Highly recommend reading newly issued GAO testimony entitled “GAO-16-185T Trusted Defense Microelectronics: Future Access and Capabilities Are Uncertain.”

According to the testimony, in “April 2015, GAO found that the Department of Defense's (DOD) access to trusted leading-edge microelectronics faced challenging consequences stemming from manufacturing costs, supply chain globalization, and market trends, creating uncertainty regarding future access about U.S.-based microelectronics sources.

·         Capital costs associated with producing leading edge microelectronics increase with each new generation of technology. Leading-edge microelectronics fabrication facilities can cost several billion dollars annually and rising capital costs of manufacturing have led to increased specialization and industry consolidation.

·         Once dominated by domestic sources, the supply chain for microelectronics manufacturing is a global one—primarily in Asia.

·         Industry is largely focused on high-volume production driven by demand for consumer electronics. The rapidly evolving commercial microelectronics market has short life cycles, with little need to support older technologies. Conversely, DOD's needs for microelectronics are low-volume, unique, and, in some cases, for technologies for which there is no commercial demand. As a result, DOD's requirements have very little influence on the commercial market.

A decade ago, the Defense Science Board concluded that DOD had “no overall vision of its future microelectronics components needs and how to deal with them. Technology and supply problems are addressed as they arise.” GAO found, in April 2015, that DOD took some efforts to address access to trusted microelectronics. For example, to address risk related to foreign sources, DOD initiated its Trusted Foundry Program (later renamed “trusted supplier program”) in 2004 through an annual contract with the IBM Corporation to provide government-wide access to leading-edge microelectronics in a trusted environment. Trust is established by assessing the integrity of the people and processes used to design, generate, manufacture, and distribute national security critical microelectronics. As part of its Trusted Defense Systems Strategy, DOD expanded, through an accreditation process which includes obtaining facility and personnel security clearances, the number of trusted suppliers—which totaled 64 as of August 2014. However, none, other than IBM, offered leading-edge technologies that met DOD's needs.

In October 2014, IBM, which had been DOD's sole-source supplier for leading-edge technologies for over a decade, announced the planned transfer of its microelectronics fabrication business to GlobalFoundries—a U.S.-based, foreign-owned entity; and in July 2015, the transfer was completed. As a result, continued access by DOD to the leading-edge technologies formerly provided by IBM is uncertain.

By not addressing alternative options when the Defense Science Board first raised them as urgent issues and by relying on a sole source supplier for leading-edge microelectronics, DOD now faces some difficult decisions with potentially significant cost and schedule impacts to programs that rely on these technologies, as well as national security implications.”

This is particularly relevant in view of the broader issues and challenges related to Diminishing Manufacturing Sources and Material Shortages (DMSMS) and Supply Chain Risk Management (SCRM), as well as the Product Support Manager’s (PSM) responsibilities under Public Law 113-66, Section 803 “Identification & Replacement of Obsolete Electronic Parts” and supporting capabilities available from the Trusted Access Program Office (TAPO).