Defense Science Board 

Task Force 

On 

HIGH PERFORMANCE 

MICROCHIP SUPPLY 

February 2005 

Office of the Under Secretary of Defense 

For Acquisition, Technology, and Logistics 

Washington, D.C. 20301-3140 
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___________________________________________________________ TABLE OF CONTENTS

HIGH PERFORMANCE MICROCHIP SUPPLY ___________________________________________ i

TABLE OF CONTENTS

EXECUTIVE SUMMARY ...............................................................................................3

Task Force Conclusion .........................................................................5

Task Force Findings and Recommendations ....................................6

DOD Vision ...........................................................................................7

Sizing the Problem................................................................................8

DOD Acquisition of Trusted Microelectronic 

Components ....................................................................................9

Custom IC Production Models and Technology..............................9

Equipment Export Controls ..............................................................10

Standard chips with Programmable Hardware and/or 

Software.........................................................................................12

DOD-Unique Technologies ...............................................................13

Adversarial Clandestine Operational Opportunities ....................14

INTRODUCTION ........................................................................................................15

Background..........................................................................................16

The Threat............................................................................................22

Foreign Dependence Risks ................................................................24

Defense Community Influence .........................................................25

FINDINGS ..................................................................................................................27

The Industry Situation .......................................................................27

DOD Vision .........................................................................................32

Sizing the Problem..............................................................................33

DOD Acquisition of Trusted Microelectronic 

Components ..................................................................................35

Standard and Custom Parts ..............................................................39

Semiconductor Manufacturing Equipment Export 

Controls .........................................................................................42

Standard chips with Programmable Hardware and/or 

Software.........................................................................................44

DOD-Unique Technologies ...............................................................48

Adversarial Clandestine Operational Opportunities ....................49

Conclusion ...........................................................................................51

RECOMMENDATIONS ...............................................................................................55

Recommendation 1 – Commit to DOD Leadership.......................57

Recommendation 2 – Level the Playing Field ................................58
TABLE OF CONTENTS____________________________________________________________ 

ii _________________________________________________________ DSB TASK FORCE ON

Recommendation 3 – Understand the Trusted 

Microelectronics Need – Enumeration..................................... 62

Recommendation 4 – Develop a DOD Microelectronics 

Action Plan ................................................................................... 63

Recommendation 5 – Develop Business Models, 

Technology, and Equipment for Economic 

Development and Production of Low-Volume ASICs........... 71

Recommendation 6 – Strengthen Bilateral and 

Multilateral Controls on Critical Semiconductor 

Manufacturing and Design Equipment ................................... 72

Recommendation 7 – Sustain Leadership in “Standard” 

Programmable Microchips......................................................... 73

Recommendation 8 – Support DOD-Unique Technology 

Research and Development ....................................................... 75

Recommendation 9 – Enhance U.S. Countertamper 

Proficiency .................................................................................... 77

APPENDIX A. TERMS OF REFERENCE.......................................................................81

APPENDIX B. TASK FORCE MEMBERSHIP................................................................83

APPENDIX C. DEPUTY SECRETARY OF DEFENSE MEMO ........................................85

APPENDIX D. FUTURE TECHNOLOGY DEVELOPMENT...........................................87

APPENDIX E. VERIFYING CHIPS MADE OUTSIDE THE UNITED STATES ................93

APPENDIX F. TRUSTED FOUNDRY PROGRAM .........................................................95

APPENDIX G. COMPARISON OF ASIC AND FPGA SYSTEM CHARACTERISTICS ...99

APPENDIX H. DFAR SUPPLEMENT .......................................................................101

Defense Federal Acquisition Regulation Supplement................ 101

APPENDIX I. MINORITY REPORT............................................................................103

APPENDIX J. ACRONYMS........................................................................................105
__________________________________________________________ EXECUTIVE SUMMARY

HIGH PERFORMANCE MICROCHIP SUPPLY ___________________________________________ 3

EXECUTIVE SUMMARY 

The microelectronics industry, supplier of hardware capability 

that underlies much of America’s modern military leadership 

technology, is well into a profound restructuring leading to 

horizontal consolidation replacing the past vertically integrated 

company structure. One unintended result of this otherwise sound 

industry change is the relocation of critical microelectronics 

manufacturing capabilities from the United States to countries with 

lower cost capital and operating environments. Trustworthiness and 

supply assurance for components used in critical military and 

infrastructure applications are casualties of this migration. Further, 

while not the focus of this study per se, the U.S. national 

technological leadership may be increasingly challenged by these 

changing industry dynamics; this poses long term national economic 

security concerns. 

Accordingly, for the DOD’s strategy of information superiority to 

remain viable, the Department requires: 

 Trusted and assured supplies of integrated circuit 

(IC) components. 

 A continued stream of exponential improvements in 

the processing capacity of microchips and new 

approaches to extracting military value from 

information. 

Trustworthiness of custom and commercial systems that support 

military operations – and the advances in microchip technology 

underlying our information superiority – however has been 

jeopardized. Trustworthiness includes confidence that classified or 

mission critical information contained in chip designs is not 

compromised, reliability is not degraded or untended design 

elements inserted in chips as a result of design or fabrication in 

conditions open to adversary agents. Trust cannot be added to integrated 

circuits after fabrication; electrical testing and reverse engineering cannot be 

relied upon to detect undesired alterations in military integrated circuits. 
EXECUTIVE SUMMARY ___________________________________________________________ 

4 _________________________________________________________ DSB TASK FORCE ON

Assured sources are those available to supply microelectronics 

components, as needed, for defense applications according to 

reasonable schedules and at a reasonable cost. 

Pressure on U.S. IC suppliers for high return on invested capital 

has compelled them to outsource capital intensive manufacturing 

operations. Thus, the past decade has seen an accelerating trend 

toward vertical disaggregation in the semiconductor business. 

Companies whose manufacturing operations once encompassed the 

full range of integrated circuit activities from product definition to 

design and process development, to mask-making and chip 

fabrication, to assembly and final test and customer support, even 

materials and production equipment, are contracting out nearly all 

these essential activities. 

 Most leading edge wafer production facilities (foundries), with 

the exception so far of IBM and possibly Texas Instruments, are 

controlled and located outside the United States. The driving forces 

behind the “alienation” of foundry business from the United States to 

other countries include the lower cost of capital available in 

developing countries, through foreign nations’ tax, market access 

requirements, subsidized infrastructure and financing incentives 

(including ownership), and the worldwide portability of technical 

skills, equipment and process know-how. 

These changes are directly contrary to the best interests of the 

Department of Defense for non-COTS ICs. The shift from United 

States to foreign IC manufacture endangers the security of classified 

information embedded in chip designs; additionally, it opens the 

possibility that “Trojan horses” and other unauthorized design 

inclusions may appear in unclassified integrated circuits used in 

military applications. More subtle shifts in process parameters or 

layout line spacing can drastically shorten the lives of components. 

To the extent that COTS destinations in DOD systems can be kept 

anonymous, the use of COTS implies less risk. However, even use of 

COTS components may not offer full protection from parts 

compromise. Neither extensive electrical testing nor reverse 

engineering is capable of reliably detecting compromised 

microelectronics components. 
__________________________________________________________ EXECUTIVE SUMMARY

HIGH PERFORMANCE MICROCHIP SUPPLY ___________________________________________ 5

A further complication in DOD’s integrated circuit supply 

problems lies in military systems’ use of microelectronic components 

that incorporate technologies for which there is no commercial 

demand. Irreducible requirements for radiation hardening, high 

power microwave and millimeter-wave circuits and special sensor, to 

name but a few, lie outside widely available commercial capabilities. 

Beyond the threat of IC device compromise described above, 

dependence on off-shore or foreign-owned semiconductor 

component production subjects the United States to several risks, 

such as lack of quick response or surge capacity in time of war, that 

could threaten its access to state-of-art microelectronics. As capacity 

moves to potential adversary countries, the United States is 

vulnerable to a governmental “reverse-ITAR” by which critical 

technologies are denied to the U.S. in international trade. 

A longer term risk lies in the historical fact that leading-edge R&D 

tends to follow production. The most attractive positions for talented 

process scientists and engineers moves with advanced production. 

Additionally, a separation of design from production could render 

the close collaboration between process engineers and designers 

required for leading edge chip development ineffective for U.S. 

defense industry. 

The Defense Department does not directly acquire components at 

the integrated circuit level. Individual circuits are most often 

specified by designers of subsystems; even system primes have little 

knowledge of the sources of the components used in their systemlevel products. Any DOD acquisition plan to address IC 

trustworthiness and availability must focus on defense suppliers as 

much as DOD itself. 

TASK FORCE CONCLUSION

The Department of Defense and its suppliers face a major 

integrated circuit supply dilemma that threatens the security and 

integrity of classified and sensitive circuit design information, the 

superiority and correct functioning of electronic systems, system 
EXECUTIVE SUMMARY ___________________________________________________________ 

6 _________________________________________________________ DSB TASK FORCE ON

reliability, continued supply of long system-life and special 

technology components. 

TASK FORCE FINDINGS AND RECOMMENDATIONS

Industry Situation 

Finding: Semiconductor technology and manufacturing 

leadership is a national priority that must be maintained if the U.S. 

military is to continue to lead in applying electronics to support the 

warfighter. An integral part of that leadership is the close coupling of 

manufacturing with the development of advanced technology and 

the design of leading-edge integrated circuits. This can best be 

achieved if development and manufacturing are co-located. 

Recommendation: To assure DOD to access leading edge trusted 

manufacturing facilities, the United States needs a broad national 

effort to offset foreign polices designed to encourage movement of 

leading edge semiconductor manufacturing facilities to offshore 

locations. A coherent U.S. policy response to counter the extensive 

intervention by foreign governments to encourage local investment in 

the semiconductor industry would include, 

 U.S. government vigorous support for compliance 

with World Trade Organization rules. 

 U.S. government steps to insure that intellectual 

property laws are fully enforced, 

 Increased Department of Defense and intelligence 

agency involvement in decisions by other agencies 

of the U.S. government which have the potential to 

significantly affect the U.S. defense microelectronics 

industrial base, 

 Increased university research funding to ensure that 

the U.S. remains an attractive and competitive 

location for the most talented students and faculty 

from around the world to study microelectronics, 
__________________________________________________________ EXECUTIVE SUMMARY

HIGH PERFORMANCE MICROCHIP SUPPLY ___________________________________________ 7

 Continued intelligence agency monitoring of the 

global state of microelectronics technology to 

determine where additional effort is required to 

keep U.S. ahead of, or at least equal to, the world 

state of the art in critical fields, and 

 Continued DOD efforts to inventory current and 

future trusted component needs as a basis for its 

long-term microelectronics acquisition plans 

 The federal government needs to determine its role 

in assisting various States in developing their 

incentive packages. States should also strive to 

ensure that their permitting processes are responsive 

to business timelines. 

DOD VISION

Finding: On 10 October, 2003, the Deputy Secretary Wolfowitz 

outlined five goals for a “Trusted Integrated Circuit Strategy:” 

 Facilities Identification 

 Product Identification 

 Near Term Solutions 

 Research Initiatives 

 Healthy Commercial IC Industry 

The Task Force agrees with the need for a strategy and with the 

elements identified in Dr. Wolfowitz’s Defense Trusted Integrated 

Circuits Strategy (DTICS) memo. 

Based on the presentations and information it has received, plus 

the experience of its members, the Task Force perceives that DOD has 

a Trusted Foundry strategy that addresses its near-term needs. 

However it has no overall vision of its future microelectronics 

components needs and how to deal with them. Technology and 

supply problems are addressed as they arise (e.g., radiation-hardened 

IC supply, sources of classified components, legacy parts). An overall 

vision would enable the Department to develop approaches to 
EXECUTIVE SUMMARY ___________________________________________________________ 

8 _________________________________________________________ DSB TASK FORCE ON

meeting its needs before each individual supply source becomes an 

emergency, and to preempt or diffuse the threat and risks outlined 

above. 

Recommendation: The Task Force recommends that DOD, directed 

by the Secretary and the Undersecretary for Acquisition, Technology 

and Logistics, lead in guaranteeing its needs are supported by 

ensuring that the United States policy and industry together 

transform and enhance the U.S. position in onshore microelectronics. 

Providing for assured supplies by DOD contracts with today’s 

trusted foundries helps solve the immediate problem, but is only a 

temporary measure; foundry agreements will not address the 

structural issue of funding research that will sustain our information 

superiority. Long term national security depends upon U.S.-based 

competitiveness in research, development, design and 

manufacturing. DOD should advocate that these are not only DOD 

objectives but also national priorities. 

SIZING THE PROBLEM

Finding: The Task Force attempted to estimate DOD’s IC 

requirements to size the problem facing future U.S. military 

integrated circuits acquisition needs. A precise evaluation of DOD’s 

IC consumption is not possible; a rough estimate is 1-2% - a small 

fraction of global demand. Based on data it has gathered, the Task 

Force estimates that at least 50-60 new critical part types are being 

generated per year within DOD – a number that is likely to increase 

over the next several years as signal processing becomes more 

distributed. 

Although DOD-unique IC consumption is a small fraction of the 

commercial market, the functions performed by these special circuits 

are essential to the nation’s defense. 

Recommendation: DOD must determine classes of ICs incorporated 

in its weapon systems and other key mission products that require 

trusted sources and how many such circuits are needed. This 

requires that DOD identify device and technology types of 

microelectronics devices that require trusted sources as well as the 
__________________________________________________________ EXECUTIVE SUMMARY

HIGH PERFORMANCE MICROCHIP SUPPLY ___________________________________________ 9

length of time it will need such special supply arrangements. This 

identification must include the full range of technologies needed for 

DOD as well as its suppliers. 

DOD ACQUISITION OF TRUSTED MICROELECTRONIC 

COMPONENTS

Finding: Throughout the past ten years, the need for classified 

devices has been satisfied primarily through the use of governmentowned, government- or contractor-operated or dedicated facilities 

such as those operated by NSA and Sandia. The rapid evolution of 

technology has made the NSA facility obsolete or otherwise 

inadequate to perform this mission; the cost of continuously keeping 

it near to the state of the art is regarded as prohibitive. Sandia is not 

well suited to supply the variety and volume of DOD special circuits. 

There is no longer a diverse base of U.S. IC fabricators capable of 

meeting trusted and classified chip needs. 

DOD has initiated a Trusted Foundry Program to provide, in the 

interim, a source of high performance ICs in accordance with the 

overall DTICS mandate. DOD has contracted for these services on a 

“take-or-pay” basis. This program is a good start addressing 

immediate needs for trusted sources of IC supply, however a more 

comprehensive program is needed that looks further into the future. 

Recommendation: Led by the USD(AT&L), DOD and its Military 

Departments/Agencies, working with their system suppliers, must 

develop a plan of action that encompasses both short- and long-term 

technology, acquisition and manufacturing capabilities needed to 

assure on-going availability of supplies of trusted microelectronic 

components. This plan of action requires both a steady-state vision 

and implementation plans for both standard and special technology 

components. 

CUSTOM IC PRODUCTION MODELS AND TECHNOLOGY

Finding: Commercial integrated circuit production methods and 

production technology has become strongly skewed to 
EXECUTIVE SUMMARY ___________________________________________________________ 

10 _________________________________________________________ DSB TASK FORCE ON

manufacturing commodity products. Costs of high volume standard 

products have continued to fall, however this mass production trend 

has dramatically raised the cost of low production volume leadingedge custom products beyond affordability. 

Since military systems very often require a few parts with unique 

functions, state-of-the-art speed and low power, DOD and its 

suppliers have an irreducible need for custom components. A similar 

need is arising in industry. The solution to this quandary lies in 

development of a new model for economic production of limited 

volume custom circuits and equipment. 

Developing cost-effective technology for the design and 

fabrication of low production volume, leading edge technology 

ASICs will require the combined efforts of DOD, the semiconductor 

industry and semiconductor fabrication equipment suppliers. 

DARPA attempted such a development in the mid-1990s through 

its MMST program; however that program had different goals than 

those required today. 

Recommendation: DDR&E should take another look at ASIC 

production and formulate a program to address barriers to low- to 

medium-volume custom IC production. This program will require a 

dedicated, joint effort by all participants in ASIC production - 

designers, fabricators and equipment makers. Such an effort could be 

similar to SEMATECH, the industry-initiated, DARPA supported 

consortium. 

EQUIPMENT EXPORT CONTROLS

Finding: Dual use technology exports which pose national 

security or foreign policy concern are regulated pursuant to the 

Export Administration Act of 1979. Advanced semiconductor 

manufacturing equipment and technology are regarded as sensitive, 

and export to destination such as China requires issuance of an 

export license by the Department of Commerce (DoC). Applications 

for export licenses are reviewed by DoC as well as the Department of 

Defense and the State Department. Decisions to grant or not grant 
__________________________________________________________ EXECUTIVE SUMMARY

HIGH PERFORMANCE MICROCHIP SUPPLY ___________________________________________ 11

licenses are determined on a case-by-case basis. Since the end of the 

Cold War U.S. export controls have become less effective in 

restricting the flow of advanced semiconductor manufacturing 

equipment (SME) and design technology and equipment to China. 

The strict international regime of export controls that governed 

semiconductor design and production equipment exports during the 

Cold War, CoCom, was replaced in 1996 by the less rigorous 

Wassenaar Arrangement, a non-treaty, voluntary system for 

coordinating and sharing information with respect to the export of 

sensitive technologies. On several occasions, the U.S. government 

has sought to persuade other Wassenaar members to restrict exports 

of SME to China, but has been rebuffed. 

Recommendation: The Wassenaar Arrangement covering exports 

of sensitive, leading edge semiconductor manufacturing equipment 

(SME) is not an effective tool for assuring that potential adversaries 

do not have access to leading edge design and wafer fabrication 

equipment, technology and cell libraries. The U.S. should act to 

strengthen export controls by: 

 Negotiating bilateral agreements or understandings 

with Wassenaar members in which advanced SME 

and design tools are made with the objective of 

harmonizing export licensing practices and 

standards, 

 Concluding a similar bilateral agreement or 

understanding with Taiwan. 

 Giving the Department of Commerce a mandate and 

resources to compile an up-to-date catalogue of the 

global availability (including foreign availability) of 

state-of-the-art SME and design tools in designated 

foreign countries. 
EXECUTIVE SUMMARY ___________________________________________________________ 

12 _________________________________________________________ DSB TASK FORCE ON

STANDARD CHIPS WITH PROGRAMMABLE HARDWARE 

AND/OR SOFTWARE

Finding: Defense system electronic hardware, like that used in 

commercial applications, has undergone a radical transformation. 

Whereas custom circuits, unique to specific applications, were once 

widely used, most information processing today is performed by 

combinations of memory chips (DRAMs, SRAMs, etc.) which store 

data (including programs), and programmable microchips, such as 

Structured ASICs, Programmable Logic Arrays (PLAs), central 

processors (CPUs) and digital signal processors (DSPs), which 

operate on the data. Of the two classes of parts, the latter have more 

intricate designs, which make them difficult to validate (especially 

after manufacturing) and thus more subject to undetected 

compromise. 

U.S. companies have led in design of programmable microchips 

since their inception. Although U.S. design leadership does not in 

and of itself assure the trustworthiness of these parts, it does put the 

DOD in a superior position to potential adversaries, whose systems 

rely on U.S. based suppliers and/or inferior parts procured abroad. 

This advantage accrues not only to fielded weapon systems, but to all 

aspects of the defense community and of U.S. national 

infrastructures. 

U.S. leadership cannot be taken for granted, especially in light of 

the global dispersion underway in the semiconductor industry. 

Recommendation: Continued development of new programmable 

technologies is key to sustaining U.S. leadership. To support these 

developments, DOD should: 

 Partner with industry and with other government 

agencies, especially the NSF and Homeland 

Security, to fund university research that will ensure 

the domestic supply of scientists and engineers who 

are skilled in the development and use of 

programmable hardware, 
__________________________________________________________ EXECUTIVE SUMMARY

HIGH PERFORMANCE MICROCHIP SUPPLY ___________________________________________ 13

 Should foster the voluntary exchange of best 

counter-tampering practices for assuring trust of 

standard programmable hardware among 

government and U.S. commercial semiconductor 

developers, through the creation of courseware and 

industry information exchange programs, 

 Institute a targeted program in the area of firmware 

integrity to rapidly develop, disseminate and 

encourage adoption of improvements to this trustrelated aspect of programmable parts, and in 

conjunction with the above, initiate a research 

program on “design for trust evaluation” along the 

lines of prior successful efforts on “design for 

testability.” 

DOD-UNIQUE TECHNOLOGIES

Finding: Defense systems, by the nature of their functions and use 

environment, require some technologies for which there is no wide 

commercial demand. The most widely known of these “special” 

technologies is that of radiation-hardening of circuits to allow their 

operation / survival through a nuclear event. Similar unique 

technologies include low power and counter-tamper techniques. 

Research and development for these special technologies is 

supported, almost entirely, by DOD through DTRA, NSA or similar 

mission agencies. 

Recommendation: DOD must continue to support research and 

development of the special technologies it requires. This includes ongoing radiation hardened and EMP-resistant component design and 

process development. The emergence of requirements for 

trustworthiness requires new efforts in technologies to embed, assure 

and protect component trust. The Department will require additional 

technology development efforts, including: 

 Reducing barriers to radiation-tolerant “standard” 

designs, 
EXECUTIVE SUMMARY ___________________________________________________________ 

14 _________________________________________________________ DSB TASK FORCE ON

 Increasing efforts to develop tamper protection 

technology, and 

 Developing design and production techniques for 

disguising the true function of ICs. 

ADVERSARIAL CLANDESTINE OPERATIONAL OPPORTUNITIES

Finding: Because of the U.S. military dependence on advanced 

technologies whose fabrication is progressively more offshore, 

opportunities for adversaries to clandestinely manipulate technology 

used in U.S. critical microelectronics applications are enormous and 

increasing. In general, a sophisticated, clandestine services develop 

opportunities to gain close access to a target technology throughout 

its lifetime, not just at inception. 

If real and potential adversaries’ ability to subvert U.S. 

microelectronics components is not reversed or technically mitigated, 

our adversaries will gain enormous asymmetric advantages that 

could possibly put U.S. force projection at risk. In the end, the U.S. 

strategy must be one of risk management, not risk avoidance. Even if 

risk avoidance were possible, it would be prohibitively costly. 

Recommendation: Accurate characterization and assessment of 

adversaries’ “dirty tricks” is essential to develop an effective U.S. 

counter tamper strategy. The Task Force addressed many of these 

issues relative to the security challenges of information sharing, but 

opportunities, methods and threats change continuously. The 

DDR&E in conjunction with the Intelligence Community should 

develop risk mitigating technical approaches to support the risk 

management function. DDR&E should take the lead in defining the 

requirements and making the necessary investments to realize the 

needed security breakthroughs 
______________________________________________________________ INTRODUCTION

HIGH PERFORMANCE MICROCHIP SUPPLY ___________________________________________ 15

INTRODUCTION

The microelectronics industry, supplier of hardware capability 

that underlies much of America’s modern military leadership 

technology, is well into a profound restructuring leading to 

horizontal consolidation replacing the past vertically integrated 

company structure. This restructuring is driven by the need to 

spread large and rapidly increasing capital risks widely, across a 

broad industry base. One unintended result of this otherwise sound 

industry change is the relocation of critical microelectronics 

manufacturing capabilities from the United States to countries with 

lower-cost capital and operating environments. From a U.S. national 

security view, the potential effects of this restructuring are so 

perverse and far reaching and have such opportunities for mischief 

that, had the United States not significantly contributed to this 

migration, it would have been considered a major triumph of an 

adversary nation’s strategy to undermine U.S. military capabilities. 

Trustworthiness and supply assurance for components used in 

critical military and infrastructure applications are the casualties of 

this migration. Further, while not the focus of this study per se, the 

U.S. national technological leadership may be increasingly challenged 

by these changing industry dynamics; this possibility poses longterm national economic security concerns. 

Although this study focuses on microelectronics components, 

changes underway in the semiconductor industry may apply to other 

critical military electronics technologies: circuit boards, subsystems 

assemblies, and, especially, software. DOD cannot and should not 

disengage from its allies and from seeking supply from the global 

marketplace, but defense systems and other mission-critical products 

designed and procured abroad need appropriate oversight and 

controls to ensure trustworthiness. 

The superiority of U.S. forces depends on information superiority, 

which rests on having superior sensors and superior information 

processing and networking capabilities. These capabilities, in turn, 
INTRODUCTION _______________________________________________________________ 

16 _________________________________________________________ DSB TASK FORCE ON

depend on sustained improvements in the performance of microchips 

(see appendix D).1

Accordingly, for the DOD’s strategy of information superiority to 

remain viable, the department requires: 

 Trusted2 and assured3 supplies of integrated circuit 

(IC)4 components. 

 A continued stream of exponential improvements in 

the processing capacity of microchips and new 

approaches to extracting military value from 

information. 

BACKGROUND

It is now taken for granted that microelectronics-based weapons, 

communications, navigation, space, sensor, intelligence, and battle 

management systems provide the force multipliers that made the 

 

1. Improvements in sensors are typically linear, i.e., the fidelity of individual sensors 

increases linearly with time. However, the “take” of raw information increases 

exponentially owing to complementary growth in the diversity and number of sensors 

available. This, in turn, drives exponential growth in the demand for information 

processing and network capacity. The demand for processing power is also driven by the 

simple observation that for every “n” bits of information that are acquired, there are 2n

permutations, only a fraction of which will be of interest. Although exhaustive 

examination of all of those permutations would be intractable, the DOD has to date 

excelled at combining exponential growth in the processing capacity of individual 

microchips with improvements in the sophistication of the algorithms that are used to 

wring “signals” from data. Note that information superiority does not simply accrue 

from the use of microchips in large supercomputers but depends on the processing 

performance of microchips that are embedded within a wide range of DOD systems, both 

large and small. 

2. “Trusted” ICs and microelectronic components, in the context of this study, are those 

that can be employed by a user with confidence that they will perform as expected and 

are free from compromises, denials or exploitation. 

3. “Assured” supplies are manufacturing capabilities that are available to produce needed 

quantities of microelectronics components throughout the life of their system 

applications. 

4. Integrated Circuits (ICs) are microelectronic components that combine multiple circuit 

elements on a single semiconductor chip. ICs dominate today’s electronic systems, 

performing often complex, high-performance, reliable analog, digital and RF functions. 
______________________________________________________________ INTRODUCTION

HIGH PERFORMANCE MICROCHIP SUPPLY ___________________________________________ 17

revolution in military affairs possible. The hardware underlying 

these systems incorporates many classified capabilities, accounts for 

reliability, uses special technologies, and enables the long lives of 

today’s military systems. Trusted and assured supplies of integrated 

circuit components for military applications are critical matters for 

U.S. national security, yet the defense fraction of the total integrated 

circuits market is minuscule (1 or 2% now versus 7% in the 1970s)5; 

supplier strategies are driven entirely by economic and market 

pressures affecting company health and competitiveness. 

In response to the increasing commercial availability of highperformance ICs, U.S. defense acquisition has emphasized use of 

commercial off-the-shelf (COTS) components in new system designs. 

Further, the military specifications (MIL-SPEC) system that drove 

1970s defense hardware acquisitions was left behind, often in favor of 

commercial performance and reliability specifications. Substantial 

benefits have followed as a consequence of these acquisition 

decisions – cost, performance, and development times of 

microelectronic elements of defense systems have improved 

markedly6. 

Trustworthiness of custom and commercial systems that support 

military operations – and the advances in microchip technology 

underlying our information superiority – have been jeopardized7. 

Trustworthiness includes confidence that classified or mission-critical 

information contained in chip designs is not compromised, reliability 

is not degraded, and unintended design elements are not inserted in 

chips as a result of design or fabrication in conditions open to 

adversary agents. Trust cannot be added to integrated circuits after 

fabrication; electrical testing and reverse engineering cannot be 

relied upon to detect undesired alterations in military integrated 

circuits.8 While not wholly sufficient -- circuit boards, subassemblies, 

 

5. Military share reference. See: “Sizing the Problem” in the findings section 

6. Special Technology Review on Commercial Off-the-Shelf Electronic Components, DOD 

Advisory Group on Electron Devices, June 1999. 

7. Ray Price, Briefing to the Defense Science Board Task Force on High-Performance 

Microchips Supply, May 20, 2004. 

8. Randy Goodall, SEMATECH Director, External Programs: Briefing to the Defense Science 

Board Task Force on High-performance Microchip Supply, June 23, 2004 see Appendix E. 
INTRODUCTION _______________________________________________________________ 

18 _________________________________________________________ DSB TASK FORCE ON

and software may also pose concerns -- trusted electronic 

components are key and necessary elements to guarantee 

performance of defense systems, but are not sufficient. 

Assured sources are those available to supply microelectronics 

components as needed for defense applications according to 

reasonable schedules and at a reasonable cost. Changes in the 

semiconductor industry structure also jeopardize DOD’s ability to 

procure needed microelectronic components in emergencies and 

throughout the long lives of military systems. 

The past decade has seen an accelerating trend toward vertical 

disaggregation in the semiconductor business.9 10 11 Companies whose 

manufacturing operations once encompassed the full range of 

integrated circuit activities from product definition to design and 

process development, through mask-making and chip fabrication, 

through assembly and final test and customer support, and even 

including materials and production equipment, are outsourcing 

nearly all these essential activities. Materials and production 

equipment supply developed into separate industries 20 years ago. 

Company rationale for this divestiture was sound: firms that perform 

capital-intensive activities for many customers divide their fixed costs 

among them all. Further, the need for these firms to compete in the 

open market distills the best supply sources. Next came external 

mask-fabrication for lithography. Recent trends point to company 

outsourcing of virtually all manufacturing operations, including chip 

fabrication, assembly, and testing as well as process development. 

 

9. Daryl Hatano, SIA: Fab America –Keeping U.S. Leadership in Semiconductor Technology, 

Presentation to the Defense Science Board Task Force on High-Performance Microchips, 

March 3, 2004. 

10. Firms that specify and design integrated circuits which are then produced under 

contract foundries and assembled and tested by contractors are called “fabless.” 

Fabless IC companies exhibit better financial performance than vertically integrated 

firms because of their low capital investment, greater flexibility and need for less 

process engineering. They are increasingly being emulated by historically vertically 

integrated manufacturers (sometimes called Integrated Device Manufacturers, or 

IDMs). 

11. Bob Stow and George Nossaman (BAE Systems): Rad Hard Microelectronics Supply

Presentation to the Defense Science Board Task Force on High-Performance Microchips, 

March 3, 2004. 
______________________________________________________________ INTRODUCTION

HIGH PERFORMANCE MICROCHIP SUPPLY ___________________________________________ 19

Design and development will soon follow. Fabless IC production has 

grown to 16% of the total industry (see Figure 1); the fraction fabless 

production at the leading technology edge is much higher. The 

prototypical integrated circuits supplier in 10 years is likely to specify 

products that will then be designed, manufactured, assembled, and 

tested by contractors and sold through outside representatives and 

distributors. Historical vertical integration in the semiconductor 

industry has been replaced by horizontal consolidation of chip 

fabrication, mask making, material supply, assembly, testing, and 

equipment supply. This consolidation has led to global dispersion of 

manufacturing operations, removing many critical operations from 

U.S. national control. 

The fabless/foundry business model has grown to 16% of the 

U.S. chip industry. The trend is strongest in the leading 

process technology portion of the industry

0

2

4

6

8

10

12

14

16

'85 '86 '87 '88 '89 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

U.S. Fabless Sales % U.S. Industry Source: SIA

$ Billions % Share

Figure 1 
INTRODUCTION _______________________________________________________________ 

20 _________________________________________________________ DSB TASK FORCE ON

U.S. industry’s share of capital expenditures falling and in 

leading edge semiconductor manufacturing capacity.

20%

22%

24%

26%

28%

30%

32%

34%

36%

38%

1998 1999 2000 2001 2002 2003

< 0.4μ < 0.3μ < 0.3μ < 0.2μ < 0.2μ < 0.16μ Leading 

Edge

Source: SICAS/SIA

Figure 2 

The hollowing out of previously vertically integrated companies 

into fabless firms is the direct result of the rapid technology progress 

that characterizes the integrated circuits industry. As technology has 

surged forward, the cost of building factories has risen dramatically 

(now approaching three billion dollars for a full-scale, 300 mm wafer, 

65 nm process chip fabrication plant). Irresistible pressures for 

economies of scale, huge nonrecurring product development 

expenses, and the need for sophisticated design and test techniques 

have forced consolidation of leading-edge product realization 

functions into huge, specialized wafer processing facilities, referred to 
______________________________________________________________ INTRODUCTION

HIGH PERFORMANCE MICROCHIP SUPPLY ___________________________________________ 21

as “foundries,” 12 which offer unique services to the broad industry 

customer base. Foundries spread the huge costs (both skills and 

money) across multiple customers, thereby attaining economies of 

scale not possible in a single company’s operations. Contract 

assembly started in the 1970s. Wafer fabrication foundries that accept 

business from all qualified customers are a relatively new 

development in the semiconductor business; they arose in the 1990s 

to serve the needs of a new breed of chip companies who lacked inhouse manufacturing capability. The impressive financial 

performance of these industry latecomers has put pressure on 

traditional chip firms to follow suit, to become “fab-light.” As a 

result, after rising to 35% in 1999 to 2004, the U.S. semiconductor 

industry fraction of world-wide semiconductor capitol investment in 

leading edge technology has fallen to 20% (see Figure 2) 

Strategic decisions by several countries that indigenous leadingedge integrated circuits capability is key to their economic future has 

aided and abetted movement of U.S. IC manufacturing and 

development abroad. These countries implement their strategies 

through a wide variety of economic incentives and support. 

Most leading-edge wafer foundries (with the exception so far of 

IBM and possibly Texas Instruments) are controlled and located 

outside the United States. Although cost of labor was the initial 

consideration driving integrated circuit manufacturing off-shore, 

automation and inflation has now erased much of this advantage. 

Nevertheless, virtually all integrated circuit assembly and most 

integrated circuit testing is performed abroad, where the greatest 

competence for these activities now resides. 

Today the driving force behind the “alienation” of foundry 

business from the United States to other countries is the lower cost of 

capital available in developing countries, made possible by foreign 

nations’ tax incentives, market access requirements, subsidized 

infrastructure, and low-cost financing (including ownership), in 

combination with the worldwide portability of technical skills, 

 

12. A “foundry,” for purposes of this study, is a wafer production facility that fabricates IC 

designs for a broad customer clientele as a major part of its business. 
INTRODUCTION _______________________________________________________________ 

22 _________________________________________________________ DSB TASK FORCE ON

equipment and process know-how. Sophisticated process knowledge 

is now provided by equipment suppliers as part of equipment 

purchases. Scientists and engineers trained in U.S. graduate schools 

are free to move to other nations. In some cases, students may no 

longer seek education in the United States; for example, the number 

of engineering graduates in China is far outpacing U.S. totals so that 

students no longer have to come to the U.S. to attend school. The 

primary beneficiary countries of the foundry trend have been in the 

Far East (Taiwan, Singapore, People’s Republic of China, Korea, and 

Japan), some of whose future interests may not align with those of 

the United States. Taiwan dominates global foundry production with 

about two-thirds of current capacity; China, a relatively new entrant 

with 8 percent of global capacity, is rapidly increasing its market 

share. 

Similar trends are evident in the mask-making and materials 

businesses that support integrated circuit fabrication. These ancillary 

industries, like that of integrated circuit fabrication, play critical roles 

in the integrity of the military microelectronic components supply. 

THE THREAT

The changes underway in the integrated circuit supply structure 

are directly contrary to the best interests of the Department of 

Defense with regard to non-COTS ICs. The shift from United States 

to foreign IC manufacture endangers the security of classified 

information embedded in chip designs; additionally, it opens the 

possibility that “Trojan horses” and other unauthorized design 

inclusions may appear in unclassified integrated circuits used in 

military applications. These surreptitious inclusions are similar to 

viruses, Trojan Horses, and worms13 common in today’s public 

 

13. A Trojan horse is a program that disguises itself as another program. Similar to viruses, 

these programs are hidden and usually cause an unwanted effect, such as installing a 

back door in your system that can be used by hackers. Worms spread without any user 

interaction, typically by exploiting a flaw in popular software. Once activated, they 

generally use the Internet or your LAN (local network) to self-propagate and often take 

advantage of vulnerabilities in email programs. 
______________________________________________________________ INTRODUCTION

HIGH PERFORMANCE MICROCHIP SUPPLY ___________________________________________ 23

software networks. Such backdoor features could be used by an 

adversary to disrupt military systems at critical times. More subtle 

shifts in process parameters or layout line spacing can drastically 

shorten the lives of components. To the extent that COTS 

destinations in DOD systems can be kept anonymous, the use of 

COTS implies less risk. However, even use of COTS components 

may not offer full protection from parts compromise. Neither 

extensive electrical testing nor reverse engineering is capable of 

reliably detecting compromised microelectronics components. 

The increasing complexity and sophistication of microelectronics 

design and fabrication technology presents additional integrated 

circuit supply difficulties. Advances in integrated circuits 

manufacturing technology make possible increasingly smaller critical 

dimensions of individual devices that comprise a chip’s circuits. 

These critical dimensions are now approaching 50 nanometers (fifty 

billionths of a meter or 2 microinches). Lithography tools and 

materials necessary to perfectly define patterns with dimensions 

much smaller than the wavelength of visible light have become 

prohibitively expensive for any but the highest-manufacturingvolume products. Further, the sophisticated deposition and etch 

processes required to create such tiny switches are economically 

feasible only on huge 300mm-diameter wafers. 

In IC design and manufacturing, the emphasis is on economies of 

scale. The commercial market has moved away from complex, lowcost, low-production-volume products because of their high costs. 

The combination of high nonrecurring lithography costs and large 

wafer size make leading edge integrated circuit products with 

lifetime requirements for few parts, such as those used in military 

systems, uneconomical. While today’s high-volume fabrication 

emphasis is on 300 mm wafers, the need to convert to 450 mm wafers 

is forecast by industry in order to meet the historic cost-per-gate 

trend that drives IC industry economics. 

To further complicate DOD’s integrated circuit problems, military 

systems use many microelectronic components that must incorporate 

technologies for which there is no commercial demand. Irreducible 

requirements for radiation hardening, high-power microwave, and 
INTRODUCTION _______________________________________________________________ 

24 _________________________________________________________ DSB TASK FORCE ON

millimeter-wave circuits and special sensor requirements, to name 

but a few, lie outside widely available commercial industrial 

capabilities.14

FOREIGN DEPENDENCE RISKS

Beyond the threat of IC device compromise described above, 

dependence on off-shore or foreign-owned semiconductor 

components subjects the United States to the risk that several 

circumstances, such as quick response or surge capacity in time of 

war, could threaten its access to state-of-the-art microelectronics. 

Some of these risks are a result of the concentration of the foundry 

industry into a few Far Eastern countries. 

Political/Geographic Dislocations 

 In September 1999, an earthquake measuring 7.6 on the Richter 

scale hit Taiwan, shutting down all factories in Hsinchu, the national 

wafer fabrication center. Fortunately, these plants were restarted in a 

matter of weeks; however, a temblor that seriously damaged 

Taiwan’s wafer capacity would have started a worldwide run on 

commercial wafer capacity that would have taken years to rectify. 

During such a time, DOD and its contractors would have little 

leverage to obtain needed fabrication services. 

A major armed confrontation between Taiwan and China over the 

Straits of Taiwan would have similar consequences. 

As additional capacity moves to potential adversary countries, the 

United States is vulnerable to a governmental “reverse-ITAR”15 by 

which critical technologies are denied to the United States in 

international trade. In the late 1980s, the Japanese denied leadingedge semiconductor manufacturing tools to U.S. manufacturers, 

resulting in the need for SEMATECH, a rush joint effort by DARPA 

 

14. Critical Assessment of Technologies, DOD Advisory Group on Electron Devices, 2002. 

15. International Traffic in Arms Regulations (ITAR) is the set of procedures used by the 

United States to restrict international shipment of arms and defense-related technology. 
______________________________________________________________ INTRODUCTION

HIGH PERFORMANCE MICROCHIP SUPPLY ___________________________________________ 25

and industry to rebuild U.S. equipment base. Denial of advanced 

foundry services could be much more difficult to counter. 

Loss of U.S. National Technological Leadership

Delays in making leading-edge technology available to U.S. firms 

(as happened in the 1980s with Japanese advanced lithography tools) 

slow the time to market for U.S. advanced systems. Loss of 

leadership in critical advanced microelectronics technologies would 

slow the entire commercial and defense product development 

process. 

One way such a loss could occur lies in the historical fact that 

leading-edge research and development (R&D) tends to migrate to 

production leaders. The most attractive positions for talented process 

scientists and engineers move toward advanced production. The 

close collaboration between process engineers and designers required 

for leading-edge chip development could be rendered ineffective for 

the U.S. defense industry. 

DEFENSE COMMUNITY INFLUENCE

The Department of Defense and its contractors can do little on 

their own to ameliorate the department’s integrated circuit supply 

problems by influencing the way the industry as a whole acts. The 

economic forces that drive the industry restructuring are too strong, 

and the military share of the integrated circuits business is at least an 

order of magnitude too small. The U.S. IC industry, as a whole, is 

relatively healthy financially and still holds the technological edge, at 

least for now; maintenance of its military segment, however, has a 

dismal future as it is now headed. Satisfying DOD unique 

requirements will require special attention, especially at the leading 

edge of process technology. 

The changes in integrated circuit supply capability and the cost of 

leading-edge, complex ASICs16 has discouraged DOD use of unique, 

 

16. An ASIC, or Application Specific Integrated Circuit, is a custom IC designed for a 

single, application. 
INTRODUCTION _______________________________________________________________ 

26 _________________________________________________________ DSB TASK FORCE ON

special-purpose integrated circuits in new systems. Instead, 

subsystems designers are looking for solutions that employ older 

chip technologies or have moved to field programmable gate arrays 

(FPGAs) at the sacrifice of circuit speed and increased power. 

A further complication lies in the fact that the Defense 

Department does not directly acquire components at the integrated 

circuit level. Individual circuits are most often specified by the 

designers of subsystems; even system primes have little knowledge 

of the sources of the components used in their system-level products. 

Any DOD acquisition plan to address IC trustworthiness and 

availability must focus on defense suppliers as much as DOD itself.
__________________________________________________________________ FINDINGS

HIGH PERFORMANCE MICROCHIP SUPPLY ___________________________________________ 27

FINDINGS

THE INDUSTRY SITUATION

Semiconductor technology and manufacturing leadership is a 

national priority that must be maintained if the U.S. military is to 

continue to lead in the application of electronics to support the 

warfighter. An integral part of that leadership is the close coupling of 

manufacturing with the development of advanced technology and 

the design of leading-edge integrated circuits. This coupling can best 

be achieved if development and manufacturing are colocated. Doing 

so provides an advantage to integrated device manufacturers who 

are able to coordinate design and process development to be first to 

market with leading-edge products. The transfer of technology from 

the laboratory to manufacturing is facilitated. 

U.S. industry’s share of capital expenditures falling....

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

1997 1998 1999 2000 2001 2002 2003 2004

North America Japan Europe Korea Taiwan Rest of the World

Source: VLSI Research

Figure 3 
FINDINGS ___________________________________________________________________ 

28 _________________________________________________________ DSB TASK FORCE ON

There is ample evidence that capital investment in the 

semiconductor industry is moving offshore (see Figure 3). The U.S. 

industry’s share of capital expenditures has decreased from a high of 

42% of the world’s total investment in 2001 to 33% projected for 

2004.17 

By the end of 2005, there will be 59 300-mm fabrication plants 

(fabs) worldwide with only 16 of these located in the United States 

(see Figure 4). As measured by capacity, this will be the first time that 

less than 25% of advanced capacity is located in the United States.18 

Of the 16 U.S. advanced technology fabrication facilities, most are 

special-purpose memory or microprocessor plants, adapted to a 

single product type and not suitable to meet government ASIC needs. 

Only one for sure and at most possibly three of the U.S.-based 

production fabs are accessible for the DOD to produce trusted 

microelectronics (one is currently under contract). 

 

17. Daryl Hatano: Fab America –Keeping U.S. Leadership in Semiconductor Technology, 

Presentation to the Defense Science Board Task Force on High Performance Microchip 

Supply, March 3, 2004. 

18. Ibid. 
__________________________________________________________________ FINDINGS

HIGH PERFORMANCE MICROCHIP SUPPLY ___________________________________________ 29

300MM Wafer Fabrication Plants

0%

10%

20%

30%

40%

50%

60%

2002 2003 2004 2005E

U.S. Japan Europe Asia outside Japan

8

2

4

8

13

4

8

15

11

5

16

22

16

6

12

25

% of Capacity

Note: Number of fabs is cumulative. These figures include R&D fabs; 

which operate at a much lower capacity than a production fab.

Source: International SEMATECH

Figure 4 

This movement is the result of market forces, business models, 

and human resource trends. Government policies also affect the 

location of manufacturing and technology. These policies are guided 

by goals such as those of China: 

With 5 to 10 years’ effort....domestic integrated-circuit 

products will also satisfy most domestic demand and be 

exported as well while reducing the development and 

production gap with developed countries. 

China State Council Document Number 18 

June 24, 2000 

The initial impetus (in the 1960s and 1970s) for U.S. firms to 

manufacture abroad was lower labor cost for IC assembly and 

packaging. Before extensive automation of virtually all phases of the 

manufacturing process, labor was an important element in product 

cost. The driving force behind manufacturing abroad has now 
FINDINGS ___________________________________________________________________ 

30 _________________________________________________________ DSB TASK FORCE ON

changed: a Semiconductor Industry Association document, China’s 

Emerging Semiconductor Industry (October 2003), concluded 

There is almost no cost difference between locating a facility in 

the United States, Taiwan, or China with respect of building 

and equipping...Manufacturing costs [in China] are [only] 10% 

lower than in the United States while manufacturing cost in 

Taiwan are 7% lower. Almost all...accounted for by labor 

costs. 

This data... does not support the hypothesis that the 

concentration of new foundry investment in Taiwan and the 

current migration to China is due to lower construction and 

operating costs...Government policies are driving this... 

The true challenge posed by China’s promotion effort to the 

United States and U.S. semiconductor industry is that China’s 

growing “gravitational pull” will draw capital, talented people 

and ultimately, leading edge R & D and design functions away 

from the U.S . . . should this occur, the United States would 

confront the erosion of the basic institutional and human 

infrastructure necessary to sustain world leadership in [nano] 

electronics . . .. 

China has adopted aggressive policies to promote domestic 

manufacture of semiconductors. Income tax incentives include a five 

year tax holiday plus five years at half-tax for reinvested capital with 

the clock starting when profits start. It is providing free land for 

industrial parks. Until recently, China applied a 17% value-added 

tax (VAT) to imported chips, but not to those made in China. 

Agreements with the World Trade Organization on VAT may have 

negated the impact of the full 17% on imported chips however while 

amounts over 3-6% are still rebated for Chinese-made chips. 

Taiwan has adopted policies to encourage Taiwanese companies 

to keep “roots in Taiwan.” A “Statute for Upgrading Industries” 

allow authorities to support targeted industries. Taiwan’s tax law 

provides five-year tax holidays for semiconductors. (Taiwan’s major 

semiconductor companies have paid little taxes for years.) To help 

finance the significant costs required to build chip facilities or start up 

microelectronics-related companies, Taiwan has a number of 
__________________________________________________________________ FINDINGS

HIGH PERFORMANCE MICROCHIP SUPPLY ___________________________________________ 31

government subsidy funds and government-controlled banks. 

Further, the personal income tax laws allow employees at high-tech 

firms to receive stock as compensation virtually tax free. This policy 

enables Taiwanese companies to compete effectively for engineering 

talent in the worldwide market. It is effective in attracting new 

advanced-degree graduates from top U.S. universities to return to 

Taiwan. 

The SIA 2003 China report concludes: 

No U.S. policy exists with respect to the largely tax-free 

environment for semiconductor manufacturing and design 

firms in China/Taiwan. China is replicating Taiwanese 

policies which virtually exempt semiconductor firms from 

payment of corporate income tax. Such tax rules were a 

primary factor underlying massive semiconductor investments 

in Taiwan in the 1990s and are now being implemented in 

China . . . differences in national tax policies are becoming an 

important factor underlying location decisions in the 

semiconductor industry, and absent a U.S. policy response, 

such differences will increasingly determine where 

semiconductors are designed and produced. 

Japan has also promoted semiconductor production by allowing 

up to 88% depreciation of production equipment in the first year. 

The United States allows 20%. 

The Korean government has a history of supporting the 

semiconductor industry stretching back to the Korean governmentsponsored Korean Institute of Electronics Technology (KIET), which 

jump-started the industry in the 1980s. They have provided capital to 

a private company, Hynix, through government-controlled banks 

because it considers semiconductors to be a backbone industry that 

cannot be allowed to fail from market pressures. The capital flows 

have included debt forgiveness, extensions of maturities, and debtfor-equity swaps. 

Asian countries are not alone in using economic subsidies to 

attract new fabrication facilities of United States–based 

semiconductor companies. In February 2004, Advanced Micro 
FINDINGS ___________________________________________________________________ 

32 _________________________________________________________ DSB TASK FORCE ON

Devices, Inc. (AMD) welcomed the European Union (EU) 

Commission’s approval of investment aid for its next-generation 

microprocessor wafer facility, AMD Fab 36, in Dresden, Germany. 

The Federal Republic of Germany and the Free State of Saxony are 

providing investment allowances and investment grants of up to 

approximately $545 million — the highest benefit possible under the 

German grants and subsidy program. Hiring for AMD Fab 36 is 

underway, and headcount for the new fab is planned to reach 

approximately one thousand by 2007. AMD expects to invest 

approximately $2.5 billion through 2007 in AMD Fab 36. 

Construction of a new, dedicated 24-megawatt energy center has also 

begun adjacent to the AMD fab.19

DOD VISION

On October 10, 2003, Deputy Secretary of Defense Wolfowitz 

outlined five goals for a “Trusted Integrated Circuit Strategy”:20

 Facilities identification 

 Product identification 

 Near-term solutions 

 Research initiatives 

 Healthy commercial IC industry 

The task force agrees with the need for a strategy and with the 

elements identified in Dr. Wolfowitz’s Defense Trusted Integrated 

Circuits Strategy (DTICS) memo. 

Based on the presentations and information it has received, plus 

the experience of its members, the task force perceives that DOD has 

a trusted foundry strategy that addresses its near-term needs. 

However it has no overall vision of its future microelectronics 

components needs and how to deal with them. Technology and 

 

19. See Advanced Micro Devices, Inc. Web site: http://www.amd.com/usen/Corporate/VirtualPressRoom/0,,51_104_543%7E79105,00.html. 

20. Memo from the Deputy Secretary of Defense, “Defense Trusted Integrated Circuits 

Strategy”, dated October 10, 2003, Ref. U16619/03 - see Appendix C. 
__________________________________________________________________ FINDINGS

HIGH PERFORMANCE MICROCHIP SUPPLY ___________________________________________ 33

supply problems are addressed as they arise (e.g., radiation-hardened 

IC supply, sources of classified components, legacy parts). An overall 

vision would enable the department to develop approaches to 

meeting its needs before each individual supply source becomes an 

emergency, and to preempt or diffuse the threats and risks outlined 

above. The needs addressed should include life-cycle and logistics 

needs for microelectronic components. 

SIZING THE PROBLEM

The task force has attempted to estimate DOD’s IC requirements 

to size the problem facing future U.S. military integrated circuits 

acquisition needs. An initial step DOD must take is to identify and 

characterize the volume and scope of microelectronics that require 

trusted sources. 

Several features characterize DOD microelectronics 

demand today 

DOD demand volume is a small fraction of global IC market 

demand. Based on a top-down estimating technique developed by 

the Institute for Defense Analysis for the deputy under secretary of 

defense for industrial policy DUSD(IP), the total DOD-related 

demand for semiconductors may be upwards of $3.6 billion in fiscal 

year 2004.21 This very rough estimate is broadly defined and should 

be considered as including DOD’s use of ICs that are incorporated in 

commercial or modified commercial products that it purchases, such 

as personal computers. The Semiconductor Industry Association 

website22 estimates the expected total global sales for semiconductors 

in 2004 to be $214 billion. Comparing these two estimates, the DOD’s 

share of global demand is between 1–2%. 

Using the $3.6 billion a year estimate as a starting point, IDA has 

estimated DOD ASIC demand to be roughly $300–400 million a year. 

This estimate is very crude, and it likely overstates DOD’s needs. It is 

 

21. Reference to IDA study. 

22. See Semiconductor Industry Association website: http://www.siaonline.org/downloads/ACFE8.pdf. 
FINDINGS ___________________________________________________________________ 

34 _________________________________________________________ DSB TASK FORCE ON

based on the EIA estimate that ASICS worldwide represent about 9% 

of all semiconductors and likely overstates DOD’s needs. The task 

force understands that IDA is working for DUSD(IP) to develop a 

more complete and representative top-down estimating technique for 

DOD ASIC use. Meaningful estimates of DOD IC consumption are 

difficult to assemble: items like nonrecurring costs associated with IC 

development may or may not be included with production costs. 

DOD should be prepared to accept that an accurate estimate will be 

very difficult to make. 

Although DOD-unique IC consumption is a small fraction of the 

commercial market, the functions performed by these special circuits 

are essential to the nation’s defense. Electronics included in GPS 

systems, special intelligence equipment, M1A1 gun sights, advanced 

digital communications equipment (e.g., JTRS), radar electronically 

steerable arrays and signal processing, Synthetic Aperture Radar 

(SAR), communications protection devices (e.g., cryptography), and 

remotely piloted vehicles all use embedded ASICs. Unique lowpower technologies are particularly important in DOD portable 

applications. 

Because many DOD ASICs are designed by contractors and their 

suppliers, an accurate count of current and future needs is nearly 

impossible. Based on data it has gathered, the task force estimates 

that at least 50–60 new critical part types are being generated per year 

within DOD – a number that is likely to increase over the next several 

years as signal processing becomes more distributed. An estimate of 

contractor designs is not available. 

Enumeration of DOD integrated circuits needs is complicated by 

the fact that its military systems IC requirements occur in two phases. 

In the first phase, the development and special systems period, 

DOD needs access to the most advanced technology ICs for new 

science and technology (S&T) and R&D programs and for some 

sensitive systems. Assured access to the most advanced IC 

technology is essential for evaluating new concepts and capabilities 

and for the design, development, and testing of new products. 

Without ongoing access to evolving microelectronics technologies, 
__________________________________________________________________ FINDINGS

HIGH PERFORMANCE MICROCHIP SUPPLY ___________________________________________ 35

continued advancements in warfighting will not be achievable. For 

example, for many DOD, service and agency S&T and early 

development phase projects access to the smallest-feature-size, 

highest-speed, and most-complex processing devices holds the 

promise of allowing substantially upgraded weapon system and 

intelligence product performance levels. Equally, DOD classified and 

sensitive systems often require performance that demands 

continuous and rapid access to the most advanced IC technology. 

In the later second phase, the systems production phase, a 

different problem arises.23 Based on data supplied by the 

ODUSD(IP),24 it appears that by the time complex systems developed 

for the DOD enter production, the IC technology incorporated in 

those designs has already become mainstream or even obsolete. In 

many cases, components procurement officials for new DOD 

production systems find that the ICs incorporated in their designs are 

at or nearing the end of life and are about to be out of production. In 

this phase, the problem is access to old technology. 

DOD ACQUISITION OF TRUSTED MICROELECTRONIC 

COMPONENTS

Throughout the past 10 years, DOD’s need for classified devices 

has been satisfied primarily through the use of government-owned, 

government- or contractor-operated, dedicated facilities such as those 

operated by the National Security Agency (NSA) and Sandia. The 

rapid evolution of technology has made the NSA facility inadequate 

to perform this mission; the cost of continuously keeping it near to 

the state of the art is regarded as prohibitive. The Sandia facility, 

while its mission does not require leading-edge commercial 

processing capability, is now upgrading its facility to meet DOE’s 

 

23. By the time systems now in design go into production today’s state of the art 

technology, 90 nm CMOS, will have become an “older technology.” Fabrication lines to 

make them, however, will still need 300 mm equipment to produce wafers. 

24. Based on ODUSD(IP) sponsored study by DCMA. DCMA polled 23 leading electronics 

suppliers for DOD to characterize the number and types of devices used in DOD 

products. 
FINDINGS ___________________________________________________________________ 

36 _________________________________________________________ DSB TASK FORCE ON

stockpile stewardship, engineering, and process development 

requirements. These facilities historically provided classified or 

highly sensitive products, but did not address the need for “trusted” 

supplies for a larger set of DOD weapon system devices; there were 

sufficient U.S. firms willing and able to satisfy the then–state-of-theart needs. 

There is no longer a diverse base of U.S. IC fabricators capable of 

meeting trusted and classified chip needs. 

DOD has initiated a trusted foundry program to provide, in the 

interim, a source of high-performance ICs in accordance with the 

overall defense trusted integrated circuit supply (DTICS) mandate. 

DOD has contracted for these services on a “take-or-pay” basis.25

More information on the trusted foundry program can be found in 

appendix F. 

At this time, a single foundry contract has been let for leadingedge fabrication (tier 1)26 services with IBM. No foundry contracts 

have been negotiated with tier 2 and 3 fabricators; however, the 

larger number of fabricators available to produce ICs with processes 

one or more generations behind the leading edge has resulted in 

supplier competition to participate in the program. Sources of the 

older tier 2 and tier 3 technologies are much more available; however, 

a longer-term concern remains when the current tier 1 technology 

becomes tier 2 and there are few U.S. facilities capable of practicing it. 

The specific qualifications required of a foundry to be designated 

“trusted” are the province of the trusted foundry program and 

DTICS. 

 

25. Presentation to the Defense Science Board Task Force on High-performance 

Microelectronics by Chuck Varney, Chief, Trusted Access Program Office May 20, 2004. 

26. For purposes of the Trusted Foundry Program, the term “Tier 1" refers to a foundry 

having the state-of-the-art (leading edge) of commercial wafer fabrication technology. 

At this time, the leading edge is a CMOS process with 90 nm minimum critical 

dimensions. “Tier 2" is taken to refer to a foundry capable of processing wafer 2 to 4 

generations behind the leading edge (now CMOS with 130, 180 or 250 nm critical 

dimensions), “Tier 3" refers to foundries with wafer processing capabilities even further 

behind. 
__________________________________________________________________ FINDINGS

HIGH PERFORMANCE MICROCHIP SUPPLY ___________________________________________ 37

The objective of the DOD trusted foundry program is to establish 

trusted, leading-edge fabrication capabilities to produce 

microelectronics components for sensitive defense and intelligence 

community applications. 

The trusted foundry program allows for chip fabrication of DOD 

components determined to require acquisition from trusted sources 

in United States–owned and United States–located commercial 

facilities, and perhaps those of selected, trusted allies, under contract 

to DOD. Security controls allow for clearance of personnel necessary 

to protect the product at a maximum of DOD Secret. Wafer processes 

available through the trusted foundry will follow the commercial 

technology roadmap stabilized through commercial production 

volumes. Accelerated turnaround times are available, provided they 

are precoordinated with the foundry. A certain number of accelerated 

turns have been prepaid, and additional ones can be purchased. Life 

cycle for the processes is based on the commercial viability of the 

process. Typical processes will last 10 years. In addition, the foundry 

will provide a two-year notification for any of the processes it plans 

to retire. All programs that have ordered parts with that process will 

be notified in order to provide them the opportunity to order an endof-life buy. 

Surveys are being planned to develop additional tier 1 sources to 

ameliorate the risks inherent in single-source manufacture. However, 

there are presently only a very few facilities that can qualify as 

leading-edge processing facilities. 

Legacy parts have been produced effectively by the Defense 

Microelectronics Activity (DMEA) and under its aegis by several 

manufacturers who specialize in producing older technology parts. 

Future legacy replacement parts (both COTS and non-COTS), 

however, will require much more sophisticated technical skills. Any 

redesign of legacy parts to meet continuing replacement needs 

provide new opportunities for adversary mischief. 

The types of devices that are most at risk of corruption are 

mission-critical, application specific integrated circuits (ASICs), 

including digital or mixed-mode digital/analog components and 
FINDINGS ___________________________________________________________________ 

38 _________________________________________________________ DSB TASK FORCE ON

fully custom integrated circuits and gate array class devices. While 

these devices are potentially corruptible, they provide superiority in 

functionality, speed, and power consumption. Ensuring that these are 

truly trusted devices is of the utmost importance. 

Processes under control of the mask maker

Processes under control of the Foundry

Figure 5 

The design of an ASIC device is a complex process involving a 

team of engineers that includes specialists in software, firmware, 

system architecture, timing, circuit and device design, and testing. In 

Figure 5, the ASIC design is enclosed in the black dashed line and 

mask making in red. The activities in these stages are those that entail 

direct access to the chip design database and are thus very high risk, 

as is delivery of the completed chips. The green box encloses the 

fabrication steps under control of the foundry, where unauthorized 

process changes and outright substitutions are also possible. The 

green-enclosed area is the portion of the ASIC chip design and 

fabrication chain the Trusted Foundry Program is intended to protect. 
__________________________________________________________________ FINDINGS

HIGH PERFORMANCE MICROCHIP SUPPLY ___________________________________________ 39

STANDARD AND CUSTOM PARTS

The semiconductor world can be divided into two broad producer 

segments – standard (commodity) and custom products. Standard 

products are sold to many customers for use in many applications; 

custom products – ASICs – are designed, manufactured and sold to 

one customer for specific uses. The economic models for suppliers 

and customers in these two segments are very different. While a great 

deal of attention is paid to securing trusted ASIC supplies for the 

DOD community, questions must also be asked about the future 

sources of standard products. 

Mask Costs

0

0.5

1

1.5

2

U

S

D

ollars

ni Mill oi n

s

0.25 um 0.18 um 0.13 um 0.09 um 0.065 um

Figure 6 

Custom IC Trends and the Commodity Manufacturing 

Model 

Fixed costs are the barrier to continued use of large numbers of 

custom ICs in limited-volume applications such as military systems. 

Dealing with the complexity of state-of-the-art chip designs that may 

contain more than 50 million transistors is in itself costly. 
FINDINGS ___________________________________________________________________ 

40 _________________________________________________________ DSB TASK FORCE ON

Additionally, the mask costs for fabricating chips using advanced 

technologies can be overwhelming. The cost of a mask set for a 90 

nm design now exceeds $1 million, and future process-generation 

mask costs will be even more expensive. 

Since it is clear that the general tendency is to manufacture 

leading-edge semiconductor products outside the United States and 

the fixed costs of ASIC design and fabrication are skyrocketing, a 

clear trend is emerging for designers to use as few custom 

semiconductor products as possible; instead, they employ 

programmable standard products. Semiconductor standard products 

whose functionality can be changed by software programming, as in 

the case of microprocessors (MPUs) and digital signal processors 

(DSPs), or hardware programmability, as in the case of field 

programmable products such as field programmable gate arrays. 

While these standard products will also increasingly be 

manufactured offshore, their functionality is mostly controlled by the 

user, it may be impossible to independently secure that functionality. 

Programmable parts have more intricate designs, which make 

them difficult to validate (especially after manufacturing) and thus 

more subject to undetected compromise. Thus, it is important that 

programmable components be “trustable,” though only to a degree 

that is commensurate with their application. In a small subset of 

cases, the degree of trust required might be so high that all steps of 

the design, manufacturing, and supply chain must be thoroughly 

secured, for example, through the use of a trusted foundry. 

However, in many cases use of a trusted foundry will be infeasible 

and/or it will be sufficient for the DOD to “trust” high-volume 

“standard” parts that are manufactured commercially and obtained 

via a supply chain that limits the risk of post-manufacture tampering. 

The key to success in all commodity businesses, including 

manufactured programmable standard products and memories, lies 

in producing very high volumes of the same design very efficiently. 

This precept has led to factories designed around very large wafers, 

optimized for specific product designs. Cost is reduced by 

eliminating any variations in process and product. This is the 

manufacturing model for all major IC producers today. 
__________________________________________________________________ FINDINGS

HIGH PERFORMANCE MICROCHIP SUPPLY ___________________________________________ 41

Such manufacturers (especially memory and standard processor 

producers) are not amenable to custom product production, putting 

them at odds with DOD’s leading-edge technology, custom-design, 

small-volume product needs. 

New Custom IC Production Equipment and Methods 

While many future defense systems will be designed using 

commodity and programmable standard products, there are many 

instances where use of custom products is mandatory. Low-power, 

high-speed subsystems, analog front ends and power amplifiers, 

electronically steered antennas, and special cryptographic 

applications all demand unique parts. However, current 

semiconductor manufacturing is a very capital-intensive business, 

with state-of-the-art wafer fabrication factories (fabs) costing in excess 

of $3 billion today.27 Furthermore, the current approach to 

manufacturing requires that a process be qualified and stabilized, i.e., 

many test wafers must be run through the system before it yields 

working parts. The resultant state of the art is a batch process in 

which expensive fabs are designed to make large quantities of 

standard products, which is at odds with DOD requirements for 

leading-edge technology products in small volumes. Although 

commercial foundries subsidize their customer’s prototyping efforts, 

they do so in the hope of attracting designs that will some day enter 

volume production and are unlikely to extend similar terms to 

designers whose total lifetime production requirement may only 

amount to a few wafers. 

The IC industry situation is analogous to the pre-1970s steel 

industry, where emphasis on huge, standard product mills froze out 

the U.S. specialty steel business. A subsequent business disaster 

prompted by low-cost imported steel led to a reexamination of steel 

production methods, which resulted new technology underlying the 

mini-mills that now flourish in today’s U.S. steel industry. 

 

27. While the cost of today’s leading edge production fabrication plants is approaching $3B, 

the investment required for future facilities is expected to double every other 

technology generation. The conversion to 450 mm wafers forecasted to take place in 

five years will add still more to fixed plants costs. 
FINDINGS ___________________________________________________________________ 

42 _________________________________________________________ DSB TASK FORCE ON

A similar reexamination of integrated circuits manufacturing is 

needed to assure continued ability economically to design and 

produce custom parts at the leading technology edge. An industry 

need for the same service is also growing. Today, there is little 

commercial requirement for such capability, just as there was no 

requirement for the mini-mills until an economic collapse in the U.S. 

steel industry forced the issue. Lacking a business disaster, DOD’s 

need for custom microelectronics trusted sources is pressing, and 

therefore the burden of prompting development of this capability 

falls to DOD. The DOD does not own the complete burden for action 

(for instance ASIC manufacturers and the semiconductor 

manufacturing equipment industry must participate), but certainly 

the leadership burden must be borne by DOD. 

The tiered trusted foundry approach offers a relatively short-term 

solution to trusted leading-edge custom circuit supply. In the long 

run, it is not a realistic approach to satisfying DOD and the 

commercial industry’s needs. New methods and equipment concepts 

must be found that make custom circuit fabrication economical. 

SEMICONDUCTOR MANUFACTURING EQUIPMENT EXPORT 

CONTROLS

Dual-use technology exports that pose national security or foreign 

policy concern are regulated pursuant to the Export Administration 

Act of 1979. Advanced semiconductor manufacturing equipment 

and technology are regarded as sensitive, and export to China 

requires issuance of an export license by the Department of 

Commerce (DOC). Applications for export licenses are reviewed by 

the DOC as well as the Department of Defense and the State 

Department. Decisions to grant or not grant a license are determined 

on a case-by-case basis.28 Since the end of the cold war, U.S. export 

 

28. The Department of Commerce also has an export status called a "License Exception.” A 

License Exception, once granted to an semiconductor manufacturing equipment (SME) 

supplier allows that supplier to ship a specific class or model of SME covered by the 

license exception to a particular end user (e.g. SMIC in China) without having to ask for 

an individual license for each piece of equipment. The equipment is shipped without 

delay. 
__________________________________________________________________ FINDINGS

HIGH PERFORMANCE MICROCHIP SUPPLY ___________________________________________ 43

controls have become less effective in restricting the flow of advanced 

Semiconductor Manufacturing Equipment (SME) and design 

technology and equipment to China. During the cold war, the United 

States and its allies collectively restricted exports of sensitive dual-use 

technologies to the Warsaw Pact countries and certain others, 

including China, through the Coordinating Committee for 

Multilateral Export Controls (CoCom), a treaty organization. Under 

the CoCom regime all participating countries agreed not to export 

certain prohibited dual-use items to subject countries, and to secure 

unanimous preapproval with respect to export of prohibited items. 

CoCom was replaced in 1996 by the Wassenaar Arrangement, a nontreaty, voluntary system for the coordination and sharing of 

information with respect to the export of sensitive technologies. The 

Wassenaar system differs from CoCom in fundamental ways: 

 Under Wassenaar, each country commits only to illdefined self-restraint with respect to export of 

sensitive technologies. (Signatories agree not to 

export technologies that would result in the 

development or enhancement of military capabilities 

that undermine regional and international security.) 

 The Wassenaar controls are not aimed at exports to 

any particular country or group of countries, and a 

number of signatories have rejected the notion that 

exports to China could undermine regional and 

international security. 

 No Wassenaar member has veto power over any 

other member’s decision to export a particular item 

to a given country (i.e., each country retains its own 

“national discretion” concerning exports). 

 Any of Wassenaar’s 33 members can veto proposals 

for the adoption of new collective restrictions. 

Advanced semiconductor manufacturing and design equipment 

with roughly comparable performance characteristics is produced in 

a number of Wassenaar signatory countries. As a result, under the 

Wassenaar regime a Chinese buyer who cannot obtain desired 

equipment items from U.S. makers because the Department of 
FINDINGS ___________________________________________________________________ 

44 _________________________________________________________ DSB TASK FORCE ON

Commerce has not granted an export license can often acquire 

comparable equipment from competing sellers based in Europe or 

Asia who are able to obtain licenses from their governments. This 

situation has led U.S. producers of SME and design tools to complain 

that U.S. export controls are undermining their international 

competitiveness by limiting their access to the world’s fastestgrowing market for their products – China – while failing in their 

basic purpose of limiting Chinese access to advanced semiconductor 

technology. On several occasions, the U.S. government has sought to 

persuade other Wassenaar members to restrict exports of SME to 

China, but has been rebuffed. The U.S. government has been further 

hampered by inadequate information with respect to the types of 

SME and design equipment and technology that are currently 

available to Chinese enterprises from sources outside the United 

States. 

Taiwan, although not a Wassenaar member, maintains its own 

legal controls on the export of sensitive SME and design tools to 

China, as well as restrictions on the movement of certain personnel 

with semiconductor process and design skills. However, with the 

advent of numerous Taiwanese-owned and Taiwanese-managed 

foundries on the mainland, concerns have arisen about the potential 

flow of sensitive equipment and technology from Taiwan to the 

mainland.29 

STANDARD CHIPS WITH PROGRAMMABLE HARDWARE 

AND/OR SOFTWARE

Defense system electronic hardware, like that used in commercial 

applications, has undergone a radical transformation. Whereas 

custom circuits, unique to specific applications, were once widely 

used, most information processing today is performed by 

 

29. In March 2002 the Hsinchu District Prosecutors Office was reportedly investigating 

allegations that a former TSMC manager in charge of 12-inch wafer development had 

sold trade secrets via e-mail relating to 12-inch wafer process technology to an 

unidentified Chinese firm. The same month Taiwanese legislators charged the UMC 

had illegally sold SME to Chinese companies based in Shanghai via an intermediary 

firm incorporated in the Cayman Island, Taipei Times (March 16, 2002). 
__________________________________________________________________ FINDINGS

HIGH PERFORMANCE MICROCHIP SUPPLY ___________________________________________ 45

combinations of memory chips (DRAMs, SRAMs, ROMs, etc.), which 

store data (including programs), and programmable microchips, such 

as Programmable Logic Arrays (PLAs), central processors (CPUs), 

and digital signal processors (DSPs), which operate on the data. Of 

the two classes of parts, the latter have more intricate designs, which 

make them difficult to validate (especially after manufacturing) and 

thus more subject to undetected compromise. 

Structured ASICs are mask-programmable alternatives to pure 

ASIC parts. They consist of regular logic arrays with support 

interconnection (clock, power, and ground) fabricated as standard 

products. Multilayer interconnections are added later, possibly 

under trusted conditions, to “personalize” the array for their 

application-specific functions. The structured ASIC offers a 

relatively quick turnaround option for moderate-volume IC needs at 

some cost in density, speed, and power.30

Figure 7 

 

30. Information provided by Lightspeed Semiconductor. 
FINDINGS ___________________________________________________________________ 

46 _________________________________________________________ DSB TASK FORCE ON

Field programmable gate arrays are complex standard products 

whose function is determined at the point of use by patterns stored in 

a read-only memory (ROM). As with structured ASICs, logic units 

are built into the chip along with programming circuits, so that FPGA 

function is under the control of the user, and can be changed in the 

field, if desired. FPGAs offer the ultimate in fast turnaround time, 

since they are configured in the application itself. Although very 

complex, FPGAs are now available with embedded memories, digital 

signal processors (DSPs), and microprocessors (MPUs). FPGAs are 

slower and dissipate more power than ASICs. 

The relative ranges of application of ASICs, structured arrays, and 

FPGAs are shown in figure 7.31 Appendix G gives a comparison of 

system cost and performance with ASICs and with FPGAs. ASIC 

variable cost per unit is generally less than that of FPGAs; however, 

the high nonrecurring costs of ASICs (layout, mask, and test costs) 

make FPGAs more cost effective in low-volume production 

applications. 

In many cases, use of a trusted foundry (particularly for 

commodity ICs) will be unfeasible. It will have to be sufficient for 

DOD to “trust” high-volume “standard” parts that are manufactured 

commercially and obtained via a supply chain that limits the risk of 

postmanufacture tampering. 

Defense systems will always rely on a few custom parts, 

especially where speed, analog, or power considerations compel their 

use; however, economy and flexibility dictate use of standard 

programmable ICs wherever possible. 

Placing emphasis on the use of “standard” programmable parts is 

attractive for four reasons: 

 These parts are manufactured in high volume. Thus 

when DOD and its contractors use them, they 

benefit from the economies of manufacturing scale 

characteristic of commodity parts. 

 

31. Provided by Xilinx, Inc. 
__________________________________________________________________ FINDINGS

HIGH PERFORMANCE MICROCHIP SUPPLY ___________________________________________ 47

 Software to program these devices are much, much 

easier to develop than the equivalent custom IC 

designs. 

 U.S.-based companies lead in the design and 

manufacturing of programmable standard parts: 

Texas Instruments (TI) is a leader in DSPs; IBM and 

Freescale (formerly Motorola) lead in CPUs and 

systems on a chip (SOC) with embedded processors; 

Xilinx and Altera are leaders in FPGAs; and Intel is a 

leader in CPUs and MPUs. 

 Hardware programmable standard products such as 

PLAs and FPGAs are particularly important in 

meeting the custom function needs of military 

systems. The performance gap (in speed and power 

dissipation) between PLAs and FPGAs and ASICs, 

once a significant barrier to use of programmable 

logic arrays, continues to narrow, making hardware 

programmable devices an attractive choice for many 

custom applications. Simultaneously investing in 

further closing this gap and in new, efficient 

programming algorithms for these devices may 

allow the DOD to retain information superiority 

without requiring as wide an assortment of ASICs as 

in the past. 

Although U.S.-based leadership does not in and of itself assure 

the trustworthiness of these parts, it does put the DOD in a position 

superior to that of potential adversaries, whose systems rely on U.S.-

based suppliers and/or inferior parts procured abroad. This 

advantage accrues not only to fielded weapon systems, but to all 

aspects of the defense community and of U.S. national 

infrastructures. 

U.S. leadership cannot be taken for granted, especially given the global 

consolidation underway in the semiconductor industry. Thus, it is especially 

disconcerting that U.S. government research funding in this area has 

continued its decline as a percentage of the GDP as shown in the figure 

below. 
FINDINGS ___________________________________________________________________ 

48 _________________________________________________________ DSB TASK FORCE ON

Figure 8 

DOD-UNIQUE TECHNOLOGIES

Defense systems, by the nature of their functions and use 

environment, require technologies for which there is no wide 

commercial demand. The most widely known of these “special” 

technologies is that of radiation-hardening of circuits to allow their 

operation and survival through a nuclear event. Similar unique 

technologies include low-power and countertamper techniques. 

Research and development for these special technologies is 

supported almost entirely by DOD through Defense Threat 

Reduction Agency (DTRA), NSA, and similar mission agencies. 

Although commercial processes are evolving coincidentally 

toward satisfying some DOD special needs, such as radiation 

tolerance, there remains an irreducible need for special fabrication. 

Maintaining viable supply sources for microelectronics parts 

incorporating DOD-unique technologies is part of the trusted supply 

Federal R&D Has Not Kept Up with Growth 

in the Economy

U.S. R&D as Percent of GDP
__________________________________________________________________ FINDINGS

HIGH PERFORMANCE MICROCHIP SUPPLY ___________________________________________ 49

problem. Commercial facilities lack the unique processes required to 

meet DOD-unique needs. 

The DOD Radiation-Hardened IC Production Program is a useful 

first step in meeting DOD special needs; however, challenges remain 

in keeping the dedicated fabrication facilities supported under this 

program up-to-date as commercial processes advance. 

ADVERSARIAL CLANDESTINE OPERATIONAL OPPORTUNITIES

Because of the U.S. military dependence on advanced 

technologies whose provenance is progressively more offshore, 

opportunities for an adversary to clandestinely manipulate 

technology used in U.S. critical microelectronics applications are 

enormous and increasing. In general, a sophisticated clandestine 

service will develop opportunities to gain close access to a target 

technology throughout its lifetime. If access is early in a product’s 

life cycle, such as in the design phase, the adversary has the option of 

affecting every unit produced. More narrowly focused targeting can 

be accomplished later in the life-cycle. An example of a surgical 

operational approach was effectively used by the Soviets in the early 

1980s by intercepting typewriters destined for the U.S. embassy in 

Moscow and making a clandestine modification. This modification 

allowed the Soviets to secretly obtain copies of every document typed 

on the altered typewriters. 32

Increasingly, as microelectronic component product design and 

production move out of direct United States control, adversaries are 

able to acquire life-cycle operational access to U.S. key hardware 

technologies. In many cases, DOD program managers and U.S. 

industry inadvertently provide access to potential enemies as a result 

of their attempts to cut costs, manage schedules, and provide state-ofthe-art technology by moving critical design and production steps 

offshore. Unfortunately, this strategy provides opportunities to 

deeply embed subversive constructs into these components and 

systems that could compromise the security requirements of critical 

 

32. Presentation to the Defense Science Board Task Force on High-performance 

Microelectronics by a DOD representative, May 20, 2004. 
FINDINGS ___________________________________________________________________ 

50 _________________________________________________________ DSB TASK FORCE ON

applications (confidentiality, integrity, or availability). Today, 

offshore engineers design, develop, test, fabricate, remotely maintain, 

integrate, and upgrade some U.S. defense hardware and software. 

Regrettably, the United States currently has no effective strategy to 

weigh the obvious cost and time advantages of outsourcing offshore 

against the potential of component subversion.33 

If real and potential adversaries’ ability to subvert U.S. 

microelectronics components is not reversed or technically mitigated, 

our adversaries will gain enormous asymmetric advantages that 

could possibly put U.S. force projection at risk. In the end, the U.S. 

strategy must be one of risk management, not risk avoidance. Even if 

risk avoidance were possible, it would be prohibited by cost. Factors 

affecting the risk management calculation are numerous, 

complicated, and interdependent. They include 

 Ability of an adversary to gain life-cycle access and 

keep such access secret 

 Given access, an adversary’s capability to alter a 

component such that the alteration is difficult to 

detect and to attribute 

 The adversary’s willingness to exploit such an 

opportunity 

 The benefit to the adversary 

 The impact of a compromise on the United States 

 Capability of the United States to detect a 

modification 

 Capability of the United States to attribute the 

modification 

 Consequence to the adversary if the modification is 

detected and attributed to them 

 

33. Some of these activities may be contrary to long-standing International Traffic in Arms 

Regulations (ITAR) export controls. While the U.S. has an extensive set of laws and 

regulations governing export of critical technologies, comprehension of their 

importance and application is not widespread. 
__________________________________________________________________ FINDINGS

HIGH PERFORMANCE MICROCHIP SUPPLY ___________________________________________ 51

 Ability of the United States to limit the life-cycle 

access opportunities, for instance, to a trusted 

foundry 

 Alternate approaches available to the adversary in 

achieving equivalent impact (i.e., software 

modification) 

 Cost 

CONCLUSION

The Department of Defense and its suppliers face a major 

integrated circuit supply dilemma that threatens the security and 

integrity of classified and sensitive circuit design information, the 

superiority and correct functioning of electronic systems, system 

reliability, continued supply of long-system-life components, and 

special-technology components. 

 The department must solve this problem together 

with the rest of the defense community (i.e., defense 

suppliers). With few exceptions, today’s commercial 

industry will not perceive the same threats as DOD 

and will not adjust its operations to meet smallmanufacturing-volume military needs. 

 DOD should also play an advocate role in U.S. 

attempts (through the U.S. Trade Representative 

(USTR), the Committee for Foreign Investments in 

the United States (CFIUS) process, Department of 

State (DoS), National Security Council (NSC), 

Department of Transportation (DoT)) to achieve 

trade and economic equity in the global 

semiconductor industry in order to discourage the 

industry’s migration abroad and incentivize the 

installation of future advanced technology 

integrated circuit manufacturing and design in the 

United States. 

 DOD’s microelectronic problem is most severe at the 

leading technology edge and in special technologies, 
FINDINGS ___________________________________________________________________ 

52 _________________________________________________________ DSB TASK FORCE ON

although some risk is inherent in legacy part 

redesigns. 

 Additional study by both the DOD and its suppliers 

is needed to determine how best to assure supplies 

of obsolete parts needed for system repair and 

replacement. 

 Although there have been concerns about isolated 

supply problems (e.g., radiation-hardened and 

obsolete parts supplies), the full integrated supply 

problem has emerged onto the acquisition agenda 

and is only now being fully identified. DOD lacks a 

stable long-term investment, technology, and 

acquisition strategy capable of meeting its and its 

suppliers microelectronic component supply needs. 

Attempts to deal with microelectronics supply 

issues have been limited to isolated efforts to date. 

 DOD lacks a long-term plan for the preservation of 

U.S. information superiority, which is a cornerstone 

of U.S. national security. The department must 

either develop such a plan or be prepared to 

surrender this advantage, i.e., identify the 

alternative means by which national security will be 

assured in a regime of information inferiority. 

This conclusion is a call for the U.S. government in general, and 

the DOD and its suppliers specifically, to establish a series of 

activities to ensure that the United States maintains reliable access to 

the full spectrum of microelectronics components, from commodity 

and legacy, to state-of-the-art parts, and application-specific ICs 

special technologies. These activities must provide assurance that 

each component’s trustworthiness (confidentiality, integrity, and 

availability) is consistent with that component’s military application. 

Over time, semiconductor design and production will almost 

certainly become more, not less, globalized, making risk mitigation 

strategies that rely strictly on domestic design and production 

increasingly difficult, if not impossible, to implement. Commercial 

firms may be eager to contract design and production services, but 
__________________________________________________________________ FINDINGS

HIGH PERFORMANCE MICROCHIP SUPPLY ___________________________________________ 53

they may be subject to overriding national control in times of stress. 

While a trusted leading-edge supplier concept may provide nearterm risk reduction, over the long term, additional risk mitigation 

and risk management strategies must be developed. 

Acquisition efforts must be buttressed by both legal and technical 

efforts to protect U.S. technical leadership and intellectual property in 

the microelectronics domain. This includes maintaining and 

nurturing the U.S. electronics skill base through continuing, stable 

research funding (see appendix D). Research is particularly 

important at this time, as the traditional growth of IC capability 

shows signs of slowing; new device concepts and structures will be 

needed to continue device advances on which future defense systems 

concepts are predicated. The alternative is a future in which the same 

hardware technology is universally available, to friend and foe alike. 

In the long term, if potential adversaries become leaders in 

microelectronics technologies, the United States may find itself the 

target of “reverse-ITAR” restrictions on critical electronics 

capabilities. The United States must maintain sufficient control and 

influence over microelectronics research, design, fabrication, and 

testing to satisfy U.S. microelectronics requirements for the indefinite 

future. 

Developments in the semiconductor industry parallel similar 

trends in the software field. This similarity should be no surprise, 

since both fields deal with inherently complex designs; they require 

technically similar design techniques and tools. Additionally, 

software is the key to how hardware behaves; a matching subversion 

of a combination of hardware and software (especially in the case of 

programmable logic devices [PLDs] and field programmable logic 

[CPLDs34 and FPGAs]) could be impossible to detect. Other 

technologies, such as printed circuit boards, may be affected, but to a 

much lesser extent. 

 

34. Complex Programmable Logic Devices, or CPLDs, are predecessors of FPGAs which 

are suitable for simple logic applications. 
FINDINGS ___________________________________________________________________ 

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___________________________________________________________ RECOMMENDATIONS

HIGH PERFORMANCE MICROCHIP SUPPLY ___________________________________________ 55

RECOMMENDATIONS

Ameliorating the threats to trusted and assured DOD supplies of 

microelectronics components will require a multipronged approach. 

Pursuing only one or two initiatives will not suffice. Acquisition, 

technical, and trade actions are all needed. 

Supplies of trusted microelectronics components are important to 

the broad spectrum of the U.S. electronics industry, both military and 

civilian. From a national security standpoint, however, greatest 

concern lies in microelectronics supplies for defense, national 

infrastructure, and intelligence applications. Assuring supplies of 

trusted microelectronics components for defense systems use requires 

actions well beyond the scope and magnitude of those that can be 

mounted by a single defense supplier, or by the entire defense 

contractor industry. Addressing this problem is a uniquely 

governmental function. DOD is charged with the defense of the 

United States, a mission that depends heavily on microelectronics. 

While actions to mitigate threats to U.S. microelectronics trusted and 

assured supply require concerted action by many government 

agencies and departments, DOD has a major stake in reaching 

solutions to these problems. The task force considers DOD the logical 

steward to lead, cajole, and encourage a national solution to this 

critical problem, regardless of which arm of government must act. 

The task force also sees DOD as the logical U.S. government point to 

convene supplier, subsystem, prime and government users, and 

commercial interests, to address the recommendations in this report. 

This task force’s recommendations are ordered from general to 

specific. The overriding logic of these actions begins with the 

realization that maintaining trusted and assured supplies of 

microelectronic components based on a healthy, multisource U.S.-

resident (or trusted ally) commercial design and manufacturing 

capability at the leading edge of technology requires DOD leadership 

(recommendation 1). On a broad scale, economic and trade 

conditions for semiconductor manufacturers operating in the United 

States must be as attractive as those for manufacturers operating 
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56 _________________________________________________________ DSB TASK FORCE ON

elsewhere (recommendation 2). The department should estimate the 

number and varieties of microelectronic components that require 

trustworthiness as an aid to planning the size and scope of the 

Defense Trusted Integrated Circuits Strategy35 (recommendation 3). 

Access to the necessary design and manufacturing capability requires 

that DOD purchase products and services from leading-edge 

semiconductor firms in a way acceptable to the government, its 

systems contractors, and to the component suppliers. DOD needs a 

focused, tailored acquisition plan, driven by a long-term vision of its 

semiconductor needs, to establish the basis, policy, and operating 

guidelines for DOD-enabled access to trusted foundry services by the 

department, its contractors, and others. (For instance, the status of 

foundry-supplied components as government-furnished equipment 

must be clarified as well as payment policies. [recommendation 4]). 

Cost and manufacturing technology trends are making design and 

fabrication of limited-volume ASICs prohibitively expensive. New 

low-volume chip manufacturing models and fabrication equipment 

are required if future defense systems are to have unique 

microelectronics hardware capabilities at a reasonable cost. The same 

requirement for economical, modest-volume ICs is developing for 

future commercial products. A reexamination of economic models 

for producing low-volume products will require a joint government -

industry program to develop new, more flexible factory technology 

capable of meeting both defense and commercial needs 

(recommendation 5). The United States and its allies still maintain 

regimes of export controls for defense-critical and dual-use 

technology and equipment as one approach for limiting some 

technology transfers to potential adversaries (recommendation 6). 

Recommendations follow addressing specific technologies unique to 

use of programmable “standard” components (such as PLAs, MPUs 

and DSPs), defense applications and assurance of component 

trustworthiness (including design techniques), DOD-unique 

technologies, and countertamper proficiency (recommendations 7, 8, 

and 9). 

 

35. Memo from the Deputy Secretary of Defense, “Defense Trusted Integrated Circuits 

Strategy”, dated October 10, 2003, Ref. U16619/03 - see Appendix C. 
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RECOMMENDATION 1 – COMMIT TO DOD LEADERSHIP

DOD, prompted by the secretary and the undersecretary for 

acquisition, technology and logistics, must lead in guaranteeing its 

needs are supported by ensuring that the United States industry 

transforms and enhances its present position in onshore 

microelectronics. Providing for assured supplies by DOD’s contracts 

with today’s trusted foundries will help solve the immediate 

problem, but this measure is only temporary; it will not address the 

structural issue of funding the research that will sustain our 

information superiority. Long-term national security depends upon 

U.S.-based competitiveness in research, development, design, and 

manufacturing. Many actions required for this guarantee, however, 

are beyond the scope and function of the department. 

DOD should advocate that a strongly competitive U.S. 

semiconductor industry is not only a DOD objective but also a 

national priority. Because the U.S. share of the world’s leading-edge 

semiconductor manufacturing has declined, and because research 

and development is closely coupled to manufacturing leadership, the 

United States will soon start to lose its R&D skill base if its onshore 

manufacturing does not remain vital. Sustaining microelectronics 

leadership is essential to U.S. defense systems’ world dominance; 

sustaining microelectronics must therefore be a national security 

objective, understood by both the administration and Congress. 

The task force recommends that DOD senior officials 

 Take a leadership role in establishing trusted 

foundries in the United States for general use by 

military and critical infrastructure component 

manufacturers. 

 Recognize that the long-term solution to the 

problem of meeting leading-edge defense 

microelectronics needs depends on countering 

today’s economic reality of migration of integrated 

circuits manufacturing from the United States. 
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58 _________________________________________________________ DSB TASK FORCE ON

 Understand and vigorously communicate the 

consequences of failure to act to retain U.S. trusted 

and assured microelectronics supply and design. 

 Advocate that Congress and the administration 

embrace economic incentives and steps to attract 

those with the best technical skills to the field and 

the United States. These measures are required to 

make the United States an attractive place to 

manufacture semiconductors, related manufacturing 

equipment and materials. 

 Involve: 

− The White House, including appropriate councils 

and offices 

− Commerce and Labor Departments, also the 

USTR 

− Key congressional committees (both chair and 

minority leader) 

− Industry 

RECOMMENDATION 2 – LEVEL THE PLAYING FIELD

As a first step the task force recommends that the secretary of 

defense, the USD(ATL) and the secretary of homeland security 

prepare a special briefing for the national security advisor and 

encourage him or her to take a key role in implementing the 

measures detailed in this recommendation to slow the migration of 

the microelectronics industry and enable it to strengthen its future in 

the United States. 

To assure the ability of the DOD to access leading-edge trusted 

manufacturing facilities, the United States needs a broad national 

effort to offset foreign polices designed to encourage movement of 

leading edge semiconductor manufacturing facilities to offshore 

locations. In an ideal world, locational investment decisions would 

be based on commercial and economic factors, not government 

incentives, but we do not operate in an ideal world. A coherent U.S. 
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policy response is necessary to counter the extensive intervention by 

foreign governments to encourage local investment in the 

semiconductor industry. Such a response will require government 

policies that offset foreign incentives for manufacturing investment. 

The federal government needs to determine its role, if any, in 

assisting various states in developing their incentive packages. States 

should also strive to ensure that their permitting processes are 

responsive to business timelines. 

The U.S. government must vigorously support compliance with 

World Trade Organization (WTO) rules. The recent, apparently 

successful, resolution of the U.S. complaint with regard to China’s 

discriminatory VAT is a model for U.S. responses to other foreign 

practices that are inconsistent with WTO rules. The U.S. government 

should monitor China’s compliance with Part 1.7.3 of its protocol of 

accession to the WTO, which provides, among other things, that 

China will not enforce local content requirements, foreign exchange 

balancing, or performance requirements of any kind, including 

technology transfer. The U.S. antidumping and countervailing duties 

laws should be enforced where appropriate. 

Intellectual property (IP) rights are fundamental to innovation, 

and while China has passed laws to protect IP, the Chinese 

government must take steps to guarantee that these laws are fully 

enforced to ensure that Chinese foundries are not producing chips 

and using processes that violate others’ IP rights. 

The Department of Defense and the U.S. intelligence agencies 

should become more actively involved in decision making by other 

agencies of the U.S. government that have the potential to 

significantly affect the U.S. defense microelectronics industrial base. 

In particular, the defense community should make its concerns 

known with respect to trade issues affecting microelectronics when 

the Office of the U.S. Trade Representative conducts interagency 

reviews of those issues and with respect to inward foreign 

investment decisions under consideration by the Committee on 

Foreign Investment in the United States (CFIUS). When the 

resolution of such issues in microelectronics have the potential to 

directly affect U.S. defense capabilities in microelectronics, informed 
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60 _________________________________________________________ DSB TASK FORCE ON

high-level participation by DOD and the intelligence agencies is 

essential. 

University and independent laboratory work has played an 

important role in microelectronic history in that it has sown the seeds 

for major technological shifts. Much of the basic work in advanced 

lithography, novel computer architectures (such as the Reduced 

Instruction Set Computer [RISC]) and in development of computer 

design aids, without which complex IC circuit and process design 

would not be possible, arose from such research efforts. Industry 

research, while healthy and well-funded, excels at extension of 

existing technological trends (e.g., efforts promoted by the 

International Technology Roadmap for Semiconductors36). At a time 

when the effectiveness of conventional approaches to the extension of 

Moore’s Law are nearing their end, new ideas are essential to 

continue the progress on which the industry and future military 

systems depend. 

The United States must increase its university research funding to 

ensure that it remains an attractive and competitive location for the 

most talented students and faculty from around the world in this 

field. The National Science Foundation (NSF) has been a major 

supporter of university research in the physical sciences. The NSF 

Authorization Act of 2000 authorized a doubling of NSF budgets over 

a six-year period. The act includes specific increases in 

nanotechnology and networking and information technology. 

Congress should appropriate the funds necessary to achieve the NSF 

Authorization Act’s goals. 

The intelligence agencies should continue to monitor the global 

state of the microelectronics technology to determine where 

additional effort is required to keep the United States ahead of, or at 

least equal to, the world state of the art in critical fields. 

 

36. International Technology Roadmap for Semiconductors, jointly sponsored by the European 

Semiconductor Association, the Japan Electronics and Information Technology 

Association, the Korean Semiconductor Industry Association, the Taiwan 

Semiconductor Industry Association and the Semiconductor Industry Association. 
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The military service research arms have also contributed major 

research support to U.S. universities and research laboratories. Their 

support has been for projects more aligned with DOD needs. 

Support for microelectronics at Air Force Office of Scientific Research 

(AFOSR), Office of Naval Research (ONR), and Army Research Office 

(ARO), however has dwindled over the past decade. These levels of 

funding should be increased commensurate with the increases 

planned for NSF. 

As a result of recommendations by the Semiconductor 

Technology Council chaired by Dr. Craig Barrett, President and CEO 

of Intel, the Focus Center Research Program was instituted in 1999. 

This effort is focused on long-range research with emphasis on 

discovery in areas where evolutionary R&D may not find solutions. 

Five focus centers have been established with 30 universities 

participating.37 To date, industry has provided the majority of the 

support of the program, with the DOD contributing additional 

funding and providing program management expertise through 

DARPA. DOD funding needs to keep pace with industry 

contributions. NIST is best positioned to focus research on many of 

the metrology challenges identified in the International Technology 

Roadmap for Semiconductors. When it was established in 1994, the 

NIST Office of Microelectronics Programs was to start at $12 million 

in annual funding and grow to $25 million. This level was not 

achieved, but this task force considers this activity an important 

contribution to the national microelectronics supply issue. 

The United States must ensure that the American workforce is the 

most competitive in the world. Recent initiatives begun in math, 

science, and engineering education at both the K-12 and university 

levels included in the NSF Authorization Act must be adequately 

funded if the United States is to increase the number of citizens 

pursuing math, science, and engineering degrees. The “No Child 

Left Behind” Act must be adequately funded if the accountability and 

standards goals are to be achieved. Foreign-born students who attain 

 

37. The Center for Design and Test is located at the University of California Berkeley; The 

Interconnection Center at Georgia Tech; Nanoscale materials at MIT; Circuits, 

Systems, and Software at Carnegie Mellon; and Nanoelectronic Devices at UCLA. 
RECOMMENDATIONS ____________________________________________________________ 

62 _________________________________________________________ DSB TASK FORCE ON

advanced technology degrees in U.S. universities must be 

encouraged to remain in this country to help move the technology 

base forward. Technology is portable in the minds of these students, 

and their departure is our loss and others’ gain. 

The Department of Defense needs to solicit the support and 

cooperation of other government organizations to maintain the 

supply of U.S.-built trusted semiconductors. The USTR must 

monitor foreign countries with regard to practices that distort trade 

and investment patterns and jeopardize U.S. intellectual property 

issues. The NSF must be funded to boost university research in 

nanoelectronics and beyond. 

The United States is still the leader in technology, and a sufficient 

supply of many trusted microelectronic components is available. The 

trends of the last few years, however, indicate that this will not 

continue in the near term unless direct action is taken in the 

immediate future. 

RECOMMENDATION 3 – UNDERSTAND THE TRUSTED 

MICROELECTRONICS NEED – ENUMERATION

The DUSD(IP) is leading a DOD effort to collect component 

acquisition data from 23 DOD prime end item contractors.38 In this 

effort, the under secretary has asked the firms to identify all ASICs 

included in their prime end items. Based upon preliminary and as 

yet incomplete feedback from this survey, DOD products entering or 

in production are not generally using the most advanced IC 

technology. Feature sizes (an indicator of process maturity) for 

custom ASICs in systems such as the F-22, V-22, C-17, C-130J, B-1, 

Apache, SH-60 and M-1 tank are generally no smaller than 0.9 

microns – a 1980s-era technology. While the incompleteness of those 

data must be underscored, the smallest feature size found in this 

survey to date was 0.2 microns (early 1990s). This finding is not 

unexpected; disparity in product development cycle-times means 

that, to assure trusted sources for its in-production and in-fleet 

 

38. Institute for Defense Analyses study of DOD Integrated Circuit Demand (in progress). 
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systems support, DOD will have to implement an approach that 

continues to provide trusted production after support IC technology 

generations have left production. Newer programs, such as Joint 

Strike Fighter (JSF), already have preplanned electronics updates, 

even before the system becomes operational. 

DOD must also determine if other classes of ICs incorporated in 

its weapon systems and other key mission products require trusted 

sources and how many such circuits are needed. This requires that 

DOD identify device and technology types of microelectronics 

devices that require trusted sources as well as the length of time it 

will need such special supply arrangements. This identification must 

include the full range of technologies needed for DOD as well as its 

suppliers. 

DOD must also continue its efforts to inventory current and 

future trusted component needs as a basis for its long-term 

microelectronics acquisition plans. 

RECOMMENDATION 4 – DEVELOP A DOD

MICROELECTRONICS ACTION PLAN

Led by the USD(AT&L), DOD and its military departments and 

agencies, working with their system suppliers, must develop a plan 

of action that encompasses both short- and long-term technology, 

acquisition, and manufacturing capabilities needed to assure ongoing 

availability of supplies of trusted microelectronic components. This 

plan of action requires both a vision for the long-term steady-state 

and an implementation plan. 

Determine long-term DOD microelectronics objectives - a 

Vision 

 During the past decade, DOD eliminated many 

military specifications and opted to rely, so far as 

possible, on commercial products and processes. 
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64 _________________________________________________________ DSB TASK FORCE ON

Having experienced acquisition policies based both 

on special and commercial standards and processes, 

the DOD now needs to understand, reassess, refine, 

and make clear its steady-state vision for assuring its 

microelectronics components supplies. The 

generation and maintenance of this vision should be 

assigned to the DDR&E. The task force suggests the 

following elements for the vision: 

− Establish and publish DOD’s policy reaffirming 

the criticality of access to advanced IC 

technologies and the need for microelectronics 

S&T and R&D funding; and define and provide 

guidance on a subset of microelectronics 

components that require special considerations 

for “trustworthiness.” This policy should 

include direction as to when the department 

must assure COTS component trustworthiness. 

− Review and determine if microelectronics S&T 

and R&D funding levels are consistent with new 

priorities. 

− Institutionalize a formal approach to interagency 

and interdepartmental working groups, 

including DOD, DoE, and the intelligence 

community, in order to examine threats to and 

means of verifying trustworthiness of 

microelectronic components. These groups 

should continually evaluate the state of the art of 

techniques such as tamper-proof design, life 

testing, reverse engineering and chip and 

package testing for their practicality for DOD 

use. The working groups should pay particular 

attention to techniques for assuring 

trustworthiness of embedded processors and 

memories in array and “system on a chip” 

components. 
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Assign internal responsibilities and actions in three major 

areas in accordance with DOD’s goals 

1. Ensure continuous availability of microelectronic components 

to meet DOD needs: 

 Designate a single DOD organization (e.g., DDR&E) 

with responsibility to maintain the focus on 

microelectronic capabilities available to the DOD. 

This lead organization will provide executive 

leadership, formally tasking other DOD/OSD 

elements to carry out specific activities. It will have 

several permanent, ongoing responsibilities: 

− Create an annual, moving estimate of DOD 5- 

and 10-year future microelectronics needs 

(including processes and design methods). 

Collect and organize known and projected 

technology requirements. 

− Enhance, shape, and direct DOD 

microelectronics S&T budgets and RDT&E 

programs to assure projected requirements will 

be met. 

− Track and analyze microelectronics industry 

capabilities, including trusted technology and 

production capabilities (DUSD(IP)). 

− Perform outreach and industry coordination on 

all these tasks via external advisory groups and 

industry associations. 

− Arrange trusted foundry capacity as needed at 

all tier levels and define their funding model. 

Also, issue directions and policies for their use. 

2. Ensure availability of trusted hardware as needed: 

 USD(ATL) must issue acquisition policy39 requiring 

hardware “trustworthiness” evaluations and 

solutions as key, contracted performance criteria for 

 

39. DOD 5000.2 and its Guidebook. 
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66 _________________________________________________________ DSB TASK FORCE ON

prime contractors. DDR&E should lead in 

overseeing the development and implementation of 

major acquisition policy elements that include 

- Requiring that all programs not yet in 

production identify system or product areas 

requiring hardware trustworthiness and address 

these needs in program plans and system design 

reviews. 

- Requiring that DOD PMs make trustworthiness 

assessments and design solutions a prime 

contract responsibility and that contractors 

utilize DOD certified trusted foundries for all 

microelectronics determined to require category 

1 (mission critical 40) subsystems, both classified 

and unclassified. The task force recommends 

that, as a minimum, this includes all ASICs in 

category 1 subsystems. 

− Adding trustworthiness as a performance 

element in major program milestone reviews 

held by senior DOD acquisition leaders. 

 DDR&E should also lead other DOD activities, the 

intelligence community, and industry participants in 

developing guidance and techniques for 

implementing this policy, including the following: 

− Informing acquisition and supplier personnel of 

hardware assurance “threats and 

vulnerabilities.” 

− Establishing criteria and process guidelines for 

DOD programs and DOD prime contractors on 

how to identify or classify components requiring 

the highest degree of trustworthiness. 

− Developing procedures and techniques to 

evaluate the need for trustworthiness of each 

microelectronic component in defense systems. 

 

40. DOD 8500 defines categories for mission criticality. 
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Include an investigation of whether field 

programmable gate arrays (FPGAs) and selected 

COTS components need trusted design or 

foundry process controls. 

− Developing microelectronics designs that can be 

easily tested and evaluated. 

3. Implement Acquisition Policy 

 The task force recommends that DOD pursue and 

enlarge the trusted foundry program already 

underway within the department. The use of 

trusted foundries to manufacture components for 

Department of Defense systems will require changes 

in procedures at several levels in the acquisition 

process. Specific recommendations are as follows: 

− The Systems Program Office (SPO), in 

consultation with the prime contractor, should 

formally assess the level of trust required in a 

specific system (and its component subsystems) 

and document it during the system design and 

development (SDD) phase, with special 

consideration given to the application of the 

system and the potential damage to system 

utility that could be imposed by a determined 

adversary. Based on this high-level evaluation, 

the prime contractor program manager for each 

system should be responsible for developing and 

implementing procedures to meet the desired 

level of system trust. These procedures should 

include a comprehensive threat assessment and 

implementation of effective countermeasures at 

each level of system hierarchy at the time of 

development as well as manufacturing, fielding 

and life-cycle support. Regarding the flowdown 

of this requirement to subcontractors, the DSB 

recognizes that many electronic subsystem 

contracts are small (i.e., less than $5 million) and 

that the resources and knowledge base of 
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68 _________________________________________________________ DSB TASK FORCE ON

subcontractors may be insufficient to perform a 

credible threat assessment and mitigation plan. 

Therefore, SPO and prime contractor 

responsibility and leadership is essential. 

− To ensure the success of (1) above, an education 

program must be undertaken to assure that those 

who are managing and developing the designs at 

the SPO, prime contractor, and subcontractor 

levels are well versed in potential threats. For 

example, design data and the data used in the 

mask-making function represent the best 

opportunities for the inclusion of subversive 

elements that can modify circuit function. 

Frequent peer reviews of the design are 

suggested as a way to detect unwanted 

inclusions. Design and mask data integrity is 

vital. Their transmission over secure lines is an 

integral part of the trusted foundry program. 

− Integrated circuit fabrication beyond the design 

and mask phases offers less attractive 

opportunities for covert circuit inclusions; 

however, subtle process parameter changes can 

still compromise lifetime and performance in 

stressful environments. Consequently, it is the 

unanimous opinion of this DSB task force that 

the manufacture of mission-critical ASICs in 

foundries that have not been certified as 

“trusted” will (1) expose vital system intellectual 

property to potential theft; (2) increase the risk of 

unwanted design inclusions; and (3) possibly 

violate existing International Traffic in Arms 

(ITAR) export regulations. To mitigate these 

risks, the acquisition system must require all 

DOD laboratories and contractors to utilize the 

trusted foundry program for all ASICs in 

category 1 (mission-critical) subsystems, both 

classified and unclassified. Waiver requests must 
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have compelling justification and must be 

obtained through the DDR&E, and aggressive 

steps must be taken to increase the number of 

trusted foundries available for DOD and 

contractor use. Exceptions must also be for 

accommodated for the myriad of non–missioncritical prototypes developed by DOD 

laboratories and contractors. A draft Defense 

Federal Acquisition Regulation Supplement 

(DFARS) is included as appendix H of this 

report. 

− As the trusted foundry program is deployed, the 

DOD Trusted Foundry Program Office must 

develop a flexible business model for contractors 

that evolves from government furnished 

equipment (GFE) and accommodates existing 

agreements between contractors and trusted 

foundry suppliers. An integrated product team 

(IPT) chaired by the DDR&E that includes both 

government and industry representatives is 

strongly encouraged to address these issues. The 

DOD Trusted Foundry Program Office must also 

take a leadership position in widely publicizing 

the trusted foundry program to SPOs, prime 

contractors, and major electronics subcontractors 

within the U.S. defense industry and intelligence 

community. 

Radiation-Hardened Components 

 Special care must be taken to support military-specific 

microelectronic requirements such as radiation-hardened 

microelectronics and photonics components. DOD space and 

strategic missile systems, such as the transformational 

communications satellite, space tracking and surveillance system, 

and space-based radar for the Missile Defense Agency's groundbased interceptor (GBI)require radiation-hardened microelectronics 

and photonics components to ensure uninterrupted and long-lived 
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70 _________________________________________________________ DSB TASK FORCE ON

operation in either the natural space radiation environment or one 

enhanced by an exo-atmospheric nuclear weapon detonation.41

Recommendations 

 Director Defense Research & Engineering (DDR&E) 

should continue the oversight and coordination of 

DOD radiation-hardened microelectronics efforts 

through the Radiation Hardened Oversight Council 

(RHOC). The RHOC should coordinate with the 

Defense Trusted Integrated Circuit Strategy (DTICS) 

Office to ensure that radiation-hardened production 

capabilities are qualified as trusted sources of 

trusted microelectronics. 

 DOD should continue to sponsor radiationhardened technology development programs 

covering the full spectrum of research from basic 

mechanisms research into new materials and design 

mitigation techniques to development of radiation-

 

41. In June 1999, the Director Defense Research & Engineering (DDR&E) formally 

established and chaired the Radiation Hardened Oversight Council (RHOC) to provide 

oversight to DOD management of radiation hardened microelectronic efforts and 

coordinate a corporate approach to meet the needs of planned military systems. The 

RHOC developed a multi-faceted strategy to ensure the long-term availability of 

radiation hardened microelectronics. This strategy includes: (1) the development of the 

Radiation Hardened Microelectronics Accelerated Technology Development (RHM 

ATD) program, which will satisfy DOD's need for radiation hardened microelectronics 

through 2015 ; (2) resources to investigate and develop alternative technologies and 

processes to establish a base to support the radiation hardening of microelectronics and 

photonics beyond the 2012 - 2015 era and (3) the development of an overarching longterm strategy to ensure the availability of hardened microelectronics post 2020 to meet 

DOD requirements. A key element of this strategy is to make maximum use of 

commercial microelectronics and photonics technologies and trusted fabrication 

facilities while ensuring that a viable domestic source of strategically hardened 

components. The basic technical approach concerning the implementation of this 

strategy includes the development and evaluation of material technologies with the 

potential to provide radiation hardening though properties inherent in the new 

materials; continued investigation of circuit design techniques that mitigate the 

damage, functional upsets, and data loss caused by the radiation environment; and 

long-term support of programs to maintain radiation effects core competencies. 
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hardened components such as nonvolatile memories 

to support DOD system requirements and ensure 

the maintenance of the RHOC roadmap. 

RECOMMENDATION 5 – DEVELOP BUSINESS MODELS,

TECHNOLOGY, AND EQUIPMENT FOR ECONOMIC 

DEVELOPMENT AND PRODUCTION OF LOW-VOLUME ASICS

Developing cost-effective technology for the design and 

fabrication of low-production-volume, leading-edge technology 

ASICs will require the combined efforts of DOD, the semiconductor 

industry, and semiconductor fabrication equipment suppliers. The 

industry’s emphasis on manufacturing economies of scale has led to a 

manufacturing approach that is not sufficiently flexible for DOD’s 

special circuit needs. Commercial industry is now beginning to 

realize a need for economical, limited IC production as well. 

Developing an alternative, more flexible approach to integrated 

circuit manufacturing demands a thorough reexamination of business 

models, technology, and manufacturing equipment design. The 

Defense Advanced Research Projects Agency (DARPA) attempted 

such a reexamination in the mid-1990s through its Microelectronics 

Manufacturing Science and Technology (MMST) program. That 

program had different goals than are required today. DDR&E should 

now take another look at ASIC production and formulate a program 

to address barriers to low- to medium-volume custom IC production. 

This program will require the dedicated, joint effort of all 

participants in ASIC production - designers, fabricators, and 

equipment makers. Such an effort would be similar to SEMATECH, 

the industry-initiated, DARPA-supported consortium. DDR&E 

should consider working with the existing SEMATECH or 

establishing a joint-effort equivalent, to seek solutions for costeffective manufacturing of advanced-technology, custom 

semiconductor products in relatively low volumes. We believe this 

challenge can be undertaken jointly with university, industry, and 

government support. The leadership, however, must come from 

DOD. The goal should be to establish a self-sustaining business 
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72 _________________________________________________________ DSB TASK FORCE ON

sector that will support and sustain DOD access to low-volume, highperformance ICs. 

RECOMMENDATION 6 – STRENGTHEN BILATERAL AND 

MULTILATERAL CONTROLS ON CRITICAL SEMICONDUCTOR 

MANUFACTURING AND DESIGN EQUIPMENT

The Wassenaar Arrangement covering exports of sensitive, 

leading-edge semiconductor manufacturing equipment (SME) is not 

an effective tool for assuring that potential adversaries do not have 

access to leading-edge IC design and wafer fabrication equipment, 

technology, and cell libraries. Steps to strengthen export controls 

include the following: 

 The U.S. government should negotiate bilateral 

agreements or understandings with Wassenaar 

members in which advanced SME and design tools 

are made with the objective of harmonizing export 

licensing practices and standards with respect to 

China. In most cases such bilateral arrangements 

will involve only a handful of Wassenaar’s 33 

member countries. For example, only Japan and the 

Netherlands are significant suppliers of state-the-art 

lithography systems. Bilateral or multilateral 

agreements between the United States, Japan, 

United Kingdom, the Netherlands, and Sweden 

alone would encompass all of the countries that 

supply state-the-art PECVD systems, ion implanters, 

plasma dry-etchers, and lithography systems. 

Collective restrictions on exports to China should be 

established for key enabling equipment and 

technologies -- (1) for the manufacture of leadingedge dual-use (i.e. commercial and military 

application) ICs, and (2) for the R&D and design of 

advanced ICs and their technologies. In light of the 

difficulty the United States has encountered in 

achieving consensus with its allies in the past, it is 

recognized that achieving such agreements may 
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require elevation of this issue as a U.S. priority and 

where necessary, the application of leverage, 

including linkage with other bilateral issues. 

 A similar bilateral agreement or understanding 

should be concluded with Taiwan. 

 The Department of Commerce should be given a 

mandate and resources to compile an up-to-date 

catalogue of the global availability (including 

foreign availability) of state-of-the-art SME and 

design tools in designated foreign countries, 

particularly China. This catalogue should include, 

when necessary, classified information. 

RECOMMENDATION 7 – SUSTAIN LEADERSHIP IN 

“STANDARD” PROGRAMMABLE MICROCHIPS

U.S. leadership in programmable standard microchips cannot be 

taken for granted, especially in light of the global consolidation 

underway in the semiconductor industry. Continued development of 

new programmable technologies is key to sustaining U.S. leadership. 

It is especially disconcerting that U.S. government research funding 

in this area has substantially decreased and that industry has focused 

on near-term research goals. Several technical areas affecting 

programmable standard product trustworthiness are important in 

RDT&E investment: 

 Research on the Design of Programmable Elements.

The DOD should partner with industry and with 

other government agencies, especially the NSF and 

Homeland Security, to fund university research that 

will ensure the domestic supply of scientists and 

engineers who are skilled in the development and 

use of programmable hardware. 

 Best Practices. The DOD, in collaboration with other 

agencies such as NIST and with universities, and 

building on countertamper techniques developed in 

accordance with recommendation 9, should foster 
RECOMMENDATIONS ____________________________________________________________ 

74 _________________________________________________________ DSB TASK FORCE ON

the voluntary exchange of best practices for assuring 

trust of standard programmable hardware among 

commercial semiconductor developers, through the 

creation of courseware and industry information 

exchange programs. Developers of high-volume, 

standard parts are commercially motivated to 

ensure the integrity of their designs, both during the 

design and manufacturing process and once they are 

in operation. However, these suppliers are not wellinformed of the means by which adversaries might 

attempt to compromise their designs and 

mechanisms that could be used to detect and deter 

such efforts. It is likely that a substantial 

improvement in the trustworthiness of standard 

commercial parts could be obtained simply through 

increased awareness of threat models and the 

exchange of best practices among the commercial 

parties. 

 Research to Enable Firmware Integrity. A targeted 

DOD program in the area of firmware integrity 

would likely lead to the rapid development, 

dissemination, and adoption of improvements to 

these trust-related aspects of programmable parts. 

Today’s standard parts, especially FPGAs, offer 

limited protection against the compromise of their 

firmware, i.e., the configuration software that is 

loaded into the parts prior to or during execution. 

The loading of low-level firmware (e.g., the BIOS) 

into CPUs can also have similar vulnerabilities. 

However, it is likely that suppliers of commercial 

parts would incorporate protective measures if they 

were readily available. Thus, DOD investment in 

university research in this area could yield 

significant improvements in the trustworthiness of 

standard parts. 

 “Design for Trust Evaluation.” In conjunction with 

the above, the DOD should initiate a research 

program on “design for trust evaluation” along the 
___________________________________________________________ RECOMMENDATIONS

HIGH PERFORMANCE MICROCHIP SUPPLY ___________________________________________ 75

lines of prior successful efforts on “design for 

testability.” As previously indicated, the designs of 

modern programmable components are especially 

intricate, making it currently unfeasible to evaluate 

their trustworthiness. However, these complexities 

also plague chip verification and validation, making 

it increasingly difficult to produce designs that work 

reliably – let alone ones that can be shown to be 

uncompromised. DOD support for new approaches 

that simplify both validation and trust evaluation 

would be good candidates for commercial suppliers’ 

further investment and adoption. 

RECOMMENDATION 8 – SUPPORT DOD-UNIQUE 

TECHNOLOGY RESEARCH AND DEVELOPMENT 

DOD must continue to support research and development of the 

special technologies it requires. This research and development 

includes ongoing radiation-hardened and EMP-resistant component 

design and process development; however, the emergence of 

requirements for trustworthiness requires new efforts in technologies 

to embed, assure, and protect component trust. The department will 

require additional technology development efforts. The task force 

suggests that DOD technology development balance be reexamined: 

 Consider Reducing Barriers to Radiation-Tolerant 

“Standard” Designs. New generations of 

semiconductor processes may be inherently more 

tolerant to radiation than those of the past. 

However, export controls discourage commercial 

entities from studying and/or testing for these 

properties, let alone incorporating them into their 

”standard” parts. Similarly, future computer 

architectures may incorporate checkpoint/recovery 

mechanisms. Although these mechanisms are 

intended for the purposes of improved transaction 

performance and/or speculative processing, it is 

conceivable that they could also be used to recover 
RECOMMENDATIONS ____________________________________________________________ 

76 _________________________________________________________ DSB TASK FORCE ON

from transient events. However, commercial entities 

are reluctant to investigate or enhance these 

possibilities for fear that it would subject their 

designs to export controls. Export control policies 

should be reexamined to determine the right balance 

between increasing the suitability of standard parts 

to certain applications versus increasing the number 

of potential adversaries capable of mounting new 

challenges to U.S. interests through the availability 

of such parts. Loosening radiation-tolerance 

restrictions, for example, would result in future 

standard parts that could be used in military 

systems, easing requirements for radiation-hardened 

ASICs. The task force does not, however advocate 

easing export restrictions on radiation-hardened 

components. 

 Increase Efforts to Develop Tamper Protection 

Technology. Once components have been proven 

trustworthy, antitamper protection is essential to 

protect chips from subversion or reverse 

engineering. The ongoing contest between adversary 

tamper efforts and U.S. defensive efforts in chip 

protection requires a continuous program seeking 

ever better ways to protect chip integrity. 

 Develop Design and Production Techniques for 

Disguising the True Function of ICs. There may be 

future instances in which use of untrusted foundries 

is unavoidable. In those instances, camouflage 

offers one possible protection against subversion. 

The complexity of today’s ICs offers the option of 

burying the true function of design in a sea of 

confusing logic. 
___________________________________________________________ RECOMMENDATIONS

HIGH PERFORMANCE MICROCHIP SUPPLY ___________________________________________ 77

RECOMMENDATION 9 – ENHANCE U.S. COUNTERTAMPER 

PROFICIENCY 

Accurate characterization and assessment of adversaries’ “dirty 

tricks” is essential to develop an effective U.S. countertamper 

strategy. The task force addressed many of these issues relative to 

the security challenges of information sharing, but opportunities, 

methods, and threats change continuously. The DDR&E, in 

conjunction with the intelligence community, should develop riskmitigating technical approaches to support the risk management 

function. DDR&E should take the lead in defining the requirements 

and making the necessary investments to realize the needed security 

breakthroughs. 

Specific actions needed to enhance U.S. countertamper proficiency 

include the following: 

 The intelligence community should be tasked to 

− Characterize (through collection, analysis, and 

reporting) the capabilities and intent of key 

potential adversaries to subvert U.S. 

microelectronics. With this new insight, DDR&E 

should support development of techniques to 

detect subversions, attribute the subversions to 

an opponent, and establish consequences 

sufficient to deter the adversary’s behavior. 

Detailed knowledge of likely adversary 

techniques allows focus on likely subversion 

means, increasing the effectiveness of tamper 

detection efforts. 

− Develop and keep current a catalog of subversive 

techniques for altering the behavior of 

microelectronic component design and 

implementation. 
RECOMMENDATIONS ____________________________________________________________ 

78 _________________________________________________________ DSB TASK FORCE ON

− Establish current best practices for detecting and 

preventing subversive techniques, keeping in 

mind cost, both in money and time.42

 An investment strategy for enhancing U.S. 

countertamper evaluation capabilities should be 

developed. Current and projected capabilities must 

be highly protected; insight into U.S. detection 

abilities allows an adversary to tailor offensive 

approaches to reduce their cost and operational 

uncertainty. 

 Establish an aggressive national antitamper 

development and evaluation program. Once the 

appropriate level of trust is established for a given 

component, effective, manufacturable, and 

affordable antitamper technology must be applied to 

the component to ensure the maintenance of trust. 

 Initiate an annual competition to exercise the 

defensive approaches outlined above. This 

competition will provide estimates of the 

effectiveness of defensive techniques and increase 

confidence in the risk management process. 

 Assess the subversion vulnerabilities of FPGAs. The 

innovative application of FPGAs in DOD critical 

systems shows great promise. However, aggressive 

adversarial analysis of these approaches has not 

been initiated. 

A strategy for achieving the above hardware 

countertamper objectives without a comparable strategy 

for software is of limited utility. The task force 

recommends DDR&E 

 Commission a similar DSB study to investigate 

national security issues associated with rapid 

 

42. These items are recommended tasks for the IC. 
___________________________________________________________ RECOMMENDATIONS

HIGH PERFORMANCE MICROCHIP SUPPLY ___________________________________________ 79

migration of software production, testing, and 

maintenance overseas. 

 Develop a national security strategy with 

corresponding implementation plan that couples the 

recommendations of the microelectronic and 

software studies and ensures that they are in balance 

and mutually supportive. 
RECOMMENDATIONS ____________________________________________________________ 

80 _________________________________________________________ DSB TASK FORCE ON

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_________________________________________________________________ APPENDIX A 

HIGH PERFORMANCE MICROCHIP SUPPLY ___________________________________________ 81

APPENDIX A. TERMS OF REFERENCE

 
TERMS OF REFERENCE __________________________________________________________ 

82 _________________________________________________________ DSB TASK FORCE ON

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_________________________________________________________________ APPENDIX B 

HIGH PERFORMANCE MICROCHIP SUPPLY ___________________________________________ 83

APPENDIX B. TASK FORCE MEMBERSHIP

CHAIRMAN

Name Affiliation 

Dr. William Howard Consultant 

TASK FORCE MEMBERS

Mr. Bill Bandy Matrics, Inc. 

Mr. Steven Betza Lockheed Martin 

Ms. Christine Fisher Consultant 

Mr. Jim Gosler Sandia National Laboratories 

Mr. Tom Hart Quicklogic Corporation 

Dr. Thomas Hartwick Consultant 

Mr. Thomas Howell Dewey Ballantine 

Mr. Travis Marshall Consultant 

Dr. David Tennenhouse Intel Corporation 

Dr. James Van Tassel Consultant 

Mr. Owen Wormser C3I 

EXECUTIVE SECRETARY

Dr. Chuck Byvik ODUSD (S&T) 

DSB REPRESENTATIVE

LTC Scott Dolgoff DSB OUSD (AT&L) 

GOVERNMENT ADVISORS

Dr. Gerald Borsuk NRL 

Dr. Charles Cerny AFRL/SNDM 

Maj Anne Clark, USAF DTRA 

Mr. Dave Emily NAVSEA, Crane Division 

Dr. Barry Hannah Navy Strategic Systems 

Mr. Robert Jones Space and Sensor Technology 
TERMS OF REFERENCE __________________________________________________________ 

84 _________________________________________________________ DSB TASK FORCE ON

Mr. Joe Keogh U.S. Government 

Dr. John Kosinki US Army RDECOM CERDEC 

Mr. Ray Price NSA 

Mr. Richard Ridgley NRO 

Mr. Mark Thompson CIA 

Mr. Steven VanDyk Navy, Strategic Programs Office 

LtCol Chris Warack ODUSD(IP) 

CDR John Zimmerman ODUSD(IP) 

Dr. John Zolper DARPA 

STAFF

Mr. Joe Maniaci Strategic Analysis, Inc. 
_______________________________________________________________ APPENDIX C 

HIGH PERFORMANCE MICROCHIP SUPPLY ___________________________________________ 85

APPENDIX C. DEPUTY SECRETARY OF DEFENSE MEMO 
DEPUTY SECRETARY OF DEFENSE MEMO ______________________________________________ 

86 _________________________________________________________ DSB TASK FORCE ON

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_________________________________________________________________ APPENDIX D 

HIGH PERFORMANCE MICROCHIP SUPPLY ___________________________________________ 87

APPENDIX D. FUTURE TECHNOLOGY DEVELOPMENT 

The Department needs to secure continued “Moore’s Law” 

improvements in processing capacity that will enable it to maximize 

the advantages inherent in its superior sources of information and the 

superiority of the algorithms and networks that are used to process 

and benefit from them. Even a “level playing field” in which 

“standard” programmable microchips of ever increasing capacity are 

available to both the DOD and its adversaries works to U.S. 

advantage, especially if the suppliers of those parts are U.S. based. In 

contrast, if the microchips available are not powerful enough to take 

full advantage of superior sensor, actuator, algorithm, networking 

and systems capabilities, U.S. superiority will rapidly erode. 

Historically, the rapid rate of growth in U.S. microchip capability 

resulted from a robust national portfolio of long-term research that 

incorporated both incremental and revolutionary components. 

Industry excelled in evolutionary technology developments that 

resulted in reduced costs, higher quality and reliability and vastly 

improved performance. DOD now is no longer perceived as being 

seriously involved in – or even taking steps to ensure that others are 

conducting – research to enable the embedded processing proficiency 

on which its strategic advantage depends. This withdrawal has 

created a vacuum where no part of the U.S. government is able to 

exert leadership, especially with respect to the revolutionary 

component of the research portfolio. 43 The problem, for DOD, the IT 

 

43. This development is partly explained by historic circumstances. Since World War II, 

the DOD has been the primary supporter of research in university Electrical 

Engineering and Computer Science (EECS) departments, with NSF contributing some 

funds towards basic research. From the early 1960’s through the 1980’s, one 

tremendously successful aspect of the DOD’s funding in the information technology 

space came from DARPA’s unique approach to the funding of Applied Research (6.2 

funding), which hybridized university and industry research through a process that 

envisioned revolutionary new capabilities, identified barriers to their realization, 

focused the best minds in the field on new approaches to overcome those barriers and 

fostered rapid commercialization and DOD adoption. The hybridization of university 

and industry researchers was a crucial element; it kept the best and the brightest in the 
FUTURE TECHNOLOGY DEVELOPMENT ________________________________________________ 

88 _________________________________________________________ DSB TASK FORCE ON

industry and the nation as a whole, is that no effective leadership 

structure has been substituted. Instead, research in these fields is 

managed through a hodge-podge of programs spawning numerous 

government agencies. The President’s budget includes “cross-cuts” of 

the government’s Nanotechnology (the NNI) and IT (the NITRD) 

research investments, each of which is stitched together by 

committees representing the participating agencies. However, there is 

no unified source of leadership that can mount revolutionary 

programs, let alone ensure that the DOD’s future requirements for 

programmable microchips will be met. 

While it is tempting to believe that the future capabilities DOD 

will require will emerge solely from the private sector, most 

commercial entities can only engage in relatively short-term 

incremental R&D on their own. Although the industry has pooled its 

resources to support a limited degree of long-term university 

research (e.g., through the SRC), this is far from sufficient to meet 

DOD’s needs. Similarly, it may be tempting to believe that NSF 

funding will be sufficient to sustain information superiority. 

Although NSF funding has risen and the NSF does fund more longer 

term incremental work than industry, the NSF does not typically 

support development of revolutionary capabilities, along the lines of 

those achieved by DARPA’s 6.2 programs. 

 

university sector well informed of defense issues and the university researchers acted 

as useful “prods” to the defense contractors, making it impossible for them to dismiss 

revolutionary concepts whose feasibility was demonstrated by university-based 6.2 

efforts that produced convincing “proof of concept” prototypes. As EECS grew in scale 

and its scope extended beyond DOD applications, a “success disaster” ensued in that 

EECS essentially “outgrew” the ability of the DOD to be its primary source of 

directional influence, let alone funding. Furthermore, DOD never developed a strategy 

to deal with this transition. With pressures to fund developments are unique to the 

Defense (e.g., military aircraft, tanks, artillery, etc.), the DOD withdrew its EECS 

research leadership. Recently, DARPA has further limited university participation, 

especially as prime contractors, in its Computer Science 6.2 programs, which were by 

far its most significant investments in university research (vastly outstripping 6.1 

funding). These limitations have come in a number of ways, including non-fiscal 

limitations, such as the classification of work in areas that were previously unclassified, 

precluding university submission as prime contractors on certain solicitations, and 

reducing the periods of performance to 18-24 months. 
_________________________________________________________________ APPENDIX D 

HIGH PERFORMANCE MICROCHIP SUPPLY ___________________________________________ 89

Past investments in research would appear to secure Moore’s Law 

scaling through 2009 or 2011. However, beyond that, the microchip 

industry faces three key challenges, each of which puts DOD’s 

information superiority at risk, but also poses opportunities for DOD 

to tilt the economics of non-standard (e.g., low volume) microchip 

manufacturing in its favor: 

 There is a significant technology gap in the 2013-

2019 time frame, as transistor critical dimensions 

shrink below 10-12 nm. While the continued use of 

charge-based devices (devices based on the 

movement of electrons) remains feasible during this 

period, there is an urgent need for revolutionary 

approaches to development new operating 

principles and materials for use in those devices. 

Surprisingly, very little of the U.S. government’s 

National Nanotechnology Initiative (NNI) is 

addressing this issue – yet the window for the timely 

conduct and insertion of such research is rapidly 

closing. The need for new technologies for use in ten 

years may also present an opportunity to contain the 

capital costs associated with microchip 

manufacturing. For example, one alternative that 

has been suggested involves the use of chemical 

processes to create nano-wire / nano-dot devices in 

bulk and to use self-assembly techniques to create 

small clusters of “pre-wired” devices and precisely 

position them on a microchip substrate. Taking this 

line of reasoning a step further, it may be possible to 

use what would then be “legacy” 10-20 nm 

lithography technology to wire together these selfassembled clusters. Since the “legacy” lithography 

and associated mask-making equipment would by 

then have been substantially depreciated, the capital 

equipment costs associated with such a 

manufacturing approach might not be as prohibitive 

to the DOD as they are today. Direct imprint 

lithography is another alternative that is being 
FUTURE TECHNOLOGY DEVELOPMENT ________________________________________________ 

90 _________________________________________________________ DSB TASK FORCE ON

investigated, though its viability at the finest feature 

sizes remains uncertain. 

 New approaches to the architecture of 

programmable microchips and to their 

programming concepts are required to extract 

benefit from the huge numbers of transistors made 

available by Moore’s Law advances. The design of 

super-complex chips is being influenced by three 

transitions, each of which presents risks and 

opportunities. First, standard CPUs and DSPs are 

evolving from single core (i.e., processor) devices to 

multi-core devices.44 Secondly, standard 

Programmable Gate Arrays (PGAs) are undergoing 

a transition in which PGA fabrics are combined on 

the same chip with CPUs and DSPs. This process, 

which is to the DOD’s advantage, will likely 

intensify with the advent of multi-core processor 

architectures described above. Finally, the sustained 

use of sub-wavelength lithography over coming 

generations of transistors will push designers of 

complex logic towards regular transistor patterns. 

This may reduce the gap between PGAs and other 

forms of logic, further accelerating the combination 

of PGAs with many-core processors. 

 In the early 2020’s, thermal noise limitations suggest 

a need to transition beyond charge-coupled devices 

 

44. Initially, this will be a relatively mild transition as the components of dual processor 

systems are integrated onto a single chip. However, as the number of cores scales up to 

hundreds and then thousands of cores per die, the impact of this transition will be far 

more pronounced. Going forward, the use of parallel independent computational 

elements (vs. frequency scaling, pipelining, etc.) will be the means of extracting 

increased performance from these microchips – not just for supercomputers, but for 

desktops, handhelds and embedded systems as well.. Arguably, this is the computer 

industry’s largest transition since the adoption of the microchip – and possibly since 

the invention of the stored program computer. Key challenges arising from this 

transition have to do with: the on-chip networks interconnecting the cores; Memory 

and I/O bandwidth to feed these microchips; and the programming environments that 

will allow their capacity to be harnessed by large numbers of programmers / users. 
_________________________________________________________________ APPENDIX D 

HIGH PERFORMANCE MICROCHIP SUPPLY ___________________________________________ 91

to those based on other physical principles, such as 

spin. Since these new technologies are unlikely to 

instantaneously transition to high volume 

manufacturing, it is likely that there will be some 

period during which their economics could favor 

lower volume applications, presenting another 

opportunity for the DOD to re-assert leadership and 

gain strategic advantage. Conversely, ceding 

leadership in this transition to nations that are 

potential adversaries would certainly undermine 

our information superiority – and may also 

undermine a key economic component of our 

national security. 
FUTURE TECHNOLOGY DEVELOPMENT ________________________________________________ 

92 _________________________________________________________ DSB TASK FORCE ON

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_________________________________________________________________ APPENDIX E 

HIGH PERFORMANCE MICROCHIP SUPPLY ___________________________________________ 93

APPENDIX E. VERIFYING CHIPS MADE OUTSIDE THE 

UNITED STATES

RANDY GOODALL, SEMATECH

SEMATECH Briefing to DSB - June 23, 2004 • Slide 23

Q2 - Verifying Chips Made by Verifying Chips Made by

Foreign Suppliers / Sites Foreign Suppliers / Sites

• Unlikely to be verifiable by non-destructive testing

• Signal testing

– Probably in the NP group of problems (“traveling salesman”)

– Hueristics likely, but what is good enough in advanced 21st

century warfare?

• Measurement testing

– Acoustic and high-energy photon imaging, mechanical (mass, 

moments of inertia, ...)

– Must have the resolution of devices/layers (nano somethings)

– Non-complex wave analysis is non -deterministic

– Isomorphic to the intractable wafer (or reticle) inspection 

problem, but with HUGE signal-to -noise ratio due to intervening 

medium of package and/or upper layers

• Unpackaged is only a little better proposition

• What cost penalty is allowed? 

– Comparison to building/upgrading a small fab?
 

RANDY GOODALL SEMATECH ______________________________________________________ 

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_________________________________________________________________ APPENDIX F 

HIGH PERFORMANCE MICROCHIP SUPPLY ___________________________________________ 95

APPENDIX F. TRUSTED FOUNDRY PROGRAM

This is the first component of the Trusted Foundry Access 

Program45. This contract was established to provide a trusted foundry 

to cover leading edge requirements. There are on-going activities to 

expand the number of trusted foundry sources to cover all 

technology needs. 

 

45. Extract from presentation given to the Task Force by Chuck Varney, NSA 
TRUSTED FOUNDRY PROGRAM _____________________________________________________ 

96 _________________________________________________________ DSB TASK FORCE ON

Security controls allow for clearance of personnel necessary to 

protect the product at a maximum of DOD Secret. The number of 

people necessary is dependent on the automation of the plant - the 

more fully automated, the fewer people necessary. 

Trusted parts imply that accountability controls have been 

imposed to guarantee that the parts were manufactured as expected, 

whether they were classified or unclassified. Classified parts would 

also have the same controls imposed on their manufacture. 

Accelerated turnaround times are available; however, this should 

be pre-coordinated with the foundry. A certain number of accelerated 

turns have been pre-paid, additional ones can be purchased. 

Life cycle for the processes is based on the commercial viability of 

the process. Typical processes will last 10 years. In addition, the 

foundry will provide a 2 year notification for any of the processes 

they plan to retire. All programs that have ordered parts with that 

process will be notified in order to provide them the opportunity to 

order an end-of-life buy. 
_________________________________________________________________ APPENDIX F 

HIGH PERFORMANCE MICROCHIP SUPPLY ___________________________________________ 97

The contract lasts for up to 10 years, with the government having 

the option to re-new the contract each fiscal year. 

The contractual amount is set for each year and is comprised of 

prototype runs (mask set + half lot expedited run), production runs, 

and Intellectual Property licensed design drop-ins. There is the 

provision to trade between these areas, keeping the overall contract 

amount fixed. 

This is a take or pay contract. The contract provides pre-paid 

foundry access to government programs. The foundry will provide 

access; however, if the government doesn’t order all the parts that 

they have access to for any fiscal year, they will lose that remaining 

access for that year. 
TRUSTED FOUNDRY PROGRAM _____________________________________________________ 

98 _________________________________________________________ DSB TASK FORCE ON

The processes are priced based on their complexity. SiGe runs will 

cost more than CMOS runs, and processes will become more costly as 

the geometry becomes smaller. However, the costs also are adjusted 

(usually lowered) each year to compensate for access to an older 

technology. 
_________________________________________________________________ APPENDIX G 

HIGH PERFORMANCE MICROCHIP SUPPLY ___________________________________________ 99

APPENDIX G. COMPARISON OF ASIC AND FPGA SYSTEM 

CHARACTERISTICS

Flexibility Of I/O Protocols Limited Yes Yes Yes

Physical Size 4 2 1.5 1

Power Dissipation 2 - 10 2 1.5 1

Ability To Upgrade After Put Into Use Yes No No No

Ability To Isolate “Red”/“Black” Regions No Limited Yes Yes

Availability Of Components For Mixed -Signal Limited Limited Limited Yes

Design

Available Sizes Limited Limited No Limit No Limit

Fabrication Cost 1 2 7 7

Typical Hardware Fabrication Time 1 4 16 16

Signal Processing Performance 0.1 - 0.5 0.5 0.8 1

Utilization of Available Transistors 0.1 - 0.9 0.7 1 1

FULL 

CUSTOM

STANDARD 

CELL 

ARRAY

MASK 

PROG. 

GATE 

ARRAY

FIELD PROG. 

GATE ARRAY* ASIC IMPLEMENTATION ISSUES

Numbers are Normalized, Where 1 is the Optimum

* Range Provided for FPGAs Because Some Applications use FPGA Real Estate and 

Components More Efficiently Than Others

ASIC vs FPGA Tradeoffs

Source: Mayo Clinic

Example of tradeoffs ASIC vs

FPGAs for a Space System

Design reusability Low High

# of boards 20 40

# of gates (Millions) 7.1 8

Technology (um) .18 .13

Clock speed (MHz) 180 210

Cost (NRE) $30M $1.5M

Development time (months) 27 5

Power (W) 2600 4200

Weight (lbs) 260 412

Parameter ASIC FPGA

Source: Lockheed Martin
 

COMPARISON OF ASIC AND

FPGA SYSTEM CHARACTERISTICS __________________________________________________ 

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_________________________________________________________________ APPENDIX H 

HIGH PERFORMANCE MICROCHIP SUPPLY ___________________________________________ 101

APPENDIX H. DFAR SUPPLEMENT

DEFENSE FEDERAL ACQUISITION REGULATION SUPPLEMENT

Proposed 

(xxx.yyy-zzzz) Restriction on Acquisition of Application 

Specific Integrated Circuits 

1. Definitions. As used in this clause— 

a. ‘Application Specific Integrated Circuit’ or ‘ASIC’ 

means any custom microelectronics device (digital or 

mixed-mode digital/analog) that is fabricated at a 

semiconductor foundry, including fully custom 

integrated circuits and gate array class devices. 

b. ‘Trusted Foundry’ means a semiconductor 

manufacturing facility that has been certified by the 

DOD to provide secure semiconductor fabrication and 

data management, including the capability for 

fabricating classified ASIC designs. 

2. Except as provided in paragraph (c) of this clause, all 

Application Specific Integrated Circuits delivered under this 

contract, either as end items or components of end items, shall 

be wholly fabricated and manufactured at a Trusted Foundry 

in the United States. 

3. The restriction under paragraph (b) of this clause does not 

apply to— 

c. Commercial-off-the-shelf microelectronic devices that 

are procured via standard part numbers and are not 

modified at the manufacturer for DOD use. 

d. Field Programmable Gate Array devices that are 

procured via standard part numbers and are later 

personalized at DOD laboratories or Contractor 

facilities. 
DFAR SUPPLEMENT ____________________________________________________________ 

102 _________________________________________________________ DSB TASK FORCE ON

e. Custom microelectronic devices that are analog in 

nature (e.g. radio frequency amplifiers, custom analog 

hybrids) that do not contain any digital logic. 

4. The restriction in paragraph (b) of this clause may be waived 

upon request from the Contractor in accordance with 

subsection 225.7009-3 of the Defense Federal Acquisition 

Regulation Supplement. The Contractor must provide 

compelling rationale for waiver of this restriction, and the 

waiver must be approved in writing by the DOD Trusted 

Foundry Program Office. 

5. The Contractor shall retain records showing compliance with 

the restriction in paragraph (b) of this clause until 3 years after 

final payment and shall make the records available upon 

request of the Contracting Officer. 

6. The Contractor shall insert this clause, including this 

paragraph (f) in all subcontracts, except those for— 

f. Commercial items other than Application Specific 

Integrated Circuits; or 

g. Items that do not contain Application Specific 

Integrated Circuits 
_________________________________________________________________ APPENDIX I 

HIGH PERFORMANCE MICROCHIP SUPPLY ___________________________________________ 103

APPENDIX I. MINORITY REPORT 

Essential portions of this report with which I heartily concur are 

the pressing need for greater chip security, continued future supply 

guarantees via a trusted foundry, and acquisition reform to lay the 

foundation for a stronger DOD infrastructure. My dissent takes issue 

with the depth of analysis of the data this committee received and the 

recommendations relating to the semiconductor industry. In my 

view, aspects relating to financial support of semiconductor industry 

activities, especially extraordinary DOD support, are not supported 

by business strategies and logic based on this committee's 

investigation. To be more blunt, it is not DOD's job to re-vamp the 

infrastructure of this healthy, robust and very profitable industry, 

rather, DOD interest's have to be evaluated in a cost benefit analysis 

such as DARPA routinely performs based on the DOD mission. Our 

nation would be better served if government provided the catalyst or 

leadership (non-financial support), apparently missing in the 

semiconductor industry, to facilitate a better semiconductor industry 

long term strategic plan. 

Dr. Thomas Hartwick 

Defense Science Board High Performance 

Microchip Supply Task Force Member 
MINORITY REPORT _____________________________________________________________ 

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_________________________________________________________________ APPENDIX J 

HIGH PERFORMANCE MICROCHIP SUPPLY ___________________________________________ 105

APPENDIX J. ACRONYMS 

AFOSR Air Force Office of Scientific Research 

AGED Advisory Group on Electron Devices 

AMD Advanced Micro Devices Inc. 

ARO Army Research Office 

ASIC Application Specific Integrated Circuit 

BIOS Basic Input Output System 

CFIUS Committee on Foreign Investments in the United States 

CMOS Complimentary Metal Oxide Semiconductor 

COTs Commercial off the Shelf 

CPLD Complex Programmable Logic Devices 

CPU Central Processing Units 

DARPA Defense Advanced Research Projects Agency 

DCMA Defense Control Management Agency 

DDR&E Director of Defense Research and Engineering 

DEPSECDEF Deputy Secretary of Defense 

DOD Department of Defense 

DoE Department of Energy 

DoS Department of State 

DoT Department of Transportation 

DRAM Dynamic Random Access Memory 

DSB Defense Science Board 

DTIC Defense Technical Information Center 

DTICS Defense Trusted Integrated Circuits Strategy 

DTRA Defense Threat Reduction Agency 

DUSD Deputy Under Secretary of Defense 

DUSD(IP) Deputy Under Secretary of Defense for Industrial Policy 

EMP Electro Magnetic Pulse 

EU European Union 

FPGA Field Programmable Gate Array 

GBI Ground Based Interceptor 

GFE Government Furnished Equipment 

IBM International Business Machines Inc. 

IC Integrated Circuit 
ACRONYMS __________________________________________________________________ 

106 _________________________________________________________ DSB TASK FORCE ON

IDA Institute for Defense Analyses 

IP Intellectual Property 

IPT Integrated Product Team 

ITAR International Traffic in Arms Regulations 

JTRS Joint Tactical Radio System 

KIET Korean Institute of Electronics Technology 

M1A1 Abrams Main Battle Tank 

MIT Massachusetts Institute of Technology 

MMST Microelectronics Manufacturing Science and Technology 

MPU MicroProcessor Unit 

NDIA National Defense Industries Association 

NIST National Institute of Standards and Technology 

NSA National Security Agency 

NSC National Security Council 

NSF National Science Foundation 

ODUSD (IP) Office of the Deputy Under Secretary of Defense for Industrial 

Policy 

ONR Office of Navel Research 

OSD Office of the Secretary of Defense 

PECVD Plasma Enhanced Chemical Vapor Deposition 

PLA Programmable Logic Array 

PLD Programmable Logic Device 

RDT&E Research Development, Test and Evaluation 

RHMATD Radiation Hardened Microelectronics Accelerated Technology 

Development 

RHOC Radiation Hardened Oversight Council 

RISC Reduced Instruction Set Computer 

S&T Science and Technology 

SAR Synthetic Aperture Radar 

SDD System Design and Development 

SIA Semiconductor Industry Association 

SME Semiconductor Manufacturing Equipment 

SOC System on Chip 

SPO System Program Office 

SRAM Static Random Access Memory 

TI Texas Instruments Corporation 

TSMC Taiwan Semiconductor Manufacturing Company 
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HIGH PERFORMANCE MICROCHIP SUPPLY ___________________________________________ 107

UCLA University of California Los Angeles 

UMC United Microelectronics Corporation 

USD(ATL) Undersecretary of Defense for Acquisition, Technology, and 

Logistics 

USTR United States Trade Representatives 

VAT Value Added Tax 

WTO World Trade Organization 
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