Pentagon Urges Defense Contractors to Wean Themselves Off China-Made Chips, Raw Materials

The Department of Defense has stepped up efforts to encourage defense contractors to start decoupling their supply chains from China and begun using artificial intelligence to quickly determine whether raw materials, electronics and aircraft components come from China and other potential competitors, The Wall Street Journal reported Sunday.

The U.S. government is increasing spending on long-range missiles, nuclear submarines and other high-end weapons systems in response to China’s military expansion work, while U.S. defense companies have said they are reducing dependence on specialized metals and microelectronics from China.

According to the report, China remains the source of rare-earth elements, computer chips and other raw materials and the U.S. is advancing the establishment of new facilities to manufacture such components to support domestic production.

For instance, Australia-based Lynas Rare Earths has received two contracts from the Pentagon to build a U.S. refinery that would import rare-earth minerals from Australia and potentially source supplies from the U.S. Lynas CEO Amanda Lacaze said the company expects the refinery to launch in Texas by 2025.

The U.S. defense supply chain is coming under renewed scrutiny after the Pentagon paused deliveries of the Lockheed Martin-built (NYSE: LMT) F-35 fighter jet in late August after discovering that China-made alloys were used in magnets within the aircraft’s engine components. 

William LaPlante, undersecretary for acquisition and sustainment at DOD and a 2022 Wash100 Award winner, said he expects F-35 aircraft deliveries to resume again provided that such components do not pose any security or safety risks.

It’s likely, if, in fact, we find neither of those to be the case, we’ll be able to — to do a waiver and do the replacements and get the production line moving again. So I’m hoping this can be resolved pretty soon,” LaPlante said at a Sept. 9 press briefing.

Join the Potomac Officers Club’s Defense Technology Summit on Oct. 25 at Ritz-Carlton Tysons Corner in Mclean, Virginia, to hear from the DOD acquisition chief and other department leaders as they share insight into trends driving priorities, spending and strategies in the U.S. military.

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