Build ICT Resilience by Teaming With Trade Partners, Commerce Urged

Creating a “more robust” U.S. electronics “ecosystem” will require “long-term effort and significant investments in infrastructure and capacity over many years,” commented HP. It backs “prioritizing incentives” for reshoring final PC product assembly and key components manufacturing in the U.S., said a heavily redacted submission.

Adequate controls and “oversight” of finished-PC assembly, including the loading of firmware, “is critical for supply chain security,” said HP. It’s important in the assembly process to ensure “sufficient control” over the source of firmware installation and configuration settings for devices shipped to end users “to minimize risk of counterfeit or malicious activity,” it said. “Control during the assembly process provides increased certainty that only genuine, untampered parts are installed in PCs and printers.”

There isn't “significant capacity” outside China for key portions of the component supply chains, said HP. “China has essentially created an insular supply chain to control the technologies needed for the PC industry, except for microprocessors and solid-state devices, it said. HP encourages the Biden administration “to adopt a global view of strengthening resilience in the ICT supply chain by building diversified capabilities for production of these components in collaboration with allies,” it said.

The administration also should “reassess” Section 301 tariffs on Chinese ICT components, said HP. The current tariffs make it “economically infeasible” to manufacture PCs in the U.S., “even before accounting for other cost differences,” it said. Broadening tariff exclusions for key ICT components “would remove a structural disadvantage to U.S. electronics manufacturing,” it said.

Microsoft agrees the U.S. “should work closely with allies and like-minded countries to coordinate ICT trade policies,” said the company. “Coordinated trade policies should encourage best practice and technology-enabled supply chain risk mitigation measures.” When “employed appropriately,” a “multilateral” supply chain security policy “that incentivizes such measures -- rather than one that imposes undue and unpredictable regulatory burdens -- will better protect supply chain security and help the United States and other democracies maintain tech leadership.”

The U.S. cannot expect to "retain" its technological leadership, “much less strengthen it,” if U.S. industry “is subject to overly restrictive measures that could stall or halt important aspects of its business,” said Microsoft. “The very same companies that are developing cutting-edge products and services for the ICT supply chain are also the companies most likely to be affected by restrictive sourcing requirements.” Companies developing 5G “currently lack a cost-effective way to source key components, either domestically or from allies,” said Microsoft. Developing alternative supply sources will take time and investment, it said. “If U.S. companies lose access to critical components before alternative supply sources exist, their businesses will be disrupted, and U.S. technology leadership will suffer.”

The COVID-19 pandemic “created surges in demand for goods and services that rely on semiconductors, ultimately exposing risks from over-reliance on a single region for semiconductor manufacturing,” said Intel. The trend “developed over years,” it said. The ICT supply chain also faces “challenges in providing data about composition and provenance of ICT hardware,” said Intel.

Intel sees an opportunity to develop tools and approaches that treat hardware components as products “whose traits such as authenticity, provenance, posture, and change histories can be tracked and communicated, digitally, across a digital supply chain,” said the chipmaker. Such approaches, if fully “embraced” by the ICT ecosystem, “may foster new technology solutions that can create a virtuous cycle of positive effects in the technology supply chain,” it said.

The U.S. can’t grow “a competitive manufacturing base” without an increased focus on “cost-competitive solutions and reduction of existing barriers to domestic manufacturing,” said contract-manufacturing giant Flex. “We see continued interest in diversifying supply chains with more U.S. or U.S.-proximate suppliers.” But “domestic solutions” in many cases “are not cost competitive or available due to other constraints,” it said.

Flex urged the administration to reduce barriers to access of “single-point-of-failure components” that are available mainly outside the U.S. It backs “incentivizing universities, employers, and mid-career professionals to invest in modern manufacturing and supply chain education.” The government should also provide access to low-cost financing, grants and investments for “capital infrastructure, logistics and warehousing, and on-the-job training,” it said.

Enhancing cooperation with “global partners” is one of 10 Information Technology Industry Council policy recommendations for building resilience into the ICT supply chain. “ITI supports increased bilateral, regional, and multilateral engagement with partner economies to deepen trade and investment relationships,” said the association.

ITI backs policies that address “negative impacts of tariffs,” including the Section 301 duties on Chinese goods. “Policymakers should consider developing an exemption process that allows for the reduction and/or removal of tariffs that negatively impact the ability of U.S. producers to reliably develop ICT products,” said ITI. “We also encourage continued engagement with Chinese counterparts to develop a schedule to roll back and work to address ongoing trade barriers.”

A “coordinated federal strategy” on ICT supply chain resilience “is critical to continued U.S. leadership,” said CTIA. A key challenge for industry is the “multiplicity of workstreams” on supply chain revisions at the federal level, it said. “Overlapping efforts among federal agencies place a significant strain on resources, for companies of all sizes.” ICT supply chain strategies “cannot turn on a dime,” it said: The report to the White House “should reflect these challenges and urge a unified federal approach to addressing supply chain issues, with the goal of reducing unnecessary burden on this vital sector.”

Congress should act to fund the Chips Act and pass the tax incentives in the Fabs Act, said the Telecommunications Industry Association. Commerce should “subsequently act to implement this funding in a way that is technology neutral and avoids preferencing specific end uses,” it said.

Government should also enact policies “that bolster the capabilities” of colleges and universities to “ensure a diverse workforce capable of deploying fiber and 5G infrastructure for commercial mobile and fixed wireless networks,” said TIA. “Public-private partnerships with community colleges, universities, and other institutions to develop degrees and programs of study on broadband deployment and 5G training, should be expanded.”

Huawei appealed for relaxation of BIS export restrictions on its U.S. trading partners. “Country-based and categorical exclusions of particular suppliers do little to address the actual risks from a global supply chain perspective,” said Huawei. Such exclusions “reduce the diversity” of the supply chain and “potentially amplify” its vulnerabilities, it said. They can “undermine” R&D “that might assist in addressing these issues and harm U.S. consumers by reducing investment in the U.S. ICT sector,” it said. “Huawei is fully prepared to actively participate in U.S. and global efforts to ensure resilience and security in the ICT supply chain.”