Why National Security Depends on Semiconductor Ecosystem

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Focus: SPA Perspectives

Categories: Capabilities, Software, Cyber, and Cloud Computing, Systems Engineering, National Security, Cabaniss

Beyond the Chip: Why National Security Depends on the Entire Semiconductor Ecosystem

Author: Staff

Alexandria, VA | August 13, 2025

For most Americans, semiconductors remain invisible—embedded in smartphones, appliances, cars, and computers without a second thought. But for those in national security and defense policy, the global semiconductor industry is now front and center, tied to questions of military readiness, economic resilience, and geopolitical competition.

And yet, many discussions in Washington focus too narrowly on one slice of the problem: domestic chip fabrication. As Christian Cabaniss, a military operations analyst with Systems Planning & Analysis (SPA) and USMC Col Ret, points out, “Chips don’t just come from fabs. They come from an ecosystem, and that ecosystem is global.”

From Book Review to Broader Perspective

Much of Cabaniss’s recent thinking on semiconductors was shaped through his engagement with Chip War: The Fight for the World’s Most Critical Technology by Chris Miller, a book he reviewed for the Marine Corps Gazette in early 2024. In that review, Cabaniss highlighted how semiconductor dominance has become central to global power competition.

“Perhaps the most difficult statistic to take is that today 90 percent of all memory chips, 75 percent of all processor (logic) chips, and 80 percent of all silicon wafers are produced in East Asia, even though those responsible for the semiconductor and the entire semiconductor industry started in the U.S.”

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– Christian Cabaniss, a military operations analyst with SPA and USMC Col Ret

This stark concentration of production presents a profound challenge for national security. But, as Cabaniss pointed out in his review, even greater challenges lie ahead. “As the author clearly articulates, the resourcing requirements for chip development just for research and development are far beyond a single service or even the DoD as a whole.”

While Chip War “may be short on policy solutions—perhaps because the issues are so complex and cut across our entire economy—it does provide a much greater appreciation of how we got here and where we may be going,” Cabaniss concluded.

This blog series builds on that review and a subsequent one-on-one interview with Cabaniss, expanding the discussion by looking beyond production numbers to the underlying ecosystem of innovation, logistics, and partnerships that must be strengthened to secure U.S. national interests.

More Than Just Chips

When policymakers think about national security risks tied to semiconductors, the conversation often gravitates to Taiwan, home to the world’s leading chip fabrication foundries. Taiwan Semiconductor Manufacturing Company (TSMC) alone produces around 90 percent of the world’s most advanced chips. That geographic concentration is undeniably risky—but it’s only part of the story.

“Semiconductors are in almost everything we use today, from washing machines to jet planes,” Cabaniss notes. “But focusing only on where they’re fabricated ignores the broader web of relationships, industries, and infrastructure that make that production possible.”

Chips are not born fully formed out of silicon wafers. They pass through multiple specialized phases:

Design: where the U.S. leads the world

Fabrication: concentrated in Taiwan, South Korea, and Japan

Packaging and testing: often done in China and outer countries in Southeast Asia

Supply chains for precursor materials and machinery: dominated by global firms, such as ASML in the Netherlands, which monopolizes the lithography machines used to etch cutting-edge chip designs

It’s this ecosystem, not just fabrication, that underpins national security.

Dual-Use Technology and the Limits of Control

One of the challenges facing U.S. policymakers is that semiconductors are inherently dual-use technologies. They power smartphones, power grids, fighter jets, and missile guidance systems alike. “Everything is dual-use now,” says Cabaniss.

This reality complicates any attempt to build walls around sensitive technologies. Export controls, tariffs, and industrial policies can shape parts of the market, but they cannot fully wall it off. As Cabaniss observes, the Department of Defense (DoD) has a relatively narrow view of the semiconductor sector, often focusing on high-end chips relevant to advanced military systems. Yet the real vulnerability may lie in the foundational, older-generation chips that support broader defense logistics and supply chain resilience.

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Even seemingly mundane electronics—from vehicles to communications gear—may rely on components sourced through fragile or poorly understood global networks. And many of those supply chains remain opaque, not just to DoD but even to major defense contractors.

Lessons from the Pandemic

The pandemic offered a harsh lesson in how these vulnerabilities play out. Automotive manufacturers were some of the first to experience chip shortages, shutting down production lines despite surging demand. But the problem didn’t stay confined to cars. It rippled outward, affecting everything from consumer electronics to medical devices to defense procurement.

For Cabaniss, the takeaway from that disruption is clear: “One of the things we did learn during COVID is the fact that we don’t produce many semiconductors in the United States is not a good thing. But even that is too narrow a view, because it’s really about the ecosystem—all the things that go together to create these high-end products.”

Simply bringing chip manufacturing onshore doesn’t solve the whole problem. Without investment in supporting industries, workforce development, power infrastructure, and global logistics, those fabs could become expensive, underperforming islands in a much larger sea of global trade.

The Ecosystem Mindset

Adopting an ecosystem mindset doesn’t mean abandoning efforts to build domestic capacity—it means expanding the conversation beyond it. According to Cabaniss, policymakers need to think in layers:

Domestic design strength must be supported by ensuring access to fabrication, packaging, and testing resources.

Domestic fabrication requires not just clean rooms and cutting-edge equipment, but workforce training and reliable power grids, both of which may take a decade or more to develop.

Global supply chains must be mapped, monitored, and diversified where possible—not just at the first or second tier of suppliers, but deeper, where obscure precursor materials or single points of failure often hide.

Collaboration with allies and partners needs to move beyond general statements to specific, measurable commitments on technology sharing, security standards, and coordinated investments.

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“We are a knowledge economy. We’re the worldwide leader. The problem is, we have forgotten the innovation that’s involved in engineering. And those elements of the supply chain are dominated by many other nations.”

– Christian Cabaniss, a military operations analyst with SPA and USMC Col Ret

The Road Ahead

While the CHIPS and Science Act has made strides in bolstering semiconductor capacity, it remains a first step, not a comprehensive solution. Defense policymakers should view it as part of a broader mosaic of actions required to safeguard both economic and national security interests.

The semiconductor supply chain isn’t just a tech issue—it’s a geostrategic imperative. It touches on energy policy, transportation infrastructure, labor development, and industrial strategy. Understanding this bigger picture will require shifting from siloed thinking to whole-of-nation approaches.

For policymakers and defense leaders, the question is not just how many chips America can make, but whether we can build, protect, and sustain the entire ecosystem that brings them to life.

Explore Further

This is the first of a four-part series exploring the complex relationship between semiconductors and national security. Future posts will examine geopolitical risks, critical infrastructure gaps, and holistic strategies for resilience. Together, these posts aim to provide defense policy makers and industry leaders with a clearer picture of what is at stake – and why securing America’s semiconductor future requires a whole-of-nation approach. Subscribe to our once-weekly update to ensure you don’t miss a post.

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