America's Semiconductor Blind Spot Requires Presidential Action—Now

Imagine a military commander preparing for battle, ready to deploy forces with the intelligence, personnel, and plans in place, only to be stopped not by enemy action, but by equipment. Otherwise mission-capable platforms sit idle because a single uncertified microelectronic component cannot be replaced or trusted.

Today, U.S. companies account for nearly half of the world’s chip sales, but U.S. semiconductor manufacturing represents only about 12 percent of global capacity. Most semiconductor production still occurs overseas, concentrated in East Asia, including Taiwan and China, which supply the same commercial components embedded across U.S. defense and critical infrastructure systems. This dependence exposes commanders and maintainers to delays, certification bottlenecks, and persistent supply uncertainty long before a crisis emerges. It also aligns Beijing’s deliberate effort to shape industrial capacity, supply chains, and technology ecosystems to build long-term military advantage. Foundational semiconductor manufacturing — particularly high-volume, foundational production — is central to that effort.

President Trump’s recent proclamation on the Section 232 investigation into semiconductor imports is a welcome acknowledgment that microelectronics supply chains are inseparable from national security.

But a focus on advanced-node chip manufacturing alone risks leaving one of the most immediate readiness vulnerabilities unaddressed: America’s overwhelming dependence on Asia for foundational-node semiconductors.

Addressing this vulnerability will require more than trade remedies or incremental procurement tweaks. The U.S must use economic incentives and federal purchasing power to ensure domestic access to the foundational semiconductors that underpin military readiness.

The Administration has used this authority before. When steel imports were deemed a threat to national security, decisive action under Section 232 helped stabilize domestic production and preserve a critical industry that both the military and broader economy rely on. Foundational semiconductors now present a similar challenge. Like steel, they are defined not by cutting-edge performance but by scale, reliability, and assured access. But unlike steel, semiconductors are embedded deep within commercial supply chains, meaning trade action alone cannot guarantee secure access; rebuilding domestic capacity will be necessary. But it won’t be cost-neutral.

Mature-process manufacturing is often lower-margin and globally distributed, and domestic expansion will require capital investment, workforce development, and sustained demand signals. Some defense programs may face modest per-unit cost increases or requalification efforts during transition. But the cost of predictable investment today must be weighed against the far greater cost of delay, disruption, or unavailability during crisis.

Necessary but not sufficient

Actions under Section 232 of the Trade Expansion Act of 1962 can play a necessary role by helping level the economic playing field so secure U.S. manufacturing can compete and scale. Decades of state subsidies, non-market practices, and cost distortions have pushed foundational-node manufacturing offshore. Without correcting those imbalances, domestic production will remain structurally disadvantaged.

But trade actions alone will not solve the problem. Tariffs or related measures are not an end in themselves, but they can help create a level economic playing field that allows secure U.S. manufacturing to compete and scale.

Why procurement must shape the commercial market

Modern defense systems rely heavily on commercial off-the-shelf components, which are sourced from the same global supply chains that serve consumer and industrial markets. As long as the broader commercial ecosystem remains anchored overseas, defense procurement preferences alone cannot ensure security of supply. This makes it necessary for procurement policy to influence where and how these components are produced.

Existing procurement preferences typically apply at the system level, allowing critical semiconductor components embedded deep within the supply chain to remain concentrated overseas even when a finished platform qualifies as American-made. That framework does little to mitigate geographic concentration risk. Closing this gap requires applying domestic sourcing principles to clearly defined semiconductor categories within national-security acquisitions.

To address this, the President should direct the Department of War and relevant civilian agencies to implement a thoughtfully phased requirement that foundational-node semiconductors used in defense mission systems and designated critical infrastructure be produced in the United States. Phasing matters: it allows time for investment, scaling, and qualification while protecting existing systems. Implementation should focus first on new-start programs and major upgrades, with waiver authority where domestic capacity is not yet sufficient. During transition, dual sourcing and targeted stockpiling can mitigate disruption and avoid creating new single points of failure. The objective is resilience, not rigidity. But the direction must be clear, mandatory, and enforceable. This would not impose a mandate across the entire commercial semiconductor ecosystem. Rather, it would condition federal procurement of designated defense and mission-critical systems on assured domestic sourcing for clearly defined semiconductor categories. Conditioning federal spending on national-security criteria is a long-standing and well-established authority.

Such a mandate would send a clear signal to industry, catalyze private investment, and ensure that once domestic capacity exists, it is consistently utilized. Combined with trade measures that address economic distortions, procurement reform would shift both commercial and defense supply chains toward trusted domestic production.

To be sure, any domestic sourcing requirement must be narrowly tailored and responsibly phased. Policymakers must operate within established national-security procurement authorities and applicable trade-law exceptions. Incentives, trusted-foundry certifications, and multinational cooperation all have important roles to play across the semiconductor ecosystem. But none of these tools alone guarantees that foundational-node production will scale domestically at the level and reliability required for mission-critical systems.

Importantly, this policy is not a retreat from allied coordination. Trusted partners remain essential. For designated defense applications, assured domestic capacity complements allied integration by reducing concentrated geographic risk and strengthening collective resilience. Secure domestic production for mission-critical systems can coexist with robust commercial trade and multinational supply-chain cooperation.

This is urgent and justified

The Pentagon’s assessment of China’s military and industrial strategy leaves little room for complacency. The vulnerabilities are documented. The consequences are foreseeable. And the ability to act already exist within executive authority.

The Department of War’s 2025 Annual Report to Congress makes clear that Beijing is pursuing a deliberate, whole-of-nation strategy to shape industrial capacity, supply chains, and technology ecosystems to secure long-term military advantage. Foundational semiconductor manufacturing—where scale, reliability, and control matter more than cutting-edge performance—sits squarely within that strategy.

At the same time, the tools to address this vulnerability already exist. The President does not need new legislation to close this gap. Within the existing acquisition framework, designated semiconductor categories can be treated as covered end products for national-security procurements, and defense regulations can be amended accordingly, while Defense Production Act authorities expand domestic capacity. This approach remains bounded to federal procurement and consistent with established law. The question is no longer whether action is justified, but whether it will be taken in time.

Ross Miller is Senior Vice President, Strategy at SkyWater Technology, where he leads enterprise and government strategy, strategic marketing, and mergers, acquisitions, and partnerships. Earlier in his career, Ross served as an active-duty U.S. Air Force officer in the Space and Missile Systems Center, where he was a program leader responsible for satellite payload integration, testing, and mission deployment.