DoD Picks Intel To Make Chips In US

WASHINGTON: The Defense Department has selected US semiconductor giant Intel to diversify designs and increase onshore manufacturing of chips used in DoD electronics and IT systems.

The contract award is the first phase in the DoD’s Rapid Assured Microelectronics Prototypes – Commercial (RAMP-C) program, which is intended to bolster US-based commercial foundries, the manufacturing facilities for chips. Intel Foundry Services, launched this year, will lead the work, parent company Intel announced yesterday. However, the company declined to reveal the contract’s financial value.

The announcement comes amid a worldwide chip shortage that has affected industries from consumer electronics to automobiles, although DoD has not been affected so far. In March, Intel announced a new business strategy, which it dubbed IDM 2.0 (Integrated Device Manufacturing), and committed to a $20 billion investment to include building two new foundries in Arizona.

Intel is already a global leader in the chip design business, but over the past three decades, it and other chip designers have outsourced manufacturing to offshore foundries. Today, over 80 percent of chips used in electronics and IT systems globally — including DoD smartphones, computers, servers, and other commercial-off-the-shelf products — are manufactured in Asia.

Taiwan Semiconductor Manufacturing Company (widely known as TSMC) and South Korea’s Samsung currently control a large percentage of commercial chipmaking through its foundries. Notably, TSMC in November announced plans to build a foundry in Arizona, its first US facility.

Purpose-built chips for DoD’s weapon systems and other special use cases are already manufactured onshore through the Trusted Foundry Program, but these represent a tiny fraction of the overall chip market. And, as DoD modernizes weapon systems, it’s widely expected to adopt new chip designs and sizes aligned more closely with the broader commercial market.

RAMP-C is one of three programs the Pentagon has established in recent years to shore up its chip supply chain. Former DoD Principal Director for Microelectronics Nicole Petta is credited with architecting the multi-year strategy, and the Defense Advanced Research Projects Agency has played a key role in ongoing innovation and program management.

The pandemic interrupted chip manufacturing and the complex, global chip supply chain more broadly, prompting an Office of the Director of National Intelligence official earlier this spring to sound the alarm.

Since then, multiple initiatives to address chip supply chain issues have emerged. The Biden administration proposed $2.3 billion for the fiscal year 2022 defense budget to shore up what it characterized as a “fragile and threatened” DoD chip supply chain.

Separately, Congress this spring set aside $52 billion for domestic research, innovation, and manufacturing of chips as part of the United States Innovation and Competition Act (formerly called the Endless Frontiers Act).

And most recently, the congressional bipartisan Defense Critical Supply Chain Task Force released a report urging DoD to shore up supply chain vulnerabilities, including those around chipmaking.