Imagine a GPGPU semiconductor is developed in the U.S. or Japan, and the attendant software and supporting components are developed in India. Then, a medical imaging platform is conceived in Germany and a complete system is built, tested, configured and shipped from China.
In recent years, the trend toward global outsourcing of R&D in the electronics supply chain has spurred both advantage and concern. For commercial players, the advent of R&D outsourcing has meant that product development can often be achieved with significant time and cost advantages through ‘Global Innovation Networks’ where countries with particular expertise contribute to an overall product development scheme.
But, for military and security providers, those same networks can pose great concerns for intellectual property (IP), data, platform, and ultimately warfighter security.
Specific countries and regions are becoming known for their expertise with concentrated R&D in electronics. Well-educated workforces, command of the English language, large and diverse populations, and low development costs mean these actors are increasingly attractive for foreign direct investments (FDI) by U.S. multi-nationals that are ‘setting up shop’ in situ.
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India, for example, has quickly become a center-of-gravity for developing software and electronic hardware technologies; China has established itself as the premier developer of production technologies and is focused on mastering every other dimension of electronic interconnect; Europe has provided leading-edge automotive, medical, and automation technologies, and the U.S. leads the world in biotechnology, nanotechnology, and – together with Japan – semiconductors and photonics.
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From the commercial perspective, a company can establish a working R&D presence through FDI in each geographic area and take advantage of the different competencies; effectively building a product across multiple borders, and meshing the results into one comprehensive product development scheme.
Imagine a GPGPU semiconductor is developed in the U.S. (or Japan) and the attendant software and supporting components are developed in India. Then, a medical imaging platform is conceived in Germany and a complete system is built, tested, configured and shipped from China. A company with R&D offices in each area, and that can effectively network and transfer – or stitch – the expertise across boundaries can potentially gain time, cost, and price advantages over competitors in electronics product development.
Now imagine that same semiconductor is a specialized chip for use in a directed energy weapon, perhaps to be used in counter-IED initiatives, and that the software coding for it is developed in India, the platform developed somewhere in Europe, and the product assembled and tested in China. And then it is shipped to one of the U.S. Military services for use in an active theater.
What do you suppose the chances are – despite the potential time/cost advantages or perhaps even the intellectual advantages – that somewhere along the way, the integrity of this weapon design will be compromised or aspects of it stolen? And to what extent is the warfighter potentially harmed by those chances?
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If those questions sound accusatory or untrusting, they’re meant to be, because the answers to those questions are critically concerning, and become the reasons why the concept of a ‘trusted supply chain’ is of paramount importance to the military. The opportunities for tampering, theft, counterfeiting, and compromise are just too high when product development is outsourced to networks where historical, cultural, political and other motivations are at work beyond the basic interconnect.
For commercial products the potential risks of outsourcing R&D involve reverse engineering, patent infringements, and international litigation. For military applications, the risks are to national security, to the warfighter, and to the probability that critical military technology will end up in the hands of adversaries.
To be sure, R&D is absolutely critical to the competitive stance of the U.S. electronics industry. And to the extent that it is being outsourced as a means for knowledge, margin, or cost improvements, implies there is some merit to the model. The key however, is to assess which portions of the product supply chain cannot (or should not) be considered viable for R&D outsourcing.
For commercial products, it is a judgement call by OEM’s and EMS provider partners as to how much product development information is sensible to let into the ‘open’. For military products, judgement relies on the strictures of the U.S. Munitions List, the degrees of ITAR compliance and anti-counterfeiting competencies in the supply chain, and upon the demonstrated trust of that supply chain.
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