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Friday, December 9, 2022

The War in Ukraine Has Exposed a Critical American Vulnerability | The Atlantic

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A supply network capable of withstanding the threats presented by Russian aggression.

In 1939, the United States Army mobilized 174,000 men over three and a half divisions. Today, more than 8 million men are deployed over 92 divisions. General George C. Marshall warned during World Battle II that “a wealthy country that lays down its guns after every war in its history would court tragedy.” Peace dividends came after the conclusion of the Cold War, although demobilization reduced the effect on the military.

In Ukraine, a worldwide supply chain has served as a bulwark against Russian aggression raised by the free world. U.S. corporations depend on Taiwan for 90 percent of their semiconductor output, while China has prioritized self-sufficiency. Creating Helpful Incentives to Produce Semiconductors for America Act funds is being sought by the Biden administration. Due to sanctions, Russia is now experiencing a semiconductor scarcity and has resorted to acquiring computer chips from household goods. Gilman Louie is the chief executive officer of the nonprofit strategic-investment firm America’s Frontier Fund.

He and his colleagues feel that strengthening the United States’ supply chain is the biggest problem facing national security. Utilizing a system where invention happens in the U.S. but production occurs overseas, U.S. corporations have achieved substantial success. Louie thinks that early government investments in defense-related industries will signal to private investors. The CHIPS for America Act is a vital first step, but it is insufficient to address our supply chain risk. In 2020, U.S. firms spent roughly $14 billion in Chinese manufacturing, while Chinese corporations invested just $141 million in the United States.

Wall Street has been slower to recognize the hazard posed by overexposure to Chinese markets than Washington. Tencent Games, which has links to the People’s Liberation Army, holds a 40 percent financial stake in American Epic Games. AFF would want to see more regulatory and public monitoring of such ties in the United States. The issue is whether a culture of short-term economics and politics can be substituted for long-term national defense.

Source: https://www.theatlantic.com/ideas/archive/2022/06/us-supply-chain-semiconductor-production-economic-warfare/661267/?utm_source=sailthru&utm_medium=email&utm_campaign=dfn-ebb

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