The newly enacted CHIPS Act (signed into law August 9, 2022) represents a potential boost in U.S. semiconductor fabrication by providing subsidies to U.S. chip manufacturers and funding for technology and research development. At a high level, the CHIPS Act is set to revitalize domestic manufacturing, lower sourcing costs, and increase job creation, all while strengthening the overall global supply chain.

The ongoing global chip shortage and difficult time sourcing components and raw materials has escalated a decades-long issue for the defense and aerospace industry. It has steadily been losing its purchasing leverage in the marketplace to other powerhouse industries, thus pushing the technological road maps of the component manufacturers. What events led up to this overarching issue and how can defense and aerospace more effectively source the parts they need in such a dynamic market? They are a very small fish in a very large pond, without many options in front of them to quickly source their legacy parts. Short-term, there are solutions available to maintain a market footing. Long-term, to avoid a critical point, defense must be willing to adapt its systems to the newest technology that will only grow in availability.

Today’s global semiconductor shortage has stretched procurement lead times to unforeseen lengths.

Military suppliers, being essential businesses, weathered the pandemic and economic shutdowns admirably thanks to strong defense funding. Yet even this stalwart industry is feeling the ill effects of the global chip shortage and the consequences of its reliance on offshore semiconductor manufacturing. The U.S. government is committed to returning chip production to the States, but whether that move will be enough and in time to save the industry is yet to be determined.