah Kelley published a report on their findings from a virtual strategy game examining the national security implications of China’s coercive tactics on Taiwan’s semiconductor industry.

Computing Hardware

How to Win Friends and Choke China’s Chip Supply

“The very aspects of the new U.S. rules that make them so effective today will pose challenges in building a consensus approach that can endure over time,” writes Senior Fellow and Director of the Energy, Economics, and Security Program Emily Kilcrease in War on the Rocks. “The difficult task for U.S. export control officials will be to persuade key producers—namely the Netherlands, Japan, South Korea, and Taiwan—to fundamentally rethink their export controls strategy. This means convincing allied governments that slowing Chinese advances in supercomputing, AI, and chips, even in purely commercial areas, is urgently necessary to prevent China’s military modernization and human rights abuses. This in turn requires overcoming fundamental divergences with European and Asian allies about how hard and fast to pursue a strategic decoupling from China in advanced technology sectors.”

The Right Time For Chip Export Controls

“The prevailing view is that the new export controls will have a major impact on China’s semiconductor sector and its AI and weapons development over the next few years,” write Senior Fellow and Director of the Technology and National Security Program Martijn Rasser and Kevin Wolf in Lawfare. “Longer term projections are more difficult, but there is ample reason to assess that the Biden administration will largely achieve its stated objectives. Two factors have outsized importance on the overall effectiveness: implementation and engagement by allies. Expect scrutiny by Congress of how BIS conducts enforcement and compliance and a full court press by U.S. officials on their colleagues in key countries to enact their own controls.”

Decoupling Wastes U.S. Leverage on China

“In cutting off China’s access to advanced chips today, the United States is giving up its long-term leverage over Chinese artificial-intelligence development and accelerating China’s drive toward chip independence,” writes Vice President and Director of Studies Paul Scharre in Foreign Policy. “Recent U.S. export controls are the latest step in ‘decoupling’ U.S.-China technology ties, yet decoupling is not enough to secure U.S. interests in a long-term competition. A better approach would be to keep China dependent on U.S. technology, giving the United States the ability to deny China access to key technologies when necessary.”

AI Competition

Four Battlegrounds: Power in the Age of Artificial Intelligence

In his most recent book, Paul Scharre takes readers inside the fierce competition to develop and implement this game-changing technology and dominate the future of artificial intelligence. He argues that four key elements define this struggle: data, computing power, talent, and institutions. Data is a vital resource like coal or oil, but it must be collected and refined. Advanced computer chips are the essence of computing power – control over chip supply chains grants leverage over rivals. Talent is about people: which country attracts the best researchers and most advanced technology companies? Lastly, the ultimate leader in AI will have institutions that effectively incorporate AI into their economy, society, and especially their military.

America Can Win the AI Race

“Right now, it is clear that the United States leads in AI, with advantages in computing hardware and human talent that other countries cannot match. But China is rapidly catching up,” writes Vice President and Director of Studies Paul Scharre in Foreign Affairs. “If the United States wants to win the AI competition, it must approach Beijing carefully and construct its own initiatives thoughtfully. It needs a strategy that will keep China dependent on foreign-made chips, and it needs to continue attracting and retaining the world’s top AI talent.”

To Stay Ahead of China in AI, the U.S. Needs to Work with China

The United States “benefits from keeping China dependent on chips made using U.S. technology,” argues Vice President and Director of Studies Paul Scharre in TIME. “The best competitive strategy for the U.S. is to sustain ties with China in areas where the U.S. benefits disproportionately, such as human talent and computing hardware, while severing problematic ties.”

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