US protects supply chains from Chinese influence

6 August 2019

New legislation aims to establish a supply chain security centre, protecting US business technology.

US Congress is introducing legislation to protect government supply chains after senators accused China of gaining an “unfair” advantage over the United States when it comes to developing technology. 

Mike Crapo, Republican senator for Idaho, and Mark Warner, Democrat senator for Virginia, introduced a bipartisan bill which would establish what they call a National Supply Chain Security Center (within the office of the Director of National Intelligence, Dan Coats) to collect information on supply chain threats. 

The senators have specifically named China as a possible threat as they guard against attempts to undermine US national security by exploiting and penetrating US supply chains. 

Their legislation is called the MICROCHIPS Act, an acronym which stands for Manufacturing, Investment, and Controls Review for Computer Hardware, Intellectual Property and Supply. It would oblige the Director of National Intelligence, the Department of Defense and other agencies to develop a plan to increase supply chain intelligence within 180 days.

It would also make funds available under the Defense Production Act for federal supply chain security enhancements. 

“Actions by the People’s Republic of China have contributed to an unfair and unsafe advantage in its technological race against the United States,” Crapo said. “Through government investments and subsidies, as well as intellectual property theft of companies like Idaho’s Micron, China aims to dominate a $1.5tn electronics industry.”

Crapo added that China’s actions had created “serious, far-reaching threats” to the supply chains that support the US government and military. 

Both senators said the MICROCHIPS Act would lead to coordinated government attempts to prevent such efforts which they claimed are “aimed at undermining or interrupting the timely and secure provision of dual-use technologies vital to our national security”. 

Warner said his country lacked a coordinated strategy to defend itself. “As a result, US companies lose billions of dollars to intellectual property theft every year,” he added. “Counterfeit and compromised electronics in US military, government and critical civilian platforms give China potential back doors to compromise these systems.” 

The senators claimed Chinese companies hope to export fifth generation technology (5G) to the United States that could potentially harm and expose both consumer and US military information. They also fear malicious chips or counterfeit parts could allow consumer data theft or cause system malfunctions. 

“Even with high investments in cybersecurity, the United States remains vulnerable to advanced cyber attackers like Russia and China,” they warned. 

In December SM reported on a bipartisan congressional panel’s findings that China’s growing strength in IT and network equipment manufacturing, and in internet of things applications, were threatening the US’s technology supply chain.

The US-China Economic and Security Review Commission’s report said: “The close supply chain integration between the United States and China, and China’s role as an economic and military competitor to the United States, create enormous economic, security, supply chain and data privacy risks for the United States.” 

This combines with Chinese state support for critical developing technologies that threaten the US’s “freedom of movement” in Asia, it added.

“Chinese firms have already leveraged strong state support to become global leaders in information technology and network equipment manufacturing, and have strengthened their roles in international standards-setting and deployment of 5G,” the commission concluded.

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