U.S. Defense Bills Would Bring Greater Resiliency and Security to Electronics Supply Chains

Key Summary

• The FY2021 NDAA includes provisions to strengthen resiliency and security across U.S. electronics supply chains
• The bill would limit sourcing of PCBs and PCBAs for defense systems to trusted allied countries
• The DoD faces risks when electronics are sourced from regions viewed as security threats
• Congress broadly supports these requirements and the industry has sufficient allied manufacturing capacity
• NDAA provisions could boost domestic and allied electronics production and reinforce national security

For more than two decades, the United States has turned a blind eye to its shrinking electronics manufacturing base, even as experts in and out of government have warned that the decline has weakened the country’s national security.

In response, both the U.S. House and Senate have included in the FY 2021 National Defense Authorization Act (NDAA) provisions to bolster the resiliency and security of the electronics manufacturing ecosystem, including printed circuit board (PCB) fabrication and printed circuit board assembly (PCBA).

The NDAA provisions aim to improve the security of electronics purchased by the Defense Department by developing an affirmative list of allied, trusted countries from which the DoD can source those boards and assemblies. The United States should not be sourcing electronics for national security systems from countries it deems a current or potential security threat. Nor should any other country, for that matter.

Today, without this requirement, there are potential national security risks associated with systems that are built with PCBs and PCBAs from sources that are beyond the visibility of the DoD. These risks have been well-documented by the Defense Department and outside experts.

The opposition fears the new requirements will disrupt their established supply chains in countries that are not affirmatively covered. But the provisions explicitly authorize the Secretary of Defense to add countries to the list of locations from which PCBs and PCBAs can be sourced. And, with over $10 billion of PCB manufacturing today in allied countries and the United States, there is ample capacity today to meet DoD demand for military and commercial off-the-shelf electronics.

In addition to down-stream electronics industry support, the provisions have more than four dozen supporting members of Congress from both sides of the aisle in the House and the Senate. Not a single member of Congress has risen in opposition.

Moreover, both the full House and Senate have voted to include these provisions in the bill, so in keeping with committee precedent, the broad parameters of issue are settled.

The NDAA provisions offer the ancillary, but meaningful, benefit of strengthening supply chain resiliency by growing the market for electronics manufactured in the United States and its allies. In fact, U.S. CEOs have indicated a desire to grow their manufacturing operations in the United States but are hedging for the moment. They are waiting for the passage of the NDAA and the demand signal it will send.

As a global organization, IPC supports public policies and industry initiatives that cultivate resilient and secure supply chains everywhere we have members. While we are committed to global commerce and a lowering of trade barriers, we believe that all countries can and should take meaningful steps to shore up trusted supply chains for electronics related to essential government functions such as national security.

Many governments IPC works with appreciate the importance of secure and robust electronics manufacturing and cultivate an environment for it to flourish. The United States is among the exceptions. The NDAA offers the United States an opportunity to begin to follow through on its commitment to a more robust industrial base and unquestioned national security.