Senate bill calls for national strategy to secure supply chains against China and others

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Bipartisan legislation calls for national strategy to protect U.S. supply chain from China and others. (Getty Images)

Bipartisan legislation introduced in the U.S. Senate calls for a national strategy to assess and prevent risks to critical U.S. technologies in the interest of strengthening national security.

U.S. Senators Mike Crapo (R-Idaho) and Mark Warner (D-Virginia) introduced the MICROCHIPS Act (S. 2316) on Tuesday to guard against attempts by China and others to undermine U.S. national security by exploiting and penetrating U.S. supply chains, according to a press release.

MICROCHIPS is an acronym for the Manufacturing, Investment, and Controls Review for Computer Hardware, Intellectual Property and Supply. The bill would “create a coordinated whole-of-government approach to identify and prevent efforts…at undermining or interrupting the timely and secure provision of dual-use technologies vital to our national security,” Crapo said in a statement.

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Warner added that the country needs “a national strategy to unify efforts across the government to protect our supply chain and our national security.”

U.S. companies lose billions of dollars each year to intellectual property theft while counterfeit or compromised electronics in the U.S. military, government and critical civilian computers “give China potential backdoors to compromise these systems,” Warner said.

Crapo said that actions by the People’s Republic of China have “contributed to an unfair and unsafe advantage in the technological race against the U.S.” Chinese government investments and subsidies and theft of IP from companies like Idaho’s Micron are intended to help China dominate the $1.5 trillion electronics industry, he said. Such actions “create serious, far-reaching threats to the supply chains that support the U.S. government and military,” he added.

Last November, the U.S. Justice Department launched a “China Initiative” to prioritize trade-theft cases and litigate them quickly. The first indictment was against China state-owned Fujian Jinhua Integrated Circuit and a Taiwan-based partner, United Microelectronics. Both were charged with conspiracy to steal trade secrets from Micron Technology, based in Boise, Idaho. The companies pleaded not guilty in January in federal court in San Francisco.

U.S. prosecutors charge that Jinhua’s DRAM product relies on technology stolen from Micron and the U.S. is using a civil suit to try to block Jinhua’s exports of DRAM. Prosecutors are relying on a portion of the Economic Espionage Act of 1996 as the basis for the civil case.

Beyond the theft of IP, the senators are concerned that Chinese companies at large will use 5G wireless and other hardware and software to potentially harm and expose both consumer and U.S. military information.

“Malicious chips or counterfeit parts could create backdoors enabling the monitoring or stealing of consumer data or cause broader system malfunctions,” a statement from the senators noted. “The Department of Defense’s continuous acquisition of weapons systems without making security a key priority could potentially lead to loss of U.S. intellectual property and technological advantage of U.S. Armed Forces, contribute to unnecessary risks to human life and interfere with the ability of the Armed Forces to execute their missions.”

The bill directs the Director National Intelligence, DOD and other agencies to develop a plan to increase supply chain intelligence within 180 days. It also calls for creation of a National Supply Chain Security Center under the Director of National Intelligence to collect supply chain threat information and distribute it to agencies under its authority to intervene. It also calls for making funds available for federal supply chain security improvements under the Defense Production Act. However, the bill doesn’t set any amount for funding.

Portions of the new bill have been passed by both chambers, including the House-passed version of the Intelligence Authorization Act and the Senate’s version of the National Defense Authorization Act.

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