Low-Volume Alternatives

One option is to partner with foundries to secure small-lot chip fabrication. Companies such as Xilinx and Qualcomm have done so successfully. But here too, small-lot production prices may simply be out of reach, and government buyers must compete with large-lot customers for priority. Security in the foundries is also an issue, as industry consolidation has led to foreign domination of this manufacturing segment as well.

That leaves the Trusted Foundry program offered by the federal government, DoD, and NSA. This program has been proactive in offsetting the threat by certifying multiple microelectronics suppliers as “Trusted Suppliers.”  However, with the exception of IBM, Trusted Foundry suppliers primarily produce only older, legacy semiconductors and parts for older DoD weapon systems and radiation-hardened devices. Most DoD-specific suppliers cannot economically justify investing in the facility or equipment upgrades required for advanced semiconductor manufacture for low-volume government contracts. The commercial companies that have been accredited by the program are focused on providing chips for commercial markets. This business model of necessity gives first priority to high-volume customers.

Where other Trusted Foundry suppliers focus on providing the government with legacy semiconductors and parts, IBM is its primary advanced (300 mm) chip supplier. This single-source reliance is extremely risky, as IBM faces the same profit motive to favor high-volume markets. Will IBM outsource production of the most advanced 300 mm chips to Global Foundries? Single-sourcing with IBM also places government procurement in jeopardy should a catastrophic event disrupt the supply of ”trusted” components needed for cutting-edge weaponry, navigation, communications, or intelligence devices.

Beyond IBM, no other leading-edge semiconductor supplier has indicated a willingness to accommodate the government’s low-volume needs. Government acquisition requirements have proven to be disruptive of normal commercial business operations and are viewed as a risk to profit potential.

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