Chinese Nuclear Weapons, 2025: Federation of American Scientists Reveals Latest Facts on Beijing’s Nuclear Buildup

Washington, D.C. – March 12, 2025 – The Federation of American Scientists (FAS) today released “Nuclear Notebook: China” – its authoritative annual survey of China’s nuclear weapons arsenal. The FAS Nuclear Notebook is considered the most reliable public source for information on global nuclear arsenals for all nine nuclear-armed states. FAS has played a critical role for almost 80 years to increase transparency and accountability over the world’s nuclear arsenals and to support policies that reduce the numbers and risks of their use.

This year’s report, published in the Bulletin of Atomic Scientists, shows the following nuclear trends:

FAS Nuclear Experts and Previous Issues of Nuclear Notebook

The FAS Nuclear Notebook, co-authored by Hans M. Kristensen, Matt Korda, Eliana Johns, and Mackenzie Knight, is published bi-monthly in the Bulletin of the Atomic Scientists. The joint publication began in 1987. FAS, formed in 1945 by the scientists who developed the nuclear weapon, has worked since to increase nuclear transparency, reduce nuclear risks, and advocate for responsible reductions of nuclear arsenal and their role.

This latest issue on the United State’s nuclear weapons comes after the release of Nuclear Notebook: United States on America’s nuclear arsenal. More research available at FAS’s Nuclear Information Project.

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ABOUT FAS

The Federation of American Scientists (FAS) works to advance progress on a broad suite of contemporary issues where science, technology, and innovation policy can deliver transformative impact, and seeks to ensure that scientific and technical expertise have a seat at the policymaking table. Established in 1945 by scientists in response to the atomic bomb, FAS continues to bring scientific rigor and analysis to address contemporary challenges. More information about FAS work at fas.org.


Winning the Next Phase of the Chip War

Last year the Federation of American Scientists (FAS), Jordan Schneider (of ChinaTalk), Chris Miller (author of Chip War) and Noah Smith (of Noahpinion) hosted a call for ideas to address the U.S. chip shortage and Chinese competition. A handful of ideas were selected based on the feasibility of the idea and its and bipartisan nature. This memo is one of them.

Summary

  1. Danger Ahead: Until now, the U.S. semiconductor policy agenda focused on getting an edge over China in the production of advanced semiconductors. But now a potentially even more  substantial challenge looms. Possible Chinese dominance in so-called ‘legacy’ chips  essential for modern economic life could grant it unacceptable leverage over the United  States. This challenge will require tools far more disruptive than ever before considered by policymakers for the chip competition. 
  2. The Foot on America’s Economic Neck: Collecting offensive economic leverage lies at the  heart of Chinese leader Xi Jinping’s strategy. Chinese dominance in legacy chips could  enable Beijing’s bullying of the United States it has thus far reserved for U.S. allies. China’s  growing leverage over Washington may embolden Beijing to think it could attack Taiwan with  relative impunity. 
  3. Familiar Semiconductor Policy Tools Won’t Work Alone: China increasingly has access to  the tech it needs for its legacy ambitions (via stockpiling and indigenization), damaging  possible expanded export controls. And unfair Chinese trade practices could reduce the  benefits of subsidies, as it has for solar and critical minerals. 
  4. Learning to Love Trade Protection: Only when the U.S. market cannot access Chinese  chips will they have sufficient incentive to manufacture chips in third countries. Washington could either turn to tariffs or outright bans on Chinese chips. Washington has several options  to block China’s chips – AD/CVD, 337, ‘ICTS’, 5949, and 232. But the most powerful tool would be Section 301 of the Trade Act of 1974. 
  5. The Keys to Success: Trade measures will have to target Chinese chips contained within  other products, not just the chips themselves. The U.S. government’s clarity into global  supply chains will have to grow dramatically. Allied participation and knowledge-sharing  might be needed. The United States can ease enforcement of a chips trade war by  incentivizing private industry to share the burden of detecting violations of U.S. law.  

The Generational Leap in U.S. Chip Policy 

For five years, U.S. concerns over China’s semiconductor sector focused on its cutting-edge chip  production. The bipartisan instinct has been to mix restrictions on Chinese access to Western  technology and to fund manufacturing of advanced chips at home. It began with the Trump  administration’s sanctions against Chinese chip giants Fujian Jinhua, Huawei, and SMIC. The Biden administration’s October 2022 export controls on China’s advanced chipmakers and the CHIPS and Science Act crowned a new era of technology competition focused on the absolute bleeding edge.  

Fast forward to July 2024: Washington entered the next phase of the chip war.  

Biden administration concerns about legacy chips emerged subtly last summer from one-off statements from Commerce Secretary Gina Raimondo. Before long Team Biden began to formally investigate the issue in an industry survey. Then in May the administration doubled existing tariffs on Chinese-made chips from 25% to 50%. 

Congress is equally concerned. The bipartisan China Committee endorsed tariffs on Chinese legacy chips in its December 2023 economic report and in a January 2024 letter to the administration. China’s growing position in the production of mature-node chips took center stage in a Committee hearing in June 2024, where Committee Chair John Moolenaar called for “a reliable domestic supply of semiconductors outside the reach of the CCP”. 

This apparently sudden shift reflects the growth of the stakes in the U.S.-China chip competition over the past year: 

Despite the scale of the challenge, Washington has not yet decided on its strategy to take on the  problem. The best approach to the legacy challenge will be one that can prevent U.S. reliance on  Chinese-made chips to ensure China cannot capture decisive leverage over the U.S. economy.  Doing so will require using trade measures to reject Chinese chips from the U.S. altogether.  

Dominance Means Leverage 

China’s fast-rising position in the legacy chip industry threatens U.S. national security because it  would grant Beijing extraordinary strategic leverage over the United States. That would encourage Chinese economic coercion and even a war over Taiwan.  

2.1. Xi’s Plan for ‘Offensive Leverage’: Geoeconomics lies at the heart of Chinese leader Xi  Jinping’s international strategy. The strategy is to exploit foreign dependence on Chinese critical  supply chains to accomplish Beijing’s objectives abroad. 

Xi himself laid the foundation of this vision in a pair of speeches in 2020 in which he called for  economic “deterrence” over the rest of the world. He called for an economic “gravitational field”  to “benefit the formation of new advantages for participating in international competition and  cooperation”. China would achieve this by heightening “the dependent relationships of international  industrial chains on our country, to form a powerful countermeasure and deterrence capability  against external parties who artificially cut off supply”, according to Xi. 

The Chinese Communist Party’s 2021 Five-Year Plan enshrined these principles in Party jargon,  calling for a “powerful domestic market and strong-trading country” to “form a powerful gravitational  field for global production factors and resources”. This is often called the “dual circulation” strategy by outside observers. It could more usefully be  called “offensive leverage”. 

2.2. Beijing’s Bullying Could Come for Washington: Since Xi Jinping rose to power in 2012, China  has repeatedly demonstrated these geoeconomic principles by flashing its economic strength to accomplish strategic objectives. 

The list of examples of Chinese economic coercion is long. In 2010, China limited Japanese  purchases of rare-earth minerals over a Senkaku Islands dispute. Norwegian salmon rotted that  same year on Chinese docks in retaliation for dissident Liu Xiaobo winning the Nobel Peace Prize. In  2012, Philippine bananas also rotted over the Scarborough Shoal dispute. In 2016, Beijing conveyed its displeasure toward Seoul for agreeing to host U.S. missile defense systems by squeezing South  Korean auto sales in China and slashing Chinese tourism in the country. 

This bullying has not slowed since Xi unveiled his economic thinking in 2020. That year, China  embargoed Australian wine, barley, wheat, coal, fish, and other products after Canberra passed  laws to reduce foreign influence and called for an investigation into the origins of Covid-19.In 2021, China blocked imports of Lithuanian goods over the state opening a “Taiwanese Representative  Office”. In just the past month, Beijing has threatened French luxury brands, German car makers, and Spanish pork producers in retaliation for EU duties on Chinese electric vehicles. 

Washington faces less blatant coercion compared to its allies. True, China has targeted U.S. firms  such Micron over the past few years. But the scale and ambition of this bullying has never  approached what China has applied to the likes of Australia and Lithuania. This may be because  Beijing does not believe it yet maintains necessary leverage over Washington to brandish its  economic blade as it does toward smaller economies.  

China’s growing position in the legacy semiconductor market could change that. How would  Beijing’s behavior change if sales of the Ford F-150 relied on Beijing’s willingness to sell its semiconductors?  

2.3. Reliance Endangers Taiwan: Western European reliance on Russian energy was one factor (among many) that encouraged Vladimir Putin to believe he could invade Ukraine with relative impunity. Likewise, deepening U.S. dependence on China for strategic supply chains could make it  far more difficult to challenge Beijing on sensitive geopolitical issues.  

The United States already relies on China for other key inputs to its economy: generic  pharmaceuticals, critical minerals, solar panels, and printed circuit boards, among others. U.S.  reliance on Chinese-made legacy chips – the product at the heart of modern economic life – could be the crown jewel of Chinese geoeconomics. American economic reliance on China could embolden Xi Jinping to think he could attack Taiwan with tolerable penalty.  

The Case for Blocking China’s Chips 

Familiar semiconductor policy approaches – export controls and subsidies – are inadequate alone to prevent reliance on Chinese-made legacy chips. Washington and its allies will instead have to turn  to the old-fashioned, disruptive tools of trade defense in the face of a challenge of this scale.  

3.1. It’s Too Late for Export Controls: The crux of current U.S. semiconductor policy toward China  is to contain the growth of Chinese advanced chip production by limiting its access to exquisite  machine tools produced by the United States and its allies (often called the ‘restrict’ agenda). Without those tools, China will be unable to build the cutting-edge chips that enable AI and  advanced weapons.  

Why not do the same for legacy chips? Washington and its allies could grow its existing rules so that China could not purchase machines capable of manufacturing legacy chips from Western producers. 

The issue is that China increasingly already has the tools it needs for its legacy chip production, in two ways: 

Export controls may have worked for the legacy challenge five or ten years ago. It’s unlikely to work alone today. 

3.2. Chinese Trade Practices Undermine Subsidies: The second pillar of Washington  semiconductor strategy for the past couple of years has been what’s often called the ‘promote’  agenda. The United States is deploying $39 billion in subsidies through the 2022 CHIPS and Science  Act to incentivize new chip factories at home. The strategy has helped galvanize $447 billion in  private investment across 25 states, 37 new chip fabs, and expansions at 21 other fabs. The United  States is now projected to make 30% of all advanced logic chips by 2032. But the CHIPS and Science Act  focuses on advanced chips, not legacy ones. Only a quarter of CHIPS funding ($10 billion) is planned to be spent on legacy-chip production.

Why not pass a Chips Act for legacy chips? California Representative Ro Khanna has called for doing  so: “a Chips Act 2.0 and 3.0 to better focus on legacy chips for our cars, refrigerators, and dryers”.  Indeed, subsidies may be a key tool to spur additional domestic legacy chip  production.  

But subsidies alone are unlikely to rise to the challenge. China’s “brute force” economic strategy  might render a legacy ‘promote’ agenda stillborn.  Beijing’s approach is to eliminate foreign  competitors with low prices by flooding international markets with state-sponsored artificially high  supply. China could flood the market with cheap chips to deter private Western investment into new chip production despite generous subsidies. The result could be billions of taxpayer dollars spent  with insufficient new chip capacity to show for it. 

Two recent examples demonstrate how Chinese industrial policy practices can undermine  Washington ‘promote’ policy: 

One Pentagon-funded Idaho mine, the only cobalt mine in the United States, was planned to open last year. It’s instead been mothballed since over low cobalt prices – down by almost two-thirds in two years.The  owner of that mine, Australian firm Jervois, told investors in March it would lay off 30% of its senior corporate management over “adverse cobalt market conditions caused by Chinese  overproduction and its impact on pricing”.

The warning signs in the legacy chip sector are already flashing. Chinese semiconductors were “20  to more than 30%” cheaper than their international counterparts in 2022 and 2023, according to the  Silverado Policy Accelerator.This price advantage will likely only widen with time. 

3.3. Don’t Compete with China on Price: The challenge facing U.S. policymakers is that Chinese  industrial policy is designed to make it impossible for Western firms to offer prices competitive  against Chinese players. The solution is to deny Chinese chips access to Western markets.  

The logic is simple yet unfamiliar for some following semiconductor policy. Only if the U.S. market is denied to Chinese chips will those producing for the United States be forced to source chips outside  of China, and only then will the construction of scaled chipmaking capacity in third countries  become economic.  

How It Would Work 

Preventing U.S. reliance on Chinese chips would be more complicated than simply raising the tariff  on Chinese-made chips imported into the U.S. market. For it to work, Washington would need to  target goods that contain Chinese chips, not just the imports of the chips themselves. It also may need allied cooperation.  

4.1. Target Chips as Components, not the Chips Themselves: Semiconductors are  overwhelmingly an intermediate good, not a final product of the sort Washington typically tariffs or blocks at the border. U.S. policy will have to reflect that complexity.  

The Biden administration in May doubled U.S. tariffs on imported Chinese chips from 25% to 50%,  citing China’s “rapid capacity expansion that risks driving out investment by market-driven firms”. The original 25% tariff, imposed by the Trump administration in 2018, reduced direct imports of  Chinese chips by around 72%, according to the U.S. International Trade Commission. But direct  imports represent only a portion – likely a minority portion – of the Chinese-made chips that  otherwise enter the United States as components within other devices. 

The original 2018 tariffs had no effect on Chinese chips arriving as components of other goods – and  neither will the new Biden tariffs, which double the rate of the 2018 tariffs without changing their design. Closing this loophole would require the administration to do just that.  

One way of doing so would be to apply a “component tariff”, effectively increasing the import cost of  the final good (whatever it is) because it contains a chip or chips made in China. The China Committee called for this in January 2024. Another way would be to deny outright products containing Chinese chips entry into the United States. Both options could work, assuming a component tariff is  high enough to overcome any possible Chinese price advantage (e.g., 200% or higher).  

Some experts have expressed doubt that it is even possible as a policy matter to target Chinese chips  because they are intermediate goods. But this view is erroneous. In fact, various laws allow  Washington to tariff or outright exclude from the U.S. market any product made with Chinese  semiconductors. (See Section 5). 

4.2. Bring the Allies Along: A strategy to prevent U.S. reliance on Chinese chips would have higher  odds of success if U.S. allies join, most importantly Europe and Japan. The risk is that without allies,  international chip players would continue to design their microelectronics with Chinese chips, leaving the United States out of the best the market has to offer. A more optimistic assessment would be that the U.S. consumer market is so large that unilateral Washington action would be  enough to force leading market players to design their products without Chinese chips. 

Either way, allied signals are positive. The EU said about legacy chips last  April that it was “gathering  information on this issue”, and that it would coordinate with the United States to “collect and share  non-confidential information” about Chinese “non-market policies and practices”.The bloc’s new  duties on Chinese automakers indicate it could be open to similar measures toward chips. Japan  has taken fewer concrete steps than Europe, but Tokyo’s Minister for Economy, Trade and Industry Ken Saito told reporters that participants took “great interest” in legacy chips at the first Japan Korea-U.S. Commerce and Industry Ministerial Meeting on 28 June 2024. 

Washington’s Toolkit 

The United States has multiple policy tools that could be used to prevent U.S. reliance on Chinese made semiconductors. Th following summarizes these tools, in roughly ascending order of magnitude.  

5.1. Countervailing Duties: This form of tax can be placed by the Commerce Department on foreign goods that it finds to be subsidised and that the U.S. International Trade Commission (ITC) finds  materially injure a U.S. domestic industry. After an investigation prompted either by a petition from U.S. industry or initiated by Commerce itself, Commerce can impose “CVDs” on the goods in  question. 

Two challenges, however: First, it can sometimes be difficult to prove that Chinese state subsidies  have boosted specific goods. Second, chips imported as components of other goods aren’t a natural  fit for CVD investigations, so some policy creativity would likely be required. 

5.2. Anti-Dumping Duties: This alternative tax is like its sister duty in how it comes about and who  investigates it, but in this case it seeks to counter imports that have been “dumped” at artificially low prices in the U.S. market. 

As with CVDs, however, some policy creativity may be required to use anti-dumping duties for chips  imported as components of other goods. Further, it can be challenging to establish a baseline “fair”  price against which to measure the price of any Chinese goods in the U.S. market. Former senior Commerce official Nazak Nikakhtar noted: “It is nearly impossible to find a surrogate  country that has not been adversely affected by the PRC’s predatory pricing. . . . Virtually all  benchmark prices in trade cases are now understated and inadequate for measuring [dumping] by the PRC.” 

5.3. Section 337: This provision (from the Tariff Act of 1930) allows the U.S. ITC to investigate  imported goods for alleged links to intellectual-property theft and a range of other unfair trade  practices. Relief can take the form of exclusion orders, cease-and-desist orders, or sequestration of goods.  

But the 337’s bureaucratic process might be too burdensome. The ITC is an independent agency not subject to direction by the White House. In 2018, the Commission on the Theft of American  Intellectual Property, led by ex-ambassador and ex-governor Jon Huntsman, recommended speeding up the ITC’s 337 process.

5.4. Section 5949: With relatively little fanfare, Congress in late 2022 enacted a measure that will  curb some Chinese legacy-chip sales in the U.S. market – but only some, and slowly. Via Section  5949 of the annual defence bill, Congress prohibited the U.S. federal government and its contractors  from procuring semiconductors for “critical” uses from three Chinese firms (SMIC, YMTC, CXMT),  beginning in four years. This provision could be expanded in multiple ways that would block Chinese chips from large swathes of the U.S. market. Policymakers could shorten the phase-in period, blacklist additional companies (beside SMIC, YMTC and CXMT), or force U.S. government  contractors not to buy proscribed Chinese chips even for their own private use.

The federal government does not, however, have the authority to force state governments to adopt similar rules. This approach would also allow any company that does not contract with the federal  government to purchase Chinese chips.  

5.5. ‘ICTS’: The Commerce Department’s “Information and Communications Technology and  Services” (ICTS) regime is probably capable of restricting the import of goods containing Chinese made chips. The regime, first outlined in the final days of the Trump administration and embraced by  the Biden administration, has broad authorities to restrict transactions (from limits on cross-border  data flows to import bans) across theoretically the entire digital economy: critical infrastructure,  network infrastructure, data hosting, surveillance and monitoring tech, communications software, and emerging technology.The ICTS office’s current investigation on Chinese ‘Connected Vehicles’, will restrict Chinese-controlled critical components from being used in cars on U.S. roads. The  president might similarly be able to use ICTS to restrict the import of products containing Chinese made semiconductors.  

Taking on Chinese legacy chips, however, would not fit the ICTS Office neatly:

5.6. Section 232: This instrument (from the Trade Expansion Act of 1962) allows any federal  department to require a Commerce Department investigation of specified imports that may threaten  national security (defined broadly). The President may then impose tariffs or quotas as a remedy.  The Trump administration used Section 232 to tariff imports of steel and aluminum in 2018, and it  could be a viable approach to legacy chips too.  

232’s main drawback is that it does not allow import bans. An obvious workaround would be to apply a component tariff onto Chinese semiconductors so high that it works effectively as a ban (e.g., north  of 200%).  

5.7. Washington’s Most Powerful Tool – Section 301: The strongest tool for the legacy-chips  challenge might be the Section 301 of the Trade Act of 1974, which gives the Office of the U.S. Trade  Representative broad scope investigate “unreasonable”, “discriminatory”, or  “unjustifiable” actions that burden U.S. commerce.  After an investigation, USTR has sweeping  powers to impose remedies as it sees fit, e.g. with tariffs, import bans, or other sanctions. It gives a president notably broad, flexible, and discretionary powers. 

301 has become the bipartisan tool of choice to address unfair Chinese trade and industrial practices and to reshore supply chains: 

A future 301 investigation could almost certainly find a way to prohibit goods with Chinese-made semiconductors from entering the U.S. market. The United States could open a 301 investigation into  Beijing’s state-led subsidy strategy to do so, as the Biden administration considered doing in 2021. 

Some may worry that 301’s required investigation before applying remedies would slow down a  solution that would ideally begin as soon as possible. But a public investigation of China’s position in the semiconductor industry could have major benefits. It could provide the administration insight into the international microelectronics supply chain, needed to implement a legacy restriction policy. 

And it would send industry a clear message that it should begin shifting its supply chains before the new U.S. policy began.  

Some of History’s Lessons on Decoupling  

One challenge facing this strategy is if it is practically possible to stop Chinese-made chips from  entering the U.S. market, no matter U.S. law. Some have called banning Chinese chips tantamount to trying to “hold sand in your hands”. The U.S. government has limited visibility into global supply chains. How could Washington enforce the next phase of China chips containment? 

Two examples of U.S. efforts to remove goods from international supply chains point to lessons about how the United States could go about doing so successfully today: implementation of the  Uyghur Forced Labor Prevention Act (UFLPA), and the ‘Kimberley Process’ to prevent sourcing blood  diamonds from Africa. They show that Washington will need three things to enforce this strategy: supply chain clarity, active participation from private industry to detect lawbreakers, and an allied  coalition to ensure success in preventing U.S. reliance on Chinese-made chips.  

6.1. Improving on the UFLPA Enforcement: Removing Chinese-made legacy chips from the U.S.  market would not be the first time Washington moved to fundamentally change the U.S.-China  trading relationship in pursuit of excising specific Chinese goods from the United States. The Uyghur Forced Labor Prevention Act, passed by Congress in late 2021, prohibited entirely any goods from  Xinjiang – or those with supply chains stemming from there – from coming into the United States on  grounds that they were tainted with forced labor. UFLPA Republican co-author Marco Rubio vowed  in 2021 that it would “fundamentally change our relationship with Beijing”. Jim McGovern, the  Democratic congressman who authored the House version of the bill, said “No more business as  usual”. 

Yet the law has had a less significant impact on U.S.-China trade flows than initially anticipated, most importantly in the solar industry. Some half of all global polysilicon, a base material for solar panels, comes from Xinjiang. Chinese firms have nonetheless increased their market share in the  United States since the passage of the UFLPA. 

There are three lessons to take from these challenges that policymakers can apply to the coming legacy chip trade war: 

  1. Supply Chain Clarity Needed: The UFLPA granted the administration no additional funding  for enforcement, likely forcing difficult decisions across the administration of how to fund  the stiff demands for research into global forced labor supply chains. Enforcing legacy-chip  protectionism would likely require a major expansion of supply chain analytical capabilities  across the U.S. government, including in the Commerce Department and within Customs  and Border Protection. 
  2. Let Private Industry Help with Enforcement: UFLPA enforcement might have been more  successful if detecting those who violated U.S. law was the responsibility of private industry,  not that of the government. Is this even possible?  


It appears so. The False Claims Act of 1863 allows private parties to initiate a lawsuit on  behalf of the U.S. government against those who have defrauded the U.S. government. Whistleblowers receive some 15% to 30% of the government’s award if they win. This law,  originally passed in the Civil War to crack down on fraud from military contractors, has  increasingly been used against those who commit customs and tariffs fraud. The law triples damages and civil penalties for violators.  

These cases (called “qui tam” cases) have been brought against those who transshipped  Chinese goods through third countries to dodge 301 tariffs. In one case, manufacturing  tools firm King Kong Tools paid $1.9 million in November 2023 to settle allegations that the  firm dodged paying 301 tariffs by falsely claiming its goods were made in Germany. The  case began when a competitor to King Kong brought a qui tam suit alleging that King Kong  produced its products in China, shipped them to Germany, then sent them to the United  States. The whistleblower received an award of $286,000. 

Washington could similarly enlist the private sector to help detect violations of legacy-chip trade rules. At a minimum, the Justice Department could begin a public campaign to  encourage whistleblowers to bring qui tam cases against violators. (Including technology research firms. TechInsights, the company known for teardowns of Chinese  microelectronics to determine their quality, comes to mind here.) The U.S. government  could also find ways to increase the incentive for private parties to bring cases against tariff  dodgers. Congress could update the False Claims Act to boost the reward for whistleblowers,  for example.  

6.2. An Allied System for Legacy-Chip Trade Protection: The Kimberley Process is a UN-mandated  certification scheme launched in 2003 to prevent diamonds that fund conflict from entering global  markets. 85 member states, civil society groups, and industry agreed to commit to transparent  practices and share data to certify that imported diamonds are not tainted by conflict. 

Washington and its allies should agree to collectively work to restrict the import of Chinese made legacy chips. They could share best practices and supply chain intelligence. It could make it  easier for Washington to know where Chinese semiconductors are moving throughout global supply chains. Doing so would help build an allied coalition collectively more resilient against Beijing’s economic coercion. 

Taking on the World’s Factory: A Path to Contain China on Legacy Chips

Last year the Federation of American Scientists (FAS), Jordan Schneider (of ChinaTalk), Chris Miller (author of Chip War) and Noah Smith (of Noahpinion) hosted a call for ideas to address the U.S. chip shortage and Chinese competition. A handful of ideas were selected based on the feasibility of the idea and its and bipartisan nature. This memo is one of them.

Challenge and Opportunity

The intelligent and autonomous functioning of physical machinery is one of the key societal developments of the 21st century, changing and assisting in the way we live our lives. In this context, semiconductors, once a niche good, now form the physical backbone of automated and intelligent systems. The supply chain disruptions of 2020 laid bare the vulnerability of the global economy in the face of a chip shortage, which created scarcity and inflation in everything from smartphones to automobiles. In an even more extreme case, a lack of chips could impact critical infrastructure, such as squeezing the supply of medical devices necessary for many modern procedures. 

The deployment of partially- or fully-automated warfighting further means that Artificial Intelligence (AI) systems now have direct and inescapable impacts on national security. With great power conflict opening on the horizon, threats toward and emanating from the semiconductor supply chain have become even more evident. 

In this context, the crucial role of the People’s Republic of China (PRC) in chip production represents a clear and present danger to global security. Although the PRC currently trails in the production of cutting-edge sub-16 nm chips used for the development of AI models, the country’s market dominance in the field of so-called “trailing edge chips” of 28 nm or above has a much wider impact due to their ubiquity in all traditional use cases outside of AI. 

The most important harm of this is clear: by leveraging its control of a keystone international industry, the Chinese Communist Party will be able to exert greater coercive pressure on other nations. In a hypothetical invasion of Taiwan, this could mean credibly threatening the U.S. and other democratic countries not to intervene under the threat of a semiconductor embargo. Even more dramatically, given the reliance of modern military manufacture on digital equipment, in the case of a full-scale war between the People’s Republic of China and the United States, China could produce enormous amounts of materiel while severely capping the ability of the rest of the world to meet its challenge. 

A secondary but significant risk involves the ability of China to build defects or vulnerabilities into its manufactured hardware. Control over the physical components that underlie critical infrastructure, or even military hardware, could allow targeted action to paralyze U.S. society or government in the face of a crisis. While defense and critical infrastructure supply chains represent only a small fraction of all semiconductor-reliant industrial products, mitigation of this harm represents a baseline test of the ability of the United States to screen imports relevant to national security. 

Beyond Subsidies: A Blueprint for Global Manufacturing

Wresting back control of the traditional semiconductor supply chain from China is widely recognized as a prime policy goal for the United States and allied democratic countries. The U.S. has already begun with the passage of the CHIPS and Science Act in 2022, providing subsidies and tax incentives to encourage the creation of new fabrication plants (fabs) in the United States. But a strategic industry cannot survive on subsidies alone. Preferential tax treatment and government consumption may stand up some degree of semiconductor manufacture. But it cannot rival the size of China’s if the PRC is able to establish itself as the primary chip supplier in both its domestic market and the rest of the world.

Nascent American foundries and the multinational companies that operate them must be able to survive in a competitive international environment without relying on unpredictable future support. They must do this while fighting against PRC-backed chip manufacturers operating with both a strong domestic market and massively developed economies of scale. Given the sheer size of both the Chinese manufacturing base and its domestic market, the U.S. cannot hope to accomplish this goal alone. Only a united coalition of developed and developing countries can hope to compete. 

The good news is that the United States and its partners in Europe and the Indo-Pacific have all the necessary ingredients to realize this vision. Developing countries in South and Southeast Asia and the Pacific have a vast and expanding industrial base, augmented by Special Economic Zones and technical universities. America and its developed partners bring the capital investment and intellectual property necessary to kickstart semiconductor production abroad. 

The goal of a rest-of-world semiconductor alliance will be twofold: to drive down the cost of chips made in the U.S. and its allies while simultaneously pushing up the cost of purchasing legacy semiconductors produced in China to meet it. Only when these two intersect will the balance of global trade begin to tip back toward the democratic world. The first two slates of policy recommendations will focus on decreasing the cost of non-China production and increasing the cost of Chinese imports, respectively. 

Finally, even in the case in which non-Chinese-influenced semiconductors become competitive with those made in the PRC, it will likely be impossible to fully exclude Chinese hardware from American and allied markets. Therefore, the final raft of policy recommendations will focus on mitigating the threat of Chinese chips in American and allied markets, including possible risks of inbuilt cyber vulnerability. 

The creation of an autonomous and secure supply chain entirely outside of China is possible. The challenge will be to achieve semiconductor independence in time to prevent China from successively weaponizing chip dominance in a future war. With clashes escalating in the South China Sea and threats across the Taiwan Strait growing ever more ominous, the clock is ticking. But America’s Indo-Pacific partners are also increasingly convinced of the urgency of cooperation. The policies presented aim to make maximum use of this critical time to build strategic independence and ensure peace. 

Plan of Action

Recommendation #1: Boosting non-China Manufacturing 

The first and most crucial step toward semiconductor sovereignty is to build and strengthen a semiconductor supply chain outside of China. No matter the ability to protect domestic markets from Chinese competition, U.S. industrial productivity relies on cheap and reliable access to chips. Without this, it is impossible to ramp up industrial production in key industries from defense contracting to consumer electronics. 

According to a report released by the CSIS Wadhwani Center for AI and Advanced Technologies, the global semiconductor value chain broadly involves three components. At the top is design, which involves creating Electronic Design Automation (EDA) software, generating IP, and producing manufacturing equipment. Next is fabrication, which entails printing and manufacturing the wafers that are the key ingredient for finished semiconductors. The final stage is assembly, test, and packaging (ATP), which entails packaging wafers into fully-functioning units that are fit for sale and verifying they work as expected. 

Of these three, the United States possesses the greatest competitive advantage in the field of design, where American intellectual property and research prowess drive many of the innovations of the modern semiconductor industry. Electronic Design Automation software, the software that allows engineers to design chips, is dominated by three major firms, of which two, Cadence and Synopsys, are American companies. The third, Mentor Graphics, is a U.S.-based subsidiary of the German industrial company Siemens. U.S. Semiconductor Manufacturing Equipment (SME) is also an important input in the design stage, with U.S.-based companies currently comprising over 40 percent of the global market share. The United States and Japan alone account for more than two-thirds. 

Meanwhile, the PRC has aggressively ramped up wafer production, aiming to make China an integral part of the global supply chain, often stealing foreign intellectual property along the way to ease its production. Recent reported efforts by the PRC to illicitly acquire U.S. SME underscore that China recognizes the strategic importance of both IP and SME as primary inputs to the chip making process. By stealing the products of American research, China further creates an unfair business environment in which law-abiding third countries are unable to keep up with Chinese capacity. 

Semiconductor Lend-Lease: A Plan for the 21st Century 

The only way for the international community to compete is to level the playing field. In order to do so, we propose that the United States encourage and incentivize its companies to license their IP and SME to third countries looking to build wafer capacity. 

Before the United States officially entered into the Second World War, the administration of President Franklin Delano Roosevelt undertook the “Lend-Lease” policy, agreeing to continue to supply allied countries such as Great Britain with weapons and materiel, without immediate expectation of repayment. Recently, Lend-Lease has been resurrected in the modern context of the defense of Ukraine, with the United States and European powers supplying Ukraine with armaments and munitions Ukrainian industry could not produce itself. 

The crucial point of Lend-Lease is that it takes the form of immediate provison of critical outputs, rather than simple monetary donations, which require time and investment to convert into the desired goods. World War II-era Lend-Lease was not based on a long-term economic or development strategy, but rather on the short-term assessment that without American support, the United Kingdom would fall to Nazi occupation. Given the status of semiconductors as a key strategic good, the parallels with a slow-rolling crisis in the South China Sea and the Taiwan Strait become clear. While in the long term, South, East, and Southeast Asia will likely be able to level up with China in the field of semiconductors, the imminent threats of both Chinese wafer dominance and a potential invasion of Taiwan mean that this development must be accelerated. Rather than industrial and munitions production, as in 1941, the crucial ingredients the United States brings to this process today are intellectual property, design tools, and SME. These are thus the tools that should be leased to U.S. partners and allies, particularly in the Indo-Pacific. By allowing dedicated foreign partners to take advantage of the gains of American research, we will allow them to level up with China and truly compete in the international market. 

Although the economics of such a plan are complex, we present a sketch here of how one iteration might look. The United States federal government could negotiate with the “Big Three” EDA firms to purchase transferable licenses for their EDA software. The U.S. could then “Lend-Lease” licenses to major semiconductor producers in partner countries such as Singapore, Malaysia, Vietnam, the Philippines, or even in Latin America. The U.S. could license this software on the condition that products produced by such companies would be made available at discounted prices to the American market, and that companies should disavow further investment from or cooperation with Chinese entities. Partner companies in the Indo-Pacific could further agree to share any further research results produced using American IP, making further advancements available to American companies in the global market. 

When growing companies attain a predetermined level of market value they could offer compensation to the United States in the form of fees or stock options, which would be collected by the United States under the terms of the treaty and awarded to the EDA firms. Similar approaches could be taken toward licensing American IP, or even physically lending SME to countries in need. 

Licensing American research to designated partner countries comes with some risks and challenges. For one, it creates a greater attack surface for Chinese companies hoping to steal software and design processes created in the United States. Preventing such theft is already highly difficult, but the U.S. should extend cooperation in standardizing industrial security practices for strategic industries. 

A recent surge in fab construction in countries such as Singapore and India means that the expansion of the global semiconductor industry is already in motion. The United States can leverage its expertise and research prowess to speed up the growth of wafer production in third countries, while simultaneously countering China’s influence on global supply chains. 

A Semiconductor Reserve? 

The comparison of semiconductors to oil is frequently made and has a key strategic justification: for more than a century, oil was a key input to virtually all industrial processes, from transportation to defense production. Semiconductors now play a similar role, serving as a key ingredient in manufacturing. 

A further ambitious policy to mitigate the harm of Chinese chips is to create a centralized reservoir of semiconductors, akin to the Strategic Petroleum Reserve. Such a reserve would be operated by the Commerce Department and maintain holdings of both leading- and trailing-edge chips, obtained from free dealings on the open market. By taking advantage of bulk pricing and guaranteed, recurring contracts, the government could acquire a large number of semiconductors at reasonable prices, sourced exclusively from American and partner nation foundries. 

In the event of a chip shortage, the United States could sell chips back into the market, allowing key industries to continue to function with a trusted source of secure chips. In the absolute worst case of a geopolitical crisis involving China, a strategic stockpile would create a bulwark for the American defense industry to continue producing armaments during a period of disrupted chip supply. This buffer of time would be intended for domestic and allied production to ramp up and continue to supply security functions. 

However, allowing the U.S. to participate in the chip industry has a further impact on economic development. By making the U.S. a first-order purchaser of semiconductors at an industrial scale, the United States could create a reliable source of demand for fledgling businesses. The United States could serve as a transitory consumer buying up excess capacity when demand is weak, ensuring that new foundries are both capable of operation and shielded from attempts from China to smother demand. The direct participation of the U.S. in the global semiconductor market would help to kickstart industry in partner countries while providing a further incentive to build collaboration with the United States. 

Recommendation #2: Fencing in Chinese Semiconductor Exports 

A second step toward semiconductor independence will be in containing Chinese exports, with the goal of reducing China’s access to global markets and starving their industrial machine. 

The most direct approach to reducing demand for Chinese semiconductors is the imposition of tariffs. The U.S. consumer market is a potent economic force. By squeezing Chinese manufacturers seeking to compete in the U.S. market, the United States can avoid feeding additional production capacity that might be weaponized in a future conflict. These tariffs can take a variety of forms and justifications, from increased probes into Chinese labor standards and human rights practices to dumping investigations pursued at the WTO. The deep challenge of effective tariffs is how to enforce these tariffs once they come into play and how to coordinate them with international partners. 

Broad Tariffs, Deep Impact 

No rule works without an enforcement mechanism, and in the worst case, a strong public stance against Chinese semiconductors that is not effectively implemented may actually weaken U.S. credibility and embolden the Chinese government. Therefore, it is imperative to have unambiguous rules on trade restrictions, with a strong enforcement mechanism to match. 

These measures should not just apply to chips that are bought directly from China but rather include those that are assembled and packaged in third countries to circumvent U.S. tariffs. The maximal interpretation of the tariffs mandate would further include a calculated tariff on products that make use of Chinese semiconductors as an intermediate input. 

In the case of semiconductors made in China but assembled, tested, or packaged in other countries, we suggest an expansion of the Biden Administration’s 50% tariff on Chinese semiconductors to include all chips, consumer, or industrial products that include a wafer manufactured in the People’s Republic of China, based on their international market rate. That is, if an Indonesian car manufacturer purchases a wafer manufactured in China with a market value of $3,000, and uses it to manufacture a $35,000 car, importing this vehicle to the United States would be subject to an additional tax of $1,500. 

While fears abound of the inflationary effects of additional tariffs, they are necessary for the creation of an incentive structure that properly contains Chinese manufacturing. In the absence of proportional tariffs on chips and products assembled outside China, Chinese fabs will be able to circumvent U.S. trade restrictions by boosting wafer production that then takes advantage of assembly, test, and packaging in third countries. Further, it is imperative for the United States to not only restrict Chinese chip growth but to encourage the development of domestic and foreign non-China chip manufacturers. Imposing tariffs on Chinese chips as an intermediate ingredient is necessary to create a proper competitive environment. Ultimately, the goal is to ensure a diversification of fab locations beyond China that will create lower prices for consumers overall. 

How would tariffs on final goods containing Chinese chips be enforced? The policy issue of sanctioning and restricting an intermediate product is, unfortunately, not new. It is well known that Chinese precursor chemicals, often imported into Mexico, form much of the raw inputs for deadly fentanyl that is driving the United States opioid epidemic. Taking a cue from this example, we further suggest the creation of an internationally maintained database of products manufactured using Chinese semiconductors. As inspiration, the National Institutes of Health / NCATS maintains the Global Substance Registration System, a database that categorizes chemical substances, along with their commonly used names, regulatory classification, and relationships with other chemicals. Such a database could be administered by the Commerce Department’s Bureau of Industry and Security, allowing the personnel who enforce the tariffs to also collect all relevant information in one place. 

Companies importing products into the U.S. would be required to register the make and model of all Chinese chips used in each of their products so that the United States and participating countries could impose corresponding sanctions. Products imported to the U.S. would be subject to random checks involving disassembly in Commerce Department workshops, with failure to report a sanctioned semiconductor component making a company subject to additional tariffs and fines. Manual disassembly is painstaking and difficult, but regular, randomized inspections of imported products are the only way to truly verify their content. 

The maintenance of such a database would bring follow-on national security benefits, in that the disclosure of any future vulnerability in a Chinese electronic component would allow quick diagnosis of what systems, including critical infrastructure, might be immediately vulnerable. We believe that creating an enforcement infrastructure that coordinates information between the U.S. and partner countries is a necessary first step to ensuring that tariffs are effective. 

Zone Defense: International Cooperation in Semiconductor Tariffs 

At first glance, tariff action by the United States on Chinese-produced goods would appear to be a difficult coordination problem. By voluntarily declining an influx of cheaply-priced goods, American consumers exacerbate an existing trade glut in world semiconductor markets, allowing and incentivizing other nations to purchase these chips in greater volume and at a lower price. 

However, rather than dissuading further sanctions in world markets, tariffs may actually spur further coordination in blocking Chinese imports. The Biden Administration’s imposition of tariffs on Chinese electric vehicles coincided with parallel sanctions imposed by the European Union, India, and Brazil. As Chinese overcapacity in EVs is rejected by U.S. markets, other countries face intensified concerns about the potential for below-price “dumping” of products that could harm domestic industry. 

However, this ad-hoc international cooperation is still in a fragile and tentative stage and must be encouraged in order to create an “everywhere but China” semiconductor supply chain. Further, while countries impose tariffs to protect existing automotive and steel industries, global semiconductor manufacturing is currently concentrated in the Indo-Pacific. Thus, coordinating against China calls on countries to not just impose tariffs to protect existing industries, but to impose “nursery” tariffs that will protect nascent semiconductor development, even in places where an existing industry does not yet exist. 

A commonsense first step to building an atmosphere of trust is to take actions protecting partner countries from retaliation in the form of Chinese trade restrictions. In response to EU tariffs on Chinese EVs, Beijing has already threatened retaliatory restrictions on chicken feet, pork, and brandy. For a bloc as large as the European Union, these restrictive sanctions can irritate an important political constituency. For a smaller or less economically-powerful country, these measures might be decisive in sending the message that semiconductor tariffs are not worth the risk. 

The United States should negotiate bilateral treaties with partner nations to erect tariffs against Chinese manufacturing, with the agreement that, in the case of Chinese retaliation against predetermined fundamental national industries, the United States government will buy up excess capacity at slightly discounted prices and release it to the American market. This preemptive protection of allied trade will blunt China’s ability to harm U.S. partners and allies. Raising tariffs on imported goods also imposes costs on the Chinese consumer, meaning that in the best case, the decreased effectiveness of these tools will deter the PRC from attempting such measures in the first place. 

Recommendation #3: Mitigating the Threat of Existing Chips 

No matter the success of the previous measures, it will be impossible to keep Chinese products entirely outside the U.S. market. Therefore, a strategy is required for managing the operational risks posed by Chinese chips that have and will exist inside the U.S. domestic sphere. 

Precisely defining the scope of the threat is very important. A narrow definition might allow threats to pass through, while an overly wide definition may expend time and resources over nothing. A recent British effort to exclude Chinese-made cap badges presents a cautionary tale. By choosing a British supplier over an existing Chinese one after the acquisition process was already underway, the UK incurred an additional delay in its military pipeline, not to mention the additional confusion caused by such an administrative pivot. Implanting GPS tracking or listening devices within small pieces of metal by one company within the Chinese supply chain seems both impractical and far-fetched–though the PRC surely enjoys the chaos and expense such a panic can cause. 

We consider it analogously unlikely that China is currently aiming to insert intentional defects into its semiconductor manufacturing. First, individual wafers are optimized for their extremely low cost of production, meaning that inserting a carefully designed (and hidden) flaw would introduce additional costs that could compromise the goal of low-cost manufacturing. Any kind of remotely activated “kill switch” would require some kind of wireless receiver– and a receiver of any reasonable strength could not be effectively hidden on a large scale. Second, such a vulnerability would have to be inserted only into wafers that are eventually purchased by the U.S. and its allies. If not, then any attempt to activate a remote exploit could risk compromising uninvolved countries or even the Chinese domestic market, either by accidentally triggering unintended chips or by providing a hardware vulnerability that could be re-used by Western cyber operations. Deliberately planting such vulnerabilities would thus require not just extreme technical precision, but a careful accounting of where vulnerable chips arrive in the supply chain.

Nonetheless, the existence of Chinese chips in the American market can accomplish much without explicitly-designed defects or “kill switches”. Here, a simple lack of transparency may be enough. China currently requires that all software vulnerabilities be reported to the Ministry of Industry and Information Technology, but does not have any corresponding public reporting requirement. This raises the fear that the Chinese government may be “stockpiling” vulnerabilities in Chinese-produced products, which may be used in future cyber operations. Here, China does not need to explicitly build backdoors into its own hardware but may simply decline to publicly disclose vulnerabilities in software in order to attack the rest of the world. 

Shining a Light on Untrusted Hardware 

The likelihood of cooperation between Chinese industry and the CCP exposes a potentially important risk. Chinese software is often deployed atop or alongside Chinese semiconductors and is particularly dangerous in the form of hardware drivers, the “glue code” that ties together software with low-level hardware components. These drivers by default operate with high privileges, and are typically closed-source and thus difficult to examine. We believe that vulnerable drivers may be a key vector of Chinese espionage or cyber threats. In 2019, Microsoft disclosed the existence of a privilege escalation vulnerability found in a Huawei driver. Although Huawei cooperated with Microsoft, it is unclear under the current legal regime whether the discovery of similar vulnerabilities by Huawei would be reported and patched, or if they would be kept as an asset by the Chinese government. The promulgation of Chinese drivers packaged with cheap hardware thus means that the Chinese Communist Party will have access to a broad, and potentially pre-mapped, attack surface with which to exploit U.S. government services. 

The first policy step here is obvious: banning the use of Chinese chips in U.S. federal government acquisitions. This has already been proposed as a Defense Department regulation set to take effect in 2027. If possible, this date should be moved up to 2026 or earlier. In order to enforce this ban, continuous research should be undertaken to map supply chains that produce U.S. government semiconductors. How to accelerate and enforce this ban is an ongoing policy question that is beyond the scope of this paper. 

However, a deeper question is how to protect the myriad components of critical infrastructure, both formal and informal. The Cybersecurity and Infrastructure Security Agency (CISA) has defined 16 sectors of critical infrastructure whose failure could materially disrupt or endanger the lives of American citizens. The recent discovery of the Volt Typhoon threat group revealed the willingness of the Chinese government to penetrate U.S. critical infrastructure using vulnerable components. 

While some of the 16 CISA sectors, such as Government Services and the Defense Industrial Base, are within the purview of the federal government, many others, such as Healthcare, Food and Agriculture, and Information Technology, are run via complex partnerships between State, Local, Tribal, and Territorial (SLTT) governments and private industry. Although a best effort should be made to insulate these sectors from over-reliance on China, fully quarantining them from Chinese chips is simply unrealistic. Therefore we should explore proactive efforts at mitigation in the case of disruption. 

A first step would be to establish a team at CISA to decompile or reverse-engineer the drivers for Chinese hardware that is known to operate within U.S. critical infrastructure. Like manual disassembly, this is an expensive and arduous process, but it has the advantage of reducing an unknown or otherwise intractable problem to an issue of engineering. In this case, special care should be taken to catalog and prioritize pieces of Chinese hardware that impact the most critical infrastructure systems, such as Programmable Logic Controllers (PLCs) in energy infrastructure and processors in hospital databases. This approach can be coordinated with the threat database described in the previous section to disassemble and profile the drivers of the highest-impact semiconductor products first. If any vulnerabilities are found, warnings can be issued to critical infrastructure providers, and patches issued to the relevant parties. 

Brace for Impact: Building Infrastructure Resiliency 

Even in the case that neither the reduction of Chinese hardware nor the proactive search for driver vulnerabilities is able to prevent a Chinese attack, the United States should be prepared to mitigate the harms of a cyber crisis. 

A further step toward this goal would be the institution of resiliency protocols and drills for designated critical infrastructure providers. The 2017 WannaCry ransomware attack substantially incapacitated the UK National Health Service by locking providers out of Electronic Medical Record (EMR) systems. Mandating routine paper backups of digital medical records is one example of a resiliency strategy that could be deployed to ensure emergency functioning even in the case of a major service disruption. 

A further step to protect critical infrastructure is to mandate regular cyber training for infrastructure providers. CISA could work in cooperation with State, Local, Tribal, and Territorial regulatory bodies to identify critical pieces of infrastructure that could be subject to attack. CISA could develop hypothetical scenarios involving outages of critical Information Technology services, and work with local infrastructure providers, such as hospitals, municipal water services, transit providers, and the like, to create plans for how to continue to operate in the event of a crisis. CISA could also prepare baseline strategies, such as having non-internet connected control systems or offline backups of critical information. Such strategies could be adapted by individual infrastructure providers to best protect their services in the event of an attack. These plans could then be carried out in mock ‘cyber drills’ to exercise preparedness in the event of an incident. 

Ultimately, plans of this kind only prepare for service disruptions and do not address the longer-reaching impacts of breaches of confidentiality or the targeted manipulation of sensitive data. However, as we believe that the likelihood of targeted or sophisticated vulnerabilities in Chinese chips is relatively low, these kinds of brute force attacks are the most likely threat model. Preparing for the most basic and unsophisticated service disruptions is a good first step toward mitigating the harm of any potential cyber attack, including those not directly facilitated by Chinese hardware. This cyber-resiliency planning is therefore a strong general recommendation for protecting Americans from future threats. 

Conclusion

We have presented the issue of international semiconductor competition along three major axes: increasing production outside of China, containing an oversupply of Chinese semiconductors, and mitigating the risks of remaining Chinese chips in the U.S. market. We have proposed three slates of policies, with each corresponding to one of the three challenges:

Boosting non-China semiconductor production 

Containing Chinese exports 

Mitigating the threat of chips in the U.S. market 

We hope that this contribution will advance future discussions on the semiconductor trade and make a measurable impact on bolstering U.S. national security. 

Using Targeted Industrial Policy to Address National Security Implications of Chinese Chips

Last year the Federation of American Scientists (FAS), Jordan Schneider (of ChinaTalk), Chris Miller (author of Chip War) and Noah Smith (of Noahpinion) hosted a call for ideas to address the U.S. chip shortage and Chinese competition. A handful of ideas were selected based on the feasibility of the idea and its and bipartisan nature. This memo is one of them.

In recent years, China has heavily subsidized its legacy chip manufacturing capabilities. Although U.S. sanctions have restricted China’s access to and ability to develop advanced AI chips, they have done nothing to undermine China’s production of “legacy chips,” which are semiconductors built on process nodes 28nm or larger. It is important to clarify that the “22 nm” “20nm” “28nm” or “32nm” lithography process is simply a commercial name for a generation of a certain size and its technology that has no correlation to the actual manufacturing specification, such as the gate length or half pitch. Furthermore, it is important to note that different firms have different specifications when it comes to manufacturing. For instance, Intel’s 22nm lithography process uses a 193nm wavelength argon fluoride laser (ArF laser) with a 90nm Gate Pitch and a 34 nm Fin height. These specifications vary between fab plats such as Intel and TSMC. The prominence of these chips makes them a critical technological component in applications as diverse as medical devices, fighter jets, computers, and industrial equipment. Since 2014, state-run funds in China have invested more than $40 billion into legacy chip production to meet their goal of 70% chip sufficiency by 2030. Chinese legacy chip dominance—made possible only through the government’s extensive and unfair support—will undermine the position of Western firms and render them less competitive against distorted market dynamics.

Challenge and Opportunity

Growing Chinese capacity and “dumping” will deprive non-Chinese chipmakers of substantial revenue, making it more difficult for these firms to maintain a comparative advantage. China’s profligate industrial policy has damaged global trade equity and threatens to create an asymmetrical market. The ramifications of this economic problem will be most felt in America’s national security, as opposed to from the lens of consumers, who will benefit from the low costs of Chinese dumping programs until a hostile monopoly is established. Investors—anticipating an impending global supply glut—are already encouraging U.S. firms to reduce capital expenditures by canceling semiconductor fabs, undermining the nation’s supply chain and self-sufficiency. In some cases, firms have decided to cease manufacturing particular types of chips outright due to profitability concerns and pricing pressures. Granted, the design of chip markets is intentionally opaque, so pricing data is insufficient to fully define the extent of this phenomenon; however, instances such as Taiwan’s withdrawal from certain chip segments shortly after a price war between China and its competitors in late 2023 indicate the severity of this issue. If they continue, similar price disputes are capable of severely subverting the competitiveness of non-Chinese firms, especially considering how Chinese firms are not subject to the same fiscal constraints as their unsubsidized counterparts. In an industry with such high fixed costs, the Chinese state’s subsidization gives such firms a great advantage and imperils U.S. competitiveness and national security.

Were the U.S. to engage in armed conflict with China, reduced industrial capacity could quickly impede the military’s ability to manufacture weapons and other materials. Critical supply chain disruptions during the COVID-19 pandemic illustrate how the absence of a single chip can hold hostage entire manufacturing processes; if China gains absolute legacy chip manufacturing dominance, these concerns would be further amplified as Chinese firms become able to outright deny American access to critical chips, impose harsh costs through price hikes, or impose diplomatic compromises and quid-pro-quo.Furthermore, decreased Chinese reliance on Taiwanese semiconductors reduces their economic incentive to pursue a diplomatic solution in the Taiwan Strait—making armed conflict in the region more likely. This weakened posture endangers global norms and the balance of power in Asia—undermining American economic and military hegemony in the region.  

China’s legacy chip manufacturing is fundamentally an economic problem with national security consequences. The state ought to interfere in the economy only when markets do not operate efficiently and in cases where the conduct of foreign adversaries creates market distortion. While the authors of this brief do not support carte blanche industrial policy to advance the position of American firms, it is the belief of these authors that the Chinese government’s efforts to promote legacy chip manufacturing warrant American interference to ameliorate harms that they have invented. U.S. regulators have forced American companies to grapple with the sourcing problems surrounding Chinese chips; however, the issue with chip control is largely epistemic. It is not clear which firms do and do not use Chinese chips, and even if U.S. regulators knew, there is little political appetite to ban them as corporations would then have to pass higher costs onto consumers and exacerbate headline inflation. Traditional policy tools for achieving economic objectives—such as sanctions—are therefore largely ineffectual in this circumstance. More innovative solutions are required.  

If its government fully commits to the policy, there is little U.S. domestic or foreign policy can do to prevent  China from developing chip independence. While American firms can be incentivized to outcompete their  Chinese counterparts, America cannot usurp Chinese political directives to source chips locally. This is true because China lacks the political restraints of Western countries in financially incentivizing production, but also because in the past—under lighter sanctions regimes—China’s Semiconductor Manufacturing International  Corporation (SMIC) acquired multiple Advanced Semiconductor Materials Lithography (ASML) DUV (Deep  Ultraviolet Light) machines. Consequently, any policy that seeks to mitigate the perverse impact of Chinese dominance of the legacy chip market must a) boon the competitiveness of American and allied firms in “third markets” such as Indonesia, Vietnam, and Brazil and b) de-risk America’s supply chain from market distortions and the overreliance that Chinese policies have affected. China’s growing global share of legacy chip manufacturing threatens to recreate the global chip landscape in a way that will displace U.S. commercial and security interests. Consequently, the United States must undertake both defensive and offensive measures to ensure a coordinated response to Chinese disruption.  

Plan of Action

Considering the above, we propose the United States enact a policy mutually predicated on innovative technological reform and targeted industrial policy to onshore manufacturing capabilities. 

Recommendation 1. Weaponizing electronic design automation 

Policymakers must understand that from a lithography perspective, the United States controls all essential technologies when it comes to the design and manufacturing of integrated circuits. This is a critically overlooked dimension in contemporary policy debates because electronic design automation (EDA) software closes the gap between high-level chip design in software and the lithography system itself. Good design simulates a proposed circuit before manufacturing, plans large integrated circuits (IC) by “bundling” small subcomponents together,  and verifies the design is connected correctly and will deliver the required performance. Although often overlooked, the photolithography process, as well as the steps required before it, is a process as complex as coming up with the design of the chip itself. 

No profit-maximizing manufacturer would print a chip “as designed” because it would suffer certain distortions and degradations throughout the printing process; therefore, EDA software is imperative to mitigate imperfections throughout the photolithography process. In much the same way that software within a home-use printer automatically screens for paper material (printer paper vs glossy photo paper) and automatically adjusts the mixture of solvent, resins, and additives to display properly, EDA software learns design kinks and responds dynamically. In the absence of such software, the yield of usable chips would be much lower, making these products less commercially viable. Contemporary public policy discourse focuses only on chips as a commodified product, without recognizing the software ecosystem that is imperative in their design and use. 

Today, there exist only two major suppliers of EDA software for semiconductor manufacturing: Synopsys and Cadence Design Systems. This reality presents a great opportunity for the United States to assert dominance in the legacy chips space. In hosting all EDA in a U.S.-based cloud—for instance, a data center located in Las Vegas or another secure location—America can force China to purchase computing power needed for simulation and verification for each chip they design. This policy would mandate Chinese reliance on U.S. cloud services to run electromagnetic simulations and validate chip design. Under this proposal, China would only be able to use the latest EDA software if such software is hosted in the U.S., allowing American firms to a) cut off access at will, rendering their technology useless and b) gain insight into homegrown Chinese designs built on this platform. Since such software would be hosted on a U.S.-based cloud, Chinese users would not download the software which would greatly mitigate the risk of foreign hacking or intellectual property theft. While the United States cannot control chips outright considering Chinese production, it can control where they are integrated. A machine without instructions is inoperable, and the United States can make China’s semiconductors obsolete.  

The emergence of machine learning has introduced substantial design innovation in older lithography technologies. For instance, Synopsis has used new technologies to discern the optimal route for wires that link chip circuits, which can factor in all the environmental variables to simulate the patterns a photo mask design would project throughout the lithography process. While the 22nm process is not cutting edge, it is legacy only in the sense of its architecture. Advancements in hardware design and software illustrate the dynamism of this facet in the semiconductor supply chain. In extraordinary circumferences, the United States could also curtail usage of such software in the event of a total trade war. Weaponizing this proprietary software could compel China to divulge all source code for auditing purposes since hardware cannot work without a software element.

The United States must also utilize its allied partnerships to restrict critical replacement components from enabling injurious competition from the Chinese. Software notwithstanding, China currently has the capability to produce 14nm nodes because SMIC acquired multiple ASML DUV machines under lighter Department of  Commerce restrictions; however, SMIC heavily relies on chip-making equipment imported from the Netherlands and Japan. While the United States cannot alter the fact of possession, it has the capacity to take limited action against the realization of these tools’ potential by restricting China’s ability to import replacement parts to service these machines, such as the lenses they require to operate. Only the German firm Zeiss has the capability to produce such lenses that ArF lasers require to focus—illustrating the importance of adopting a regulatory outlook that encompasses all verticals within the supply chain. The utility of controlling critical components is further amplified by the fact that American and European firms have limited efficacy in enforcing copyright laws against Chinese entities. For instance, while different ICs are manufactured within the 22nm instruction set, not all run on a common instruction set such as ARM. However, even if such designs run on a copyrighted instruction set, the United States has no power to enforce domestic copyright law in a Chinese jurisdiction. China’s capability to reverse engineer and replicate Western-designed chips further underscores the importance of controlling 1) the EDA landscape and 2) ancillary components in the chip manufacturing process. This reality presents a tremendous yet overlooked opportunity for the United States to reassert control over China’s legacy chip market.  

Recommendation 2. Targeted industrial policy 

In the policy discourse surrounding semiconductor manufacturing, this paper contends that too much emphasis has been placed on the chips themselves. It is important to note that there are some areas in which the United States is not commercially competitive with China, such as in the NAND flash memory space. China’s Yangtze Memory Technologies has become a world leader in flash storage and can now manufacture a 232-layer 3D NAND on par with the most sophisticated American and Korean firms, such as Western Digital and Samsung, at a lower cost. However, these shortcomings do not preclude America from asserting dominance over the semiconductor market as a whole by leveraging its dynamic random-access memory (DRAM) dominance, bolstering nearshore NAND manufacturing, and developing critical mineral processing capabilities. Both DRAM and NAND are essential components for any computationally integrated technology.  

While the U.S. cannot compete on rote manufacturing prowess because of high labor costs, it would be strategically beneficial to allow supply chain redundancies with regard to NAND and rare earth metal processing. China currently processes upwards of 90% of the world’s rare earth metals, which are critical to any type of semiconductor chips.  While the U.S. possesses strategic reserves for commodities such as oil, it does not have any meaningful reserve when it comes to rare earth metals—making this a critical national security threat.  Should China stop processing rare earth metals for the U.S., the price of any type of semiconductor—in any form factor—would increase dramatically. Furthermore, as a strategic matter, the United States would not have accomplished its national security objectives if it built manufacturing capabilities yet lacked critical inputs to supply this potential. Therefore, any legacy chips proposal must first establish sufficient rare earth metal processing capabilities or a strategic reserve of these critical resources.  

Furthermore, given the advanced status of U.S. technological manufacturing prowess, it makes little sense to outright onshore legacy chip manufacturing capabilities—especially considering high U.S. costs and the substantial diversion of intellectual capital that such efforts would require. Each manufacturer must develop their own manufacturing process from scratch. A modern fab runs 24×7 and has a complicated workflow, with its own technique and software when it comes to lithography. For instance, since their technicians and scientists are highly skilled, TSMC no longer focuses on older generation lithography (i.e., 22nm) because it would be unprofitable for them to do so when they cannot fulfill their demand for 3nm or 4nm. The United States is better off developing its comparative advantage by specializing in cutting-edge chip manufacturing capabilities, as well as research and development initiatives; however, while American expertise remains expensive, America has wholly neglected the potential utility of its southern neighbors in shoring up rare earth metals processing. Developing Latin American metals processing—and legacy chip production—capabilities can mitigate national security threats. Hard drive manufacturers have employed a similar nearshoring approach with great success. 

To address both rare earth metals and onshoring concerns, the United States should pursue an economic integration framework with nations in Latin America’s Southern Cone, targeting a partialized (or multi-sectoral) free trade agreement with the Southern Common Market (MERCOSUR) bloc. The United States should pursue this policy along two industry fronts, 1) waiving the Common External Tariff for United States’ petroleum and other fuel exports, which currently represent the largest import group for Latin American members of the bloc, and 2) simultaneously eliminating all trade barriers on American importation of critical minerals––namely arsenic, germanium, and gallium––which are necessary for legacy chip manufacturing. Enacting such an agreement and committing substantial capital to the project over a long-term time horizon would radically increase semiconductor manufacturing capabilities across all verticals of the supply chain. Two mutually inclusive premises underpin this policy’s efficacy: 

Firstly, the production of economic interdependence with a bloc of Latin American states (as opposed to a single nation) serves to diversify risk in the United States; each nation provides different sets and volumes of critical minerals and has competing foreign policy agendas. This reduces the capacity of states to exert meaningful and organized diplomatic pressure on the United States, as supply lines can be swiftly re-adjusted within the bloc. Moreover, MERCOSUR countries are major energy importers, specifically with regard to Bolivian natural gas and American petroleum. Under an energy-friendly U.S. administration, the effects of this policy would be especially pronounced: low petroleum costs enable the U.S. to subtly reassert its geopolitical sway within its regional sphere of influence, notably in light of newly politically friendly Argentinian and Paraguayan governments. China has been struggling to ratify its own trade accords with the bloc given industry vulnerability, this initiative would further undermine its geopolitical influence in the region. Refocusing critical mineral production within this regional geography would decrease American reliance on Chinese production. 

Secondly, nearshoring the semiconductor supply chain would reduce transport costs, decrease American vulnerability to intercontinental disruptions, and mitigate geopolitical reliance on China. Reduced extraction costs in Latin America, minimized transportation expenses, and reduced labor costs in especially Midwestern and Southern U.S. states enable America to maintain export competitiveness as a supplier to ASEAN’s booming technology industry in adjacent sectors, which indicates that China will not automatically fill market distortions. Furthermore, establishing investment arbitration procedures compliant with the General  Agreement on Tariffs and Trade’s Dispute Settlement Understanding should accompany the establishment of transcontinental commerce initiatives, and therefore designate the the World Trade Organization as the exclusive forum for dispute settlement. 

This policy is necessary to avoid the involvement of corrupt states’ backpaddling on established systems, which has historically impeded corporate involvement in the Southern Cone. This international legal security mechanism serves to assure entrepreneurial inputs that will render cooperation with American enterprises mutually attractive. However, partial free trade accords for primary sector materials are not sufficient to revitalize American industry and shift supply lines. To address the demand side, the exertion of downward pressure on pricing, alongside the reduction of geopolitical risk, should be accompanied by the institution of a state-subsidized low-interest loan, with available rate reset for approved legacy chip manufacturers, and a special-tier visa for hired personnel working in legacy chip manufacturing. Considering the sensitive national security interests at stake, the U.S. Federal Contractor Registration ought to employ the same awarding mechanisms and security filtering criteria used for federal arms contracts in its company auditing mechanisms.  Under this scheme, vetted and historically capable legacy chip manufacturing firms will be exclusively able to take advantage of significant subventions and exceptional ‘wartime’ loans. Two reasons underpin the need for this martial, yet market-oriented industrial policy. 

Firstly, legacy chip production requires highly specialized labor and immensely expensive fixed costs given the nature of accompanying machinery. Without targeted low-interest loans, the significant capital investment required for upgrading and expanding chip manufacturing facilities would be prohibitively high–potentially eroding the competitiveness of American and allied industries in markets that are heavily saturated with Chinese subsidies. Such mechanisms for increased and cheap liquidity also render it easier to import highly specialized talent from China, Taiwan, Germany, the Netherlands, etc., by offering more competitive compensation packages and playing onto the attractiveness of the United States lifestyle. This approach would mimic the Second World War’s “Operation Paperclip,” executed on a piecemeal basis at the purview of approved legacy chip suppliers.  

Secondly, the investment fluidity that accompanies significant amounts of accessible capital serves to reduce stasis in the research and development of sixth-generation automotive, multi-use legacy chips (in both autonomous and semi-autonomous systems). Much of this improvement a priori occurs through trial-and-error processes within state-of-the-art facilities under the long-term commitment of manufacturing, research, and operations teams. 

Acknowledging the strategic importance of centralizing, de-risking, and reducing reliance on foreign suppliers will safeguard the economic stability, national defense capabilities, and the innovative flair of the United States––restoring the national will and capacity to produce on its own shores. The national security ramifications of Chinese legacy chip manufacturing are predominantly downstream of their economic consequences, particularly vis-à-vis the integrity of American defense manufacturing supply chains. In implementing the aforementioned solutions and moving chip manufacturing to closer and friendlier locales, American firms can be well positioned to compete globally against Chinese counterparts and supply the U.S. military with ample chips in the event of armed conflict.  

In 2023, the Wall Street Journal exposed the fragility of American supply chain resilience when they profiled how one manufacturing accident took offline 100% of the United States’ production capability for black powder—a critical component of mortar shells, artillery rounds, and Tomahawk missiles.  This incident illustrates how critical a consolidated supply chain can be for national security and the importance of mitigating overreliance on China for critical components. As firms desire lower prices for their chips, ensuring adequate capacity is a significant component of a successful strategy to address China’s growing global share of legacy chip manufacturing. However, there are additional national security concerns for legacy chip manufacturing that supersede their economic significance–mitigating supply chain vulnerabilities is among the most consequential of these considerations.  

Lastly, when there are substantial national security objectives at stake, the state is justified in acting independently of economic considerations; markets are sustained only by the imposition of binding and common rules. Some have argued that the possibility of cyber sabotage and espionage through military applications of Chinese chip technology warrants accelerating the timeline of procurement restrictions. The National Defense Authorization Act for Fiscal Year 2023’s Section 5949 prohibits the procurement of China-sourced chips from 2027 onwards. Furthermore, the Federal Communications Commission has the power to restrict China-linked semiconductors in U.S. critical infrastructure under the Secure Networks Act and the U.S.  Department of Commerce reserves the right to restrict China-sourced semiconductors if they pose a threat to critical communications and information technology infrastructure.  

However, Matt Blaze’s 1994 article “Protocol Failure in the Escrowed Encryption Standard” exposed the shortcomings of supposed hardware backdoors, such as the NSA’s “clipper chip” that they designed in the 1990s to surveil users. In the absence of functional software, a Chinese-designed hardware backdoor into sensitive applications could not function. This scenario would be much like a printer trying to operate without an ink cartridge. Therefore, instead of outright banning inexpensive Chinese chips and putting American firms at a competitive disadvantage, the federal government should require Chinese firms to release source code to firmware and supporting software for the chips they sell to Western companies. This would allow these technologies to be independently built and verified without undermining the competitive position of American industry. The U.S. imposed sanctions against Huawei in 2019 on suspicion of the potential espionage risks that reliance on Chinese hardware poses. While tighter regulation of Chinese semiconductors in sensitive areas seems to be a natural and pragmatic extension of this logic, it is unnecessary and undermines American dynamism.

Conclusion

Considering China’s growing global share of legacy chip manufacturing as a predominantly economic problem with substantial national security consequences, the American foreign policy establishment ought to pursue 1) a new technological outlook that exploits all facets of the integrated chip supply chain—including EDA software and allied replacement component suppliers—and 2) a partial free-trade agreement with MERCOSUR to further industrial policy objectives.  

To curtail Chinese legacy chip dominance, the United States should weaponize its monopoly on electronic design automation software. By effectively forcing Chinese firms to purchase computing services from a U.S.-based cloud, American EDA software firms can audit and monitor Chinese innovations while reserving the ability to deny them service during armed conflict. Restricting allied firms’ ability to supply Chinese manufacturers with ancillary components can likewise slow the pace of Chinese legacy chip ascendence.  

Furthermore, although China no longer relies on the United States or allied countries for NAND  manufacturing, the United States and its allies maintain DRAM superiority. The United States must leverage capabilities to maintain Chinese reliance on its DRAM prowess and sustain its competitive edge while considering restricting the export of this technology for Chinese defense applications under extraordinary circumstances. Simultaneously, efforts to nearshore NAND technologies in South America can delay the pace of Chinese legacy chip ascendence, especially if implemented alongside a strategic decision to reduce reliance on Chinese rare earth metals processing.  

In nearshoring critical mineral inputs to the end of preserving national security and reducing costs, the United States should adopt a market-oriented industrial policy of rate-reset, and state-subsidized low-interest loans for vetted legacy chip manufacturing firms. Synergy between greater competitiveness, capital solvency, and de-risked supply chains would enable U.S. firms to compete against Chinese counterparts in critical “third markets,” and reduce supply chain vulnerabilities that undermine national security. As subsidy-induced Chinese market distortions weigh less on the commercial landscape, the integrity of American defense capabilities will simultaneously improve, especially if bureaucratic agencies move to further insulate critical U.S. infrastructure against potential cyber espionage.

An “Open Foundational” Chip Design Standard and Buyers’ Group to Create a Strategic Microelectronics Reserve

Last year the Federation of American Scientists (FAS), Jordan Schneider (of ChinaTalk), Chris Miller (author of Chip War) and Noah Smith (of Noahpinion) hosted a call for ideas to address the U.S. chip shortage and Chinese competition. A handful of ideas were selected based on the feasibility of the idea and its and bipartisan nature. This memo is one of them.

Semiconductors are not one industry, but thousands. They range from ultra-high value advanced logic chips like H100s to bulk discrete electronic components and basic integrated circuits (IC). Leading-edge chips are advanced logic, memory, and interconnect devices manufactured in cutting-edge facilities requiring production processes at awe-inspiring precision. Leading-edge chips confer differential capabilities, and “advanced process nodes”1 enable the highest performance computation and the most compact and energy-efficient devices. This bleeding edge performance is derived from the efficiencies enabled by more densely packed circuit elements in a computer chip. Smaller transistors require lower voltages and more finely packed ones can compute faster. 

Devices manufactured with older process nodes, 65nm and above, form the bulk by volume of devices we use. These include discrete electrical components like diodes or transistors, power semiconductors, and low-value integrated circuits such as bulk microcontrollers (MCU). These inexpensive logic chips like MCUs, memory controllers, and clock setters I term “commodity ICs”. While the keystone components in advanced applications are manufactured at the leading edge, older nodes are the table stakes of electrical systems. These devices supply power, switch voltages, transform currents, command actuators, and sense the environment. These devices we’ll collectively term foundational chips, as they provide the platform upon which all electronics rest. And their supply can be a point of failure. The automotive MCU shortage provides a bitter lesson that even the humblest device can throttle production. 

Foundational devices themselves do not typically enable differentiating capabilities. In many applications, such as computing or automotive, they simply enable basic functions. These devices are low-cost, low-margin goods, made with a comparatively simpler production process. Unfortunately, a straightforward supply does not equate to a secure one. Foundational chips are manufactured by a small number of firms concentrated in China. This is in part due to long-running industrial policy efforts by the Chinese government, with significant production subsidies. The Chips and Science Act was mainly about innovation and international competitiveness. Reshoring a significant fraction of leading-edge production to the United States in the hope of returning valuable communities of engineering practice (Fuchs & Kirchain, 2010). While these policy goals are vital, foundational chip supply represents a different challenge and must be addressed by other interventions. 

The main problem posed by the existing foundational chip supply is resilience. They are manufactured by a few geographically clustered firms and are thus vulnerable to disruption, from geopolitical conflicts (e.g. export controls on these devices) or more quotidian outages such as natural disasters or shipping disruptions. 

There is also concern that foreign governments may install hardware backdoors in chips manufactured within their borders, enabling them to deactivate the deployed stock of chips. While this meaningful security consideration, it is less applicable in foundational devices, as their low complexity makes such backdoors more challenging. A DoD analysis found mask and wafer production to be the manufacturing process steps most resilient to adversarial interference (Coleman, 2023, p. 36).  There already exist “trusted foundry” electronics manufacturers for critical U.S. defense applications concerned about confidentiality; these  policy interventions seek to address the vulnerability to a conventional supply disruption. This report will first outline the technical and economic features of foundational chip supply which are barriers to a resilient supply, and then propose policy to address these barriers. 

Challenge and Opportunity

Technical characteristics of the manufacture and end-use of foundational microelectronics make supply especially vulnerable to disruption. Commodity logic ICs such as MCUs or memory controllers vary in their clock speed, architecture, number of pins, number of inputs/outputs (I/O), mapping of I/O to pins, package material, circuit board connection, and other design features. Some of these features, like operating temperature range, are key drivers of performance in particular applications. However most custom features in commodity ICs do not confer differential capability or performance advantages to the final product, the pin-count of a microcontroller does not determine the safety or performance of a vehicle. Design lock-in combined with this feature variability results in dramatically reduced short-run substitutability of these devices; while MCUs exist in a commodity-style market, they are not interchangeable without significant redesign efforts. This phenomenon, designs based on specialized components that are not required in the application, is known as over-specification (Smith & Eggert, 2018). This means that while there are numerous semiconductor manufacturing firms, in practice there may only be a single supplier for a specified foundational component. 

These over-specification risks are exacerbated by a lack of value chain visibility. Firms possess little knowledge of their tier 2+ suppliers. The fractal symmetry of this knowledge gap means that even if an individual firm secures robust access to the components they directly use, they may still be exposed to disruption through their suppliers. Value chains are only as strong as their weakest link. Physical characteristics of foundational devices also uncouple them from the leading edge. Many commodity ICs just don’t benefit from classical feature shrinkage; bulk MCUs or low-end PMICs don’t improve in performance with transistor density as their outputs are essentially fixed. Analog devices experience performance penalties at too small a feature scale, with physically larger transistors able to process higher voltages and produce lower sympathetic capacitance. Manufacturing commodity logic ICs using leading-edge logic fabs would be prohibitively expensive and would be actively detrimental to analog device performance. These factors, design over-specification, supply chain opacity, and insulation from leading-edge production, combine to functionally decrease the already narrow supply of legacy chips. 

Industrial dynamics impede this supply from becoming more robust without policy intervention. Foundational chips, whether power devices or memory controllers are low-margin commodity-style products sold in volume. The extreme capital intensity of the industry combined with the low margin for these makes supply expansion unattractive for producers, with short-term capital discipline a common argument against supply buildout (Connatser, 2024). The premium firms pay for performance results in significant investment in leading-edge design and production capacity as firms compete for this demand. The commodity environment of foundational devices in contrast is challenging to pencil out as even trailing-edge fabs are highly capital-intensive (Reinhardt, 2022). Chinese production subsidies also impede the expansion of foundational fabs, as they further narrow already low margins. Semiconductor demand is historically cyclical, and producers don’t make investment decisions based on short-run demand signals. These factors make foundational device supply challenging to expand: firms manufacture commodity-style products manufactured in capital-intensive facilities, competing with subsidized producers, to meet widely varying demands. Finally, foundational chip supply resilience is a classic positive externality good. No individual firm captures all or even most of the benefit of a more robust supply ecosystem. 

Plan of Action

To secure the supply of foundational chips, this memo recommends the development of an “Open Foundational” design standard and buyers’ group. One participant in that buyer’s group will be the U.S. federal government, which would establish a strategic microelectronics reserve to ensure access to critical chips. This reserve would be initially stocked through a multi-year advanced market commitment for Open Foundational devices. 

The foundational standard would be a voluntary consortium of microelectronics users in critical sectors, inspired by the Open Compute Project. It would ideally contain firms from critical sectors such as enterprise computation, automotive manufacturing, communications infrastructure, and others. The group would initially convene to identify a set of foundational devices that are necessary to their sectors (i.e. system architecture commodity ICs and power devices for computing) and identify design features that don’t significantly impact performance, and thus could be standardized. From these, a design standard could be developed. Firms are typically locked to existing devices for their current design; one can’t place a 12-pin MCU into a board built for 8. Steering committee firms will thus be asked to commit some fraction of future designs to use Open Foundational microelectronics, ideally on a ramping-up basis. The goal of the standard is not to mandate away valuable features, unique application needs should still be met by specialized devices, such as rad-hardened components in satellites. By adopting a standard platform of commodity chips in future designs, the buyers’ group would represent demand of sufficient scale to motivate investment, and supply would be more robust to disruptions once mature. 

Government should adopt the standard where feasible, to build greater resilience in critical systems if nothing else. This should be accompanied by a diplomatic effort for key democratic allies to partner in adopting these design practices in their defense applications. The foundational standard should seek geographic diversity in suppliers, as manufacturing concentrated anywhere represents a point of failure. The foundational standard also allows firms to de-risk their suppliers as well as themselves. They can stipulate in contracts that their tier-one suppliers need to adopt Foundational Standards in their designs, and OEMs who do so can market the associated resilience advantage. 

Having developed the open standard through the buyers’ group, Congress should authorize the purchase through the Department of Commerce a strategic microelectronics reserve (SMR). Inspired by the strategic petroleum reserve, the microelectronics reserve is intended to provide the backstop foundational hardware for key government and societal operations during a crisis. The composition of the SMR will likely evolve as technologies and applications develop, but at launch, the purchasing authority should commit to a long-term high-volume purchase of Foundational Standard devices, a policy structure known as an advanced market commitment. 

Advanced market commitments are effective tools to develop supply when there is initial demand uncertainty, clear product specification, and a requirement for market demand to mature (Ransohoff, 2024). The foundational standard provides the product specification, and the advanced government commitment provides demand at a duration that should exceed both the product development and fab construction lifecycle, on the order of 5 years or more. This demand should be steady, with regular annual purchases at scale, ensuring producers’ consistent demand through the ebbs and flows of a volatile industry. If these efforts are successful, the U.S. government will cultivate a more robust and resilient supply ecosystem both for its own core services and for firms and citizens. The SMR could also serve as a backstop when supply fluctuations do occur, as with the strategic petroleum reserve.

The goal of the SMR is not to fully substitute for existing stockpiling efforts, either by firms or by the government for defense applications. Through the expanded supply base for foundational chips enabled by the SMR, and through the increase in substitutability driven by the Foundational Standard, users can concentrate their stockpiling efforts on the chips which confer differentiated capabilities. As resources can be concentrated in more application-specific chips, stockpiling becomes more efficient, enabling more production for the same investment. In the long run, the SMR should likely diversify to include more advanced components such as high-capacity memory, and field-programmable processors. This would ensure government access to core computational capabilities in a disaster or conflict scenario. But as all systems are built on a foundation, the SMR should begin with Foundational Standard devices. 

There are potential risks to this approach. The most significant is that this model of foundational chips does not accurately reflect physical reality. Interfirm cooperation in setting and adhering to the standards is conditional on these devices not determining performance. If firms perceive foundational chips as providing a competitive advantage to their system or products, they shall not crucify capability on a cross of standards. Alternatively, each sector may have a basket of foundational devices as we describe, but there may be little to no overlap sector-to-sector. In this case, the sectors representing the largest demand, such as enterprise computing, may be able to develop their own standard, but without resilience spillovers into other applications. These scenarios should be identifiably early in the standard-setting process before significant physical investment is made. In such cases, the government should explore using fab lines in the national prototyping facility to flexibly manufacture a variety of foundational chips when needed, by developing adaptive production lines and processes. This functionally shifts the policy goal up the value chain, achieving resilience through flexible manufacture of devices rather than flexible end-use.

Value chains may be so opaque that the buyers’ group might fail to identify a vulnerable chip. The Department of Commerce developing an office of supply mapping, and applying a tax penalty to firms who fail to report component flows are potential mitigation strategies. Existing subsidized foundational chip supply by China may make virtually any greenfield production uncompetitive. In this case, trade restrictions or a counter-subsidy may be required until the network effects of the Foundational Standard enable long-term viability.  We do not want the Foundational standard to lock in technological stagnation, in fact the opposite. Accordingly, there should be a periodic and iterative review of the devices within the standard and their features. The problems of legacy chips are distinct from those at the technical frontier.  

Foundational chips are necessary but not sufficient for modern electronic systems. It was not the hundreds of dollar System-on-a-Chip components that brought automotive production to a halt, but the sixteen-cent microcontroller. The technical advances fueled by leading-edge nodes are vital to our long-term competitiveness, but they too rely on legacy devices. We must in parallel fortify the foundation on which our security and dynamism rests.

The 2024 DOD China Military Power Report

The Department of Defense has finally released the 2024 version of the China Military Power Report. We will provide additional analysis of the Chinese arsenal in early 2025 but offer these observations for now:

The report estimates that China, as of mid-2024, had more than 600 nuclear warheads in its stockpile, an increase of roughly 100 warheads compared with the estimate for 2023 and about 400 warheads since 2019. As we have stated for several years, this increase is unprecedented for China and contradicts China’s obligations under the Nuclear Nonproliferation Treaty. DOD assesses that the Chinese nuclear buildup “almost certainly is due to the PRC’s broader and longer-term perceptions of progressively increased U.S.-PRC strategic competition.”

The breakdown of the DOD estimate comes with considerable uncertainty. It appears to assume that sufficient warheads have been produced to arm many – perhaps up to one third – of the silos in the three new ICBM silo fields in northern China. Different assumptions about how those silos will be armed greatly influence warhead projections:

Different assumptions about how China will arm it’s missile silos can significantly influence warhead number projections.

Matching the warhead estimate with the known force structure also depends on how many of the new liquid-fuel silos under construction in the mountains of central/southeastern China are operational, and how many of missiles carry multiple warheads. Other variables are how many warheads are assigned to the DF-26 IRBM launchers (probably not all of them), how many of the six SSBNs have been upgraded to the JL-3 SLBM and whether it is assigned multiple warheads, and how many DF-41 ICBM launchers are operational and how many warheads each missile is assigned.

As in previously years, the DOD report misleadingly describes the Chinese warheads as “operational.” This gives the false impression that they’re all deployed like Russia and U.S. nuclear warheads on their operational forces and has already created confusion in the public debate by causing some to compare all Chinese warheads with the portion of US warheads that are deployed. What DOD calls China’s “operational” warheads is equivalent to DOD’s entire nuclear warhead stockpile, whether deployed, operational, or reserve.

Except for perhaps a small number, the vast majority of Chinese warheads are thought to be in storage and not deployed on the launchers. This situation may be changing with a higher readiness level and emerging launch-on-warning capability.

The report repeats earlier projections that China might have over 1,000 warheads by 2030 but does not mention previous projections of 1,500 warheads by 2035. But this expansion requires additional plutonium production. The report confirms that China “has not produced large quantities of plutonium for its weapons program since the early 1990s” and anticipates that it “probably will need to begin producing new plutonium this decade to meet the needs of its expanding nuclear stockpile.”

ICBMs

The report lists 550 ICBM (Intercontinental-Range Ballistic Missile) launchers with 400 ICBMs, an increase of 50 launcher and 50 missiles compared with last year’s report. That is more ICBM launchers than the United States has, although far from all the Chinese silos are armed.

It is unclear what operational status a missile must have to be included in the count or whether 400 is simply the total number of missile available for the launchers. If it means operational (which I don’t think is the case), then 400 ICBMs would imply a significant number of the new silos loaded.

The report includes a map that appears to match previous FAS analysis of the three silo fields:

The DOD map of the three northern silo fields appears to match earlier FAS analysis.

The report states that the three ICBM fields were probably completed in 2022 and that PLARF has loaded “at least some” ICBMs into the silos. The report says China “probably continues to arm” the silo fields.

For now, the new silo fields appear intended for the solid-fuel DF-31A. The DOD report identifies a new version of the DF-31 (CSS-10 Mod 3), which is probably the version intended for the silos.

The ICBM estimate appears to come with several caveats. One is that the number of ICBM launchers is not the same as the number of operational ICBMs. A silo launcher appears to be counted when construction is completed, whether it is operational with missile or not. To get to 550 launchers, it is necessary to count everything, including all the 320 silos in the three new northern silo fields as well as all the silos under construction in the southeastern mountains.

The report says the silo construction in the central/southeastern part of China will probably result in about 50 silos there, matching estimates made by FAS and others. The report confirms that those new silos are intended for DF-5 liquid-fuel missiles and appears to suggest that at least two brigades with the new silos are intended for the new multi-megaton DF-5C that it says China is now fielding.

The 2024 China Military Power Report confirms reports by FAS, Ben Reuter, and Decker Eveleth about the modernization of the DF-5 silos in central/southeastern China.

The report does not say how many of the new DF-5 silos – if any – have been loaded with missiles.

The new DF-41 ICBM is not said to be deployed in silos but so far only as a road-mobile system in a few brigades. But the DOD report says China might pursue silo and rail deployments for the missile in the future.

The new DF-27 is described as dual-capable and while capable of shorter ICBM ranges mainly be intended for conventional IRBM missions.

IRBMs and MRBMs

The report lists 250 IRBM (Intermediate-Range Ballistic Missile) launchers with 500 missiles, the same as in 2023. This force apparently consists entirely of the DF-26, of which the report identifies three versions. Previously an anti-ship version was identified in addition to the basic version, so it is unclear if the first two versions are used to differentiate between the conventional and nuclear versions. Regardless, the DF-26 is replacing the DF-21 MRBM (Medium-Range Ballistic Missile) and the report says there are no longer any brigades with “dual nuclear-conventional capable DF-21Cs” (which is odd because the C was the conventional and the A was the nuclear).

The DF-17 MRBM maneuverable glide vehicle is described as conventional.

SSBNs

The report says that China continues to operate six Jin-class Type 094 SSBNs (nuclear powered ballistic missiles submarines) equipped with either the JL-2 or the 10,000-km range JL-3 SLBM (Sea-Launched Ballistic Missile). Despite the longer range of the JL-3 SLBM, it is not capable of targeting the Continental United States from the South China Sea. A submarine would have to deploy up into the shallow Bohai Sea to be able to target part of CONUS.

The DOD report says the six SSBNs “are conducting at sea deterrent patrols.” In the U.S. Navy, that means the missiles are armed with nuclear warheads, but the DOD report does not explicitly say this is the case for China.

The report says the SSBNs are “representing the PRC’s first viable sea-based nuclear deterrent,” and says China “has the capacity to maintain a constant at sea deterrent presence.” More Jin-class SSBNs apparently are under construction.

The next-generation Type 096 apparently is not yet under construction. It is said it will get a new longer-range missile, although it is unclear if that is older language that used to refer to the JL-3. The report says the Type 096 SSBN “probably is intended to field MIRVed SLBMs,” indicating that the SLBMs on the current Jin-class are not.

Bombers

The report repeats previous statements that China is fielding a nuclear version of the H-6 medium-range bomber. The nuclear version H-6N is capable of carrying a large air-launched ballistic missile that “may be” nuclear capable. Although China is often said to have a Triad, the air-leg is nascent and still only includes one brigade that is developing tactics and procedures for the PLAAF nuclear mission. 

As mentioned above, we will provide additional analysis of the DOD report and Chinese nuclear forces early in the new year. More information: The Nuclear Information Project

The Federation of American Scientists’ work on nuclear transparency would not be possible without generous support from the Carnegie Corporation of New York, Longview Philanthropy, the Jubitz Foundation, the New-Land Foundation, Ploughshares, the Prospect Hill Foundation, and individual donors.

Pursuing A Missile Pre-Launch Notification Agreement with China as a Risk Reduction Measure

While attempts at dialogue and military-to-military communication with China regarding its growing nuclear arsenal have increased, the United States has so far been unable to establish permanent lines of communication on nuclear weapons issues, let alone reach a substantive bilateral arms control agreement with China. Given the simmering tensions between the United States and China, lack of communication can be dangerous. Miscommunication or miscalculation between the two nuclear powers – especially during a crisis – could lead to escalation and increased risk of nuclear weapons use. 

In an effort to prevent this, the next U.S. presidential administration should pursue a Missile Pre-Launch Notification Agreement with China. The agreement should include a commitment by each party to notify the other ahead of all strategic ballistic missile launches. Similar agreements currently exist between the United States and Russia and between China and Russia. One between the United States and China would be a significant confidence-building measure for reducing the risk of nuclear weapons use and establishing a foundation for future arms control negotiations.

Challenge and Opportunity

Between states with fragile relations, missile launches may be seen as provocative. In the absence of proper communication, a surprise missile test launch in the heat of a tense crisis could trigger overreaction and escalate tensions. Early warning systems are made to detect incoming missiles, but experts estimate that the US early-warning system would have just two minutes to determine if the attack is real or serious enough to advise the president on a possible nuclear counterattack. For example, when the Soviet Union test-launched four submarine-launched ballistic missiles (SLBMs) in 1980, the US early warning system projected that one of the missiles appeared to be headed toward the United States, resulting in an emergency threat assessment conference of US officials. 

Establishing regular communications is increasingly important as China grows its nuclear arsenal of quick-launching ballistic missiles, with the Pentagon estimating that China’s arsenal may reach 1,000 warheads by 2030. This is creating increasing concern about China’s intentions for how it might use nuclear weapons. In reaction, some US officials are signaling that it may be necessary for the United States to field new nuclear weapons systems or increase the number of deployed warheads. Defense hawks even advocate curtailing diplomatic communication with China, arguing that talks would allow China leverage and insight into US nuclear thinking.

With tensions and aggressive rhetoric on the rise, the next administration needs to prioritize and reaffirm the necessity of regular communication with China on military and nuclear weapons issues to reduce the risk of misunderstandings and conflict and mitigate the chance of accidental escalation and miscalculation.

The opportunity for negotiating an agreement with China exists despite heightened tensions. Although still inadequate, military-to-military communications between China and the United States have improved since a breakdown in 2022 following Speaker Nancy Pelosi’s visit to Taiwan, to which China responded with military exercises, missile tests, and sanctions on the island.

On November 6, 2023, Chinese Director-General of the Department of Arms Control Sun Xiaobo and US Assistant Secretary of State for Arms Control, Deterrence, and Stability Mallory Stewart discussed nonproliferation and nuclear transparency during the first US-China arms control talk in five years. Days later, Presidents Biden and Xi decided to resume military-to-military conversations and encouraged a follow-up arms control talk. A high-level China-US defense policy talk at the Pentagon in early January 2024 followed this summit. Most recently, Presidents Biden and Xi agreed in Lima, Peru that humans, not artificial intelligence, should have control over the decision to launch nuclear weapons. These meetings show promising signs of improved dialogue, but the United States’ continual emphasis on China as a competitor and China’s recent cancelation of arms control talks with the United States over Taiwan continue to undermine progress.

Policy Models

A Missile Pre-Launch Notification Agreement between China and the United States should include a commitment to provide at least 24 hours of advanced notice of all strategic ballistic missile tests including the planned launch and impact locations. The agreement would build on historical models of risk reduction measures between other states. For example, at the 1988 Moscow Summit, the United States and the Soviet Union signed the Agreement on Notifications of Launches of Ballistic Missiles to notify each other of the planned date, launch area, and area of impact no less than 24 hours in advance of any intercontinental ballistic missile (ICBM) or submarine-launched ballistic missile (SLBM) launches. These notifications were communicated through established Nuclear Risk Reduction Centers. The Strategic Arms Reduction Talks (START), signed in 1991, followed up on the notification agreement by including an agreement to provide more information, such as telemetry broadcast frequencies, in addition to the planned launch date and the launch and reentry area. 

The two countries expanded on this agreement through the Memorandum of Agreement on the Establishment of a Joint Center for the Exchange of Data from Early Warning Systems and Notifications of Missile Launches (also known as JDEC MOA) and the Memorandum of Understanding on Notifications of Missile Launches (PLNS MOU). The purpose of these agreements, signed in 2000, was to prevent a nuclear attack based on a false early warning system notification, and the agreements were carried forward into the New START treaty that entered into force in 2011.

While Russia has suspended its participation in the New START treaty and increased its threatening rhetoric around the potential use of nuclear weapons in its war in Ukraine, the Russian Foreign Ministry said that Russia would continue to provide notification of ballistic missile launches to the United States. This demonstrates the value of communication amid tensions and conventional conflict to prevent misunderstanding. 

In 2009, Russia and China signed a pre-launch notification agreement, marking China’s first bilateral arms control agreement. This agreement was extended in 2020 for another 10 years and covers launches of ballistic missiles with ranges over 2,000 km that are in the direction of the other country. The United States and China have no such arrangement. However, China did notify the United States, Australia, New Zealand, and the Japanese Coast Guard 24 hours before an ICBM launch into the Pacific Ocean on September 25, 2024. This launch appeared to be the first test into the Pacific China has conducted in over thirty years, and the gesture of notifying the United States beforehand was, according to a Pentagon spokesperson, “a step in the right direction to reducing the risks of misperception and miscalculation.” With this notification, the groundwork and precedent for dialogue on a missile pre-launch notification agreement has been laid.

Plan of Action

Create and present a draft agreement

The next administration should direct the State Department Bureau of Arms Control, Deterrence, and Stability to draft a proposal for a missile pre-launch notification agreement requiring mutual pre-launch notifications for missile launches with ranges of 2,000 km or more, as well as the sharing of launch and impact locations.

The US Assistant Secretary of State for Arms Control, Deterrence, and Stability should present the draft proposal to China’s Director-General of the Department of Arms Control of the Foreign Ministry.

Invite President Xi Jinping to participate in talks

The administration should propose a neutral site in the Asian-Pacific region, possibly in Hanoi, Vietnam, for a meeting between the US president and President Xi Jinping to emphasize the shared goal of trade security and discuss a missile test launch agreement. The meeting should include other high-level military commanders, including the Chairman of the Joint Chiefs of Staff and Secretary of Defense, as well as their relevant Chinese counterparts. 

Continue notifying China of all US missile test launches

The next administration should continue the precedent set by China in September 2024 to voluntarily provide advance notification of all ballistic missile test launches even in the absence of a negotiated agreement, like was done in the November 2024 Minuteman launch, and even if done unilaterally going forward. Such action would improve the prospect for reaching a negotiated agreement by demonstrating good faith and commitment to conflict mitigation.  

Raise the topic of missile launch notifications in P5 meetings

China has since assumed the rotating position of Chair of the P5, which could be a useful forum for considering new proposals for risk reduction measures among all nuclear states. After direct engagement with China on an agreement, China may have an interest in working with the United States to lead a multilateral agreement, as China would have more control over the language, international recognition for nuclear risk reduction, and improved security amid global nuclear modernization.

The next administration should direct The Special Representative of the President for Nuclear Nonproliferation under the Bureau of International Security and Nonproliferation to raise the topic of missile launch notifications and a potential launch notification agreement during the P5 process meeting ahead of the 2025 Nonproliferation Treaty (NPT) preparatory conference.

In order to work constructively with China on reducing the risk of nuclear use, a pre-launch notification agreement should, for now, be decoupled from any other arms control measures that would propose limiting China’s nuclear weapons stockpile or any launch capabilities. While comprehensive arms control may be an ultimate goal, linking the two at the outset would complicate talks significantly and likely prevent an agreement from coming to fruition; the United States should start with small steps to foster trust between the two nations and deepen regular military-to-military communication. 

Pursuing and negotiating a Missile Pre-Launch Notification Agreement with China will emphasize common objectives and help prevent escalation by miscommunication.

This action-ready policy memo is part of Day One 2025 — our effort to bring forward bold policy ideas, grounded in science and evidence, that can tackle the country’s biggest challenges and bring us closer to the prosperous, equitable and safe future that we all hope for whoever takes office in 2025 and beyond.

PLEASE NOTE (February 2025): Since publication several government websites have been taken offline. We apologize for any broken links to once accessible public data.

Geolocating China’s Unprecedented Missile Launch: The Potential What, Where, How, and Why

On September 25, 2024, the Chinese Ministry of National Defence announced that the People’s Liberation Army Rocket Force (PLARF) had test-launched an intercontinental ballistic missile (ICBM) into the South Pacific. The announcement stated that this was a “routine arrangement in [their] annual training plan.” However, the ICBM was launched from Hainan Island, an unusual location for this kind of missile. In addition, the reentry vehicle impacted in the South Pacific, an estimated 11,700 km away, marking the first time China had targeted the Pacific in a test since 1980 when it tested its first ICBM (the DF-5) at the Jiuquan Satellite Launch Center.

This map, created by Dr. Marco Langbroek (@Marco_Langbroek on X), shows hazard areas from Navigational Warnings and a NOTAM with the reconstructed ballistic flight path. (source)

Given the unusual nature of this test launch and the lack of official information about the status of China’s nuclear forces, this event is an opportunity to further examine China’s nuclear posture and activities, including the type of missile, how it fits into China’s nuclear modernization, and where it was launched from.

What missile is it? 

When news of the launch broke, navigational warnings and trajectory calculations indicated the missile was launched from northeast Hainan Island, a Chinese province in the South China Sea. This is not where China normally test-launches its ICBMs, and there is no ICBM brigade permanently deployed on the island. The location and the range of the missile indicated that it was a road-mobile missile launcher, either a DF-41 or DF-31A/AG type. In the days after the launch, several images surfaced with clues about the type of missile and its potential launch location. 

An image of the missile lauch released by the Chinese People’s Liberation Army on September 25, 2024.

The first image, released by news outlets on September 25, showed features that made it clear that this was, in fact, a DF-31AG missile. The DF-31AG is a modernized version of China’s first solid-fuel road-mobile ICBM, the DF-31, which debuted in 2006. Since 2007, China has been supplementing and now completely replaced the initial DF-31 versions with the longer-range DF-31A. The DF-31A launcher had limited maneuverability, so in 2017, China first displayed the enhanced DF-31AG launcher. The DF-31AG will likely completely replace the DF-31A in the next few years. 

The DF-31AG launcher is thought to carry the same missile as the DF-31A, but the 21-meter-long eight-axle HTF5980 transporter erector launcher has improved maneuverability and is thought to require less support. The single erector arm seen in the above image matches other images of the DF-31AG. The image seems to show that the launcher was partially covered by some sort of camouflage during the launch.

The DF-31AG uses a cold-launch method, meaning the missile is ejected from the canister using compressed gas or steam before the first-stage engine ignites. Unfortunately, this also means it is harder to geolocate the site of the launch because there are unlikely to be burn marks that would normally remain visible on the ground after hot-launching a missile.

How did the missile get there? 

The nearest deployment of DF-31AG missiles is with the 632 Brigade located in Shaoyang in mainland China, around 800 km away. There is no confirmation that the missile came from this particular brigade, but the distance gives some perspective as to the process and amount of time it takes to bring a DF-31AG to Hainan Island.

To transport the mobile ICBM to Hainan, it was likely placed onto a railcar and brought to a port such as Yuehai Railway Beigang Wharf before being loaded onto a ship and transferred to Haikou port or a similar location at Hainan Island. From there, the missile was likely driven, along with the accompanying support vehicles, to a sheltered and protected area near the final launch location.

It remains unknown whether the missile was launched directly from the launch position itself, remotely from a local command post, or remotely from a centralized authority.

Where was the missile launched from? 

To find the precise location where the DF-31AG was launched on the island, we had to rely on the few photos and videos available to us (mostly captured by locals). To do this, we collaborated with analyst Ise Midori (@isekaimint on X), who carried out a complex analysis of the various launch videos to pinpoint the approximate launch location.

In the above image of the launch, one of the first noticeable features is the devastated vegetation, which matches what we would expect to see after typhoon Yagi impacted northeast Hainan in early September. There is also a small body of water barely visible at the bottom right of the image, which provides a clue when searching for the launch location. 

After analyzing the available images, photos, and videos, Midori determined the general area where the launch likely occurred to be in Wenchang, Hainan. While we are unable to determine the exact location with high confidence due to a lack of clearly identifiable signatures, we expect it to be within the area of interest indicated below, potentially at the highway intersection. 

Meanwhile, the image below began circulating on social media shortly after the launch. The image reportedly captures the DF-31AG as it was driving to its launch position, although the cloud coverage does not match that from the photo of the launch and could have been taken hours beforehand.    

An image of the DF-31AG missile driving on Hainan Island that circulated on social media shortly after the launch.

After observing the road markings and vegetation in the image, satellite imagery from Planet Labs PBC revealed a unique road that matched these signatures. This road is also only 1.9 km away from the launch location area of interest, increasing confidence that the launch occurred at or near this area.

Notably, both the launch area of interest and the location of the DF-31AG on the road are within the boundaries of what seems to be a new military training zone constructed in recent years. This also helps increase confidence in the launch area of interest and highlights this area as important for future observation.

Why here, and why now?

While China has not test-launched an ICBM into the Pacific in over four decades (it normally test launches the missiles in a very high apogee within its borders), it is not unusual for China – or other countries for that matter – to test-launch their nuclear-capable systems. It is interesting, however, to consider why China may have chosen to launch from Hainan Island instead of somewhere that is operationally representative or perhaps easier to travel to on the mainland coast. Nevertheless, the location allows China to fly the missile at full range without dropping missile stages on the ground or overflying other countries. It is unknown whether China will test-launch more ICBMs from Hainan Island in the future.

These types of tests also take months of extensive planning and coordination. Thus, the launch was likely motivated by broader political factors, not in response to particular recent events. Tong Zhao, Senior Fellow at the Carnegie Endowment for International Peace, points out that this test was crucial for the PLARF to reestablish its internal and external credibility following corruption scandals and unprecedented leadership shifts. Additionally, reports of issues with the quality of certain missiles likely prompted a desire to reestablish recognition of operational competence. 

Further, because the PLARF conducted the test launch as part of a “military drill” rather than a technological development program, it likely aims to convey military prowess and combat readiness. Conducting an ICBM test over the ocean also likely reflects China’s ambition to solidify its international status as a major nuclear power since the United States also regularly tests its ICBMs over the open ocean. 

Notably, the Pentagon confirmed they received advanced notice of China’s test launch, which potentially sets a precedent for pre-launch notification and could leave room for further communication on risk reduction measures. Moving forward, it will be interesting to see if China begins to routinely conduct these kinds of tests beyond its borders and if it continues to provide pre-launch notification to relevant states. The new DF-41 has yet to be test-flown at full range in a realistic trajectory.

This research was carried out with generous contributions from the Carnegie Corporation of New York,  the New-Land Foundation, Ploughshares, the Prospect Hill Foundation, Longview Philanthropy, and individual donors.

Chinese Nuclear Forces, 2024: A “Significant Expansion”

The Federation of American Scientists’ Nuclear Information Project, a component of the Federation’s Global Risk program, today released its latest assessment of China’s growing nuclear arsenal: the 2024 Nuclear Notebook on Chinese Nuclear Forces. The 24-page report, published in the Bulletin of Atomic Scientists, includes details on China’s nuclear weapons arsenal, including types of weapons, delivery vehicles, operations, and, importantly, questions that can help determine the reliability and accuracy of projections about the future growth of China’s nuclear capabilities.

The Notebook comes at a critical time for U.S. analysis and policy debates regarding China’s nuclear forces and the appropriate U.S. and allied response. In October 2023, the Pentagon released its annual report to Congress on Military and Security Developments Involving the People’s Republic of China. This report preceded the release of both the Strategic Posture Commission report and the State Department’s International Security Advisory Board report on Nuclear Deterrence in a World of Nuclear Multipolarity. Within the U.S. government, military, and national security community, analysts are evaluating the implications of China’s growing nuclear force for nuclear deterrence, global stability, and U.S. security commitments in East Asia, Europe, and beyond. 

What about the DOD’s numbers?

Meanwhile, the 2024 Nuclear Notebook on Chinese nuclear forces comes on the heels of a news report from Bloomberg that suggest corruption in China’s military procurement program may have resulted in the production or delivery of nuclear-tipped missiles and missile silos that do not operate properly. Reports about China’s corruption are not new, but the potential impact on the unprecedentedly rapid projected growth of China’s nuclear forces has not been previously reported, nor has it been reflected in reports, testimony, or statements by top Administration, defense, or intelligence officials.

Given the potential implications of the Bloomberg report, FAS sent a letter to Secretary of Defense Lloyd Austin asking whether the reported intelligence about the reliability of China’s missile force was known to the authors of DOD reports on China’s nuclear program and, if so, why they were not reflected in reports sent to Congress. As one of the most authoritative non-governmental sources on global nuclear forces, FAS has a unique interest in ensuring that its reports are objective and reflect the full extent of government and non-governmental expert understanding of nuclear arsenals worldwide.

2024 Nuclear Notebook: Key findings on China’s nuclear forces

Analyzing and estimating China’s nuclear forces is challenging, particularly given the relative lack of state-originating data and the tight control of messaging surrounding the country’s nuclear arsenal and doctrine. Like most other nuclear-armed states, China has never publicly disclosed the size of its nuclear arsenal or much of the infrastructure that supports it. The analyses and estimates made in the Nuclear Notebook are derived from a combination of open sources, including (1) state-originating data (e.g. government statements, declassified documents, budgetary information, military parades, and treaty disclosure data), (2) non-state-originating data (e.g. media reports, think tank analyses, and industry publications), and (3) commercial satellite imagery. From this information, FAS has tracked the significant expansion of China’s ongoing nuclear modernization program. Key findings from the 2024 FAS assessment on Chinese nuclear forces include: 

  1. China’s nuclear expansion is among the largest and most rapid modernization campaigns of the nine nuclear-armed states.
  2. FAS estimates that China has produced a stockpile of approximately 500 nuclear warheads, with 440 warheads available for delivery by land-based ballistic missiles, sea-based ballistic missiles, and bombers. 
  3. The latest Pentagon projection appears to apply the same growth rate of new warheads added to the stockpile between 2019 and 2021 to the subsequent years until 2035. FAS assesses that this projected growth trajectory is feasible but depends significantly upon many uncertain factors and assumptions.
  4. China has continued to develop its three new missile silo fields for solid-fuel intercontinental ballistic missiles (ICBMs), expand the construction of new silos for its liquid-fuel DF-5 ICBMs, and has been developing new variants of ICBMs and advanced strategic delivery systems. 
  5. China has further expanded its dual-capable DF-26 intermediate-range ballistic missile (IRBM) force, which appears to have completely replaced the medium-range DF-21 in the nuclear role.
  6. China has been refitting its Type 094 ballistic missile submarines with the longer-range JL-3 submarine-launched ballistic missile (SLBM). 
  7. China has recently reassigned an operational nuclear mission to its bombers and is developing an air-launched ballistic missile (ALBM) that might have nuclear capability.

This research was carried out with generous contributions from the New-Land Foundation, Ploughshares Fund, the Prospect Hill Foundation, Longview Philanthropy, and individual donors.

What Did the DOD Know About Chinese Missiles in the Latest PRC Nuclear Capabilities Report?

The Federation of American Scientists (FAS) sent a letter on January 9, 2024, to Secretary of Defense Lloyd Austin regarding the Department of Defense’s recent publications on China’s nuclear arsenal. These publications are a primary source of information for the public and are widely referenced by the U.S. government, military, and national security community when discussing the scope and implications of China’s nuclear modernization.

In early January 2024, Bloomberg published a press report suggesting U.S. intelligence assessments have evidence that the reliability of China’s new nuclear missiles may be undermined by corruption within China’s People’s Liberation Army Rocket Forces. These assessments cited examples of significant flaws in China’s missile program, including missile silo lids that may not be fully operational and missile silo fields – some of which were originally discovered by FAS researchers – that may have stages or components filled with water instead of fuel. If true, these flaws would compromise missile operations, calling into question China’s nuclear force readiness and overall capabilities.  

FAS noted that “For over 70 years, FAS has worked to ensure there is a vigorous and informed public debate over nuclear weapons and security.  As the world’s leading non-governmental source of information about global nuclear arsenals, ensuring the public has reliable and accurate information about the scale, role and capabilities of nuclear forces in other countries is critical to that debate.”

The letter sent by FAS asks whether these assessments were known to the authors of DOD reports to Congress who expressed concern about the record pace of China’s nuclear deployments and production. If so, the letter asks why such assessments were not included in those DOD reports or in other testimony and statements by DOD officials and military officers.

Finally, the letter notes FAS’ historical interest in ensuring U.S. government assessments about nuclear forces are complete and unbiased.

We have reproduced the text of the letter below. You can also download it as a PDF using the button on the top left of this post.

Secretary Lloyd Austin
The Department of Defense

Dear Mr. Secretary:

On January 6th, 2024, Bloomberg News reported that U.S. intelligence assessments called into question the reliability and functionality of China’s growing arsenal of long-range nuclear-armed missiles. The article mentioned that some silo doors on ICBMs may function properly, and ICBM stages or components may have been filled with water. None of this information has been included or publicly cited in reports or speeches by U.S. Defense Department officials or military officers, even as public concern about the pace of China’s reported nuclear buildup has increasingly influenced U.S. thinking about both deterrence, alliance management, and nuclear weapons procurement.

We would not expect, or want the USG Government to comment on sensitive intelligence.  However, the Federation of American Scientists (FAS) would like to know if such assessments exist and, if so, whether you and the authors of the U.S. Department of Defense report, “Military and Security Developments Involving the People’s Republic of China,” published on October 19th, 2023, were aware of these assessments prior to its publication. If such assessments exist, and if the authors of the report were aware of their existence, we would also ask why some reference to these indicators were not included in the report and testimony related to China’s reported nuclear build-up.

The growth of China’s nuclear weapons capabilities has become a serious question and concern for the United States, both within the Government and the public, and among U.S. allies in East Asia and Europe. The growth and reported capabilities of China’s nuclear arsenal are being used increasingly to justify current and potentially additional increases in U.S. nuclear capabilities and spending, and to support expanding military and even nuclear collaboration with U.S. allies in East Asia. The accuracy of Department of Defense documents with regard to China’s nuclear capabilities are central to informing these debates in Congress as well as among security experts and the broader public, and thus, ensuring they are accurate and complete is essential. As you are no doubt aware, the Soviet Military Report series produced by the Department of Defense during the Cold War was found after the fact to have systematically overinflated Soviet capabilities. It would be appropriate for the Defense Department to remember past trends and ensure lessons learned are incorporated into ongoing public documents about countries that threaten U.S. and U.S. allied security.

FAS also has a direct interest in ensuring that U.S. Government reports on nuclear capabilities are as accurate and balanced as possible, given that FAS experts remain a central resource for the global public about nuclear capabilities throughout the world. While the FAS does not take U.S. estimates verbatim, we do use them as source material and believe the statements of the U.S. should be as accurate and reliable as possible. As such, FAS has a particular interest in ensuring that its work is not mistakenly or deliberately biassed by government sources that include worst-case estimates or that fail to provide important assessments about the reliability, pace, and operational status of key systems. Having engaged in key debates on nuclear policy for over 70 years, FAS has a strong institutional basis for wanting to use reliable information from governments, but at the same time, keenly remembers periods between the 1960-1980s when the Department of Defense produced annual assessments of Soviet military capabilities that widely overinflated conventional and nuclear capabilities, which may have ultimately contributed to unnecessary arms investments in the United States.

As such, FAS would kindly request that your department make clear:

  1. Was the Department of Defense aware of intelligence before the publication of Military and Security Developments Involving the People’s Republic of China that Chinese procurement flaws may have led to missile silo doors that are not operational, or that missiles that were filled with water and not fuel?
  2. Does the Department intend to either amend or withdraw the current report to Congress and update it with a broader reliance on information––not only about the growth of China’s nuclear capabilities but also information that may acknowledge the possible unreliability of such systems so that it may be factored into the public debate in Congress and elsewhere?
  3. Were US Strategic Command or US Indo-Pacific Command aware in 2023 of the information reported on January 6th, 2024 that China’s siloed ICBMs may be less than fully reliable? If so, why was that information not included in speeches and publications?
  4. Lastly, is the Department considering changes to how its reports are produced, reviewed, and promoted to ensure not only that China’s growing capabilities are included but that they also information that might inform a more complete assessment of the nature, scale, and pace of China’s nuclear capabilities might pose to the U.S. and our allies?

For over 70 years, the Federation of American Scientists has played a key role in supporting public debate over issues related to security, technology, and nuclear weapons. We appreciate your interest in ensuring the public engages in a sustained discourse over appropriate defense investments and strategy to secure American and allied security in the coming decades. Your attention to this matter is greatly appreciated.

Sincerely,

Jon Wolfsthal
Director, Global Risk

This research was carried out with generous contributions from the New-Land Foundation, Ploughshares Fund, the Prospect Hill Foundation, Longview Philanthropy, and individual donors.

Strategic Posture Commission Report Calls for Broad Nuclear Buildup

On October 12th, the Strategic Posture Commission released its long-awaited report on U.S. nuclear policy and strategic stability. The 12-member Commission was hand-picked by Congress in 2022 to conduct a threat assessment, consider alterations to U.S. force posture, and provide recommendations.

In contrast to the Biden administration’s Nuclear Posture Review, the Congressionally-mandated Strategic Posture Commission report is a full-throated embrace of a U.S. nuclear build-up.

It includes recommendations for the United States to prepare to increase its number of deployed warheads, as well as increasing its production of bombers, air-launched cruise missiles, ballistic missile submarines, non-strategic nuclear forces, and warhead production capacity. It also calls for the United States to deploy multiple warheads on land-based intercontinental ballistic missiles (ICBMs) and consider adding road-mobile ICBMs to its arsenal.

The only thing that appears to have prevented the Commission from recommending an immediate increase of the U.S. nuclear weapons stockpile is that the weapons production complex currently does not have the capacity to do so.

The Commission’s embrace of a U.S. nuclear buildup ignores the consequences of a likely arms race with Russia and China (in fact, the Commission doesn’t even consider this or suggest other steps than a buildup to try to address the problem). If the United States responds to the Chinese buildup by increasing its own deployed warheads and launchers, Russia would most likely respond by increasing its deployed warheads and launchers. That would increase the nuclear threat against the United States and its allies. China, who has already decided that it needs more nuclear weapons to stand up to the existing U.S. force level (and those of Russia and India), might well respond to the U.S and Russian increases by increasing its own arsenal even further. That would put the United States back to where it started, feeling insufficient and facing increased nuclear threats.

Framing and context

The Commission’s report is generally framed around the prospect of Russian and Chinese strategic military cooperation against the United States. The Commission cautions against “dismissing the possibility of opportunistic or simultaneous two-peer aggression because it may seem improbable,” and notes that “not addressing it in U.S. strategy and strategic posture, could have the perverse effect of making such aggression more likely.” The Commission does not acknowledge, however, that building up new capabilities to address this highly remote possibility would likely kick the arms race into an even higher gear.

The report acknowledges that Russia and China are in the midst of large-scale modernization programs, and in the case of China, significant increases to its nuclear stockpile. This accords with our own assessments of both countries’ nuclear programs. However, the report’s authors suggest that these changes fundamentally call into question the United States’ assured retaliatory capabilities, and state that “the current U.S. strategic posture will be insufficient to achieve the objectives of U.S. defense strategy in the future….”

The Commission appears to base this conclusion, as well as its nuclear strategy and force structure recommendations, squarely on numerically-focused counterforce thinking: if China increases its posture by fielding more weapons, that automatically means the United States needs more weapons to “[a]ddress the larger number of targets….” However, the survivability of the US ballistic missile submarines should insulate the United States against needing to subscribe to this kind of thinking.

In 2012, a joint DOD/DNI report acknowledged that because of the US submarine force, Russia would not achieve any military advantage against the United States by significantly increasing the size of its deployed nuclear forces. In that 2012 study, both departments concluded that the “Russian Federation…would not be able to achieve a militarily significant advantage by any plausible expansion of its strategic nuclear forces, even in a cheating or breakout scenario under the New START Treaty, primarily because of the inherent survivability of the planned U.S. Strategic force structure, particularly the OHIO-class ballistic missile submarines, a number of which are at sea at any given time.” [Emphasis added.] Why would this logic not apply to China as well? Although China’s nuclear arsenal is undoubtedly growing, why would it fundamentally alter the nature of the United States’ assured retaliatory capability while the United States is confident in the survivability of its SSBNs?

In this context, it is worth reiterating the words of Secretary of Defense Lloyd Austin at the U.S. Strategic Command Change of Command Ceremony: “We all understand that nuclear deterrence isn’t just a numbers game. In fact, that sort of thinking can spur a dangerous arms race…deterrence has never been just about the numbers, the weapons, or the platforms.”

Force structure

Although the report says the Commission “avoided making specific force structure recommendations” in order to “leave specific material solution decisions to the Executive Branch and Congress,” the list of “identified capabilities beyond the existing program of record (POR) that will be needed” leaves little doubt about what the Commission believes those force structure decisions should be.

Strategic posture alterations

The Commission concludes that the United States “must act now to pursue additional measures and programs…beyond the planned modernization of strategic delivery vehicles and warheads may include either or both qualitative and quantitative adjustments in the U.S. strategic posture.”

Specifically, the Commission recommends that the United States should pursue the following modifications to its strategic nuclear force posture “with urgency:” [our context and commentary added below]

Nonstrategic posture alterations

The Commission appears to want the United States to bolster its non-strategic nuclear forces in Europe, and begin to deploy non-strategic nuclear weapons in the Indo-Pacific theater: “Additional U.S. theater nuclear capabilities will be necessary in both Europe and the Indo-Pacific regions to deter adversary nuclear use and offset local conventional superiority. These additional theater capabilities will need to be deployable, survivable, and variable in their available yield options.” Although the Commission does not explicitly recommend fielding either ground-launched theater nuclear capabilities or a nuclear sea-launched cruise missile for the Navy, it seems clear that these capabilities would be part of the Commission’s logic.

The United States used to deploy large numbers of non-strategic nuclear weapons in the Indo-Pacific region during the Cold War, but those weapons were withdrawn in the early 1990s and later dismantled as U.S. military planning shifted to rely more on advanced conventional weapons for limited theater options. Despite the removal of certain types of theater nuclear weapons after the Cold War, today the President maintains a wide range of nuclear response options designed to deter Russian and Chinese limited nuclear use in both regions––including capabilities with low or variable yields. In addition to ballistic missile submarines and nuclear-capable bombers operating in both regions, the U.S. Air Force has non-strategic B61 nuclear bombs for dual-capable aircraft that are intended for operations in both regions if it becomes necessary. The Navy now also has a low-yield warhead on its SSBNs––the W76-2––that was fielded specifically to provide the President with more options to deter limited scenarios in those regions. It is unclear why these existing options, as well as several additional capabilities already under development––including the incoming Long-Range Stand-Off Weapon––would be insufficient for maintaining regional deterrence. 

The Commission specifically recommends that the United States should “urgently” modify its nuclear posture to “[p]rovide the President a range of militarily effective nuclear response options to deter or counter Russian or Chinese limited nuclear use in theater.” Although current plans already provide the President with such options, the Commission “recommends the following U.S. theater nuclear force posture modifications:

Develop and deploy theater nuclear delivery systems that have some or all of the following attributes: [our context and commentary added below]

Unlike U.S. low-yield theater nuclear weapons, the Commission warns that China’s development of “theater-range low-yield weapons may reduce China’s threshold for using nuclear weapons.” Presumably, the same would be true for the United States threshold if it followed the Commission’s recommendation to increase deployed (or deployable) non-strategic nuclear weapons with low-yield capabilities in the Indo-Pacific theater.

Strategy

Overall, the Commission suggests that current U.S. nuclear strategy is basically sound, but just needs to be backed up with additional weapons and industrial capacity. However, by not including recommendations to modify presidential nuclear employment guidance –– or even considering such an adjustment, which could reshape U.S. force posture to allow for decreased emphasis on counterforce targeting –– the Commission has limited its own flexibility to recommend any options other than simply adding more weapons.

Three scholars recently proposed a revised nuclear strategy that they concluded would reduce weapons requirements yet still be sufficient to adequately deter Russia and China. The central premise of reducing the counterforce focus is similar to a study that we published in 2009. In contrast, the Commission appears to have assumed an unchanged nuclear strategy and instead focused intensely on weapons and numbers.

The Commission report does not explain how it gets to the specific nuclear arms additions it says are needed. It only provides generic descriptions of nuclear strategy and lists of Chinese and Russian increases. The reason this translates into a recommendation to increase the US nuclear arsenal appears to be that the list of target categories that the Commission believes need to be targeted is very broad: “this means holding at risk key elements of their leadership, the security structure maintaining the leadership in power, their nuclear and conventional forces, and their war supporting industry.”

This numerical focus also ignores years of adjustments made to nuclear planning intended to avoid excessive nuclear force levels and increase flexibility. When asked in 2017 whether the US needed new nuclear capabilities for limited scenarios, then STRATCOM commander General John Hyten responded: 

“[W]e actually have very flexible options in our plans. So if something bad happens in the world and there’s a response and I’m on the phone with the Secretary of Defense and the President and the entire staff, …I actually have a series of very flexible options from conventional all the way up to large-scale nuke that I can advise the President on to give him options on what he would want to do… So I’m very comfortable today with the flexibility of our response options… And the reason I was surprised when I got to STRATCOM about the flexibility, is because the last time I executed or was involved in the execution of the nuclear plan was about 20 years ago and there was no flexibility in the plan. It was big, it was huge, it was massively destructive, and that’s all there. We now have conventional responses all the way up to the nuclear responses, and I think that’s a very healthy thing.”

While advocating integrated deterrence and a “whole of government” approach, the Commission nonetheless sets up an artificial dichotomy between conventional and nuclear capabilities: “The objectives of U.S. strategy must include effective deterrence and defeat of simultaneous Russian and Chinese aggression in Europe and Asia using conventional forces. If the United States and its Allies and partners do not field sufficient conventional forces to achieve this objective, U.S. strategy would need to be altered to increase reliance on nuclear weapons to deter or counter opportunistic or collaborative aggression in the other theater.”

Arms control

The Commission recommends subjugating nuclear arms control to the nuclear build-up: “The Commission recommends that a strategy to address the two-nuclear-peer threat environment be a prerequisite for developing U.S. nuclear arms control limits for the 2027-2035 timeframe. The Commission recommends that once a strategy and its related force requirements are established, the U.S. government determine whether and how nuclear arms control limits continue to enhance U.S. security.”

Put another way, this constitutes a recommendation to participate in an arms race, and then figure out how to control those same arms later. 

The Commission report does acknowledge the importance of arms control, and notes that “[t]he ideal scenario for the United States would be a trilateral agreement that could effectively verify and limit all Russian, Chinese, and U.S. nuclear warheads and delivery systems, while retaining sufficient U.S. nuclear forces to meet security objectives and hedge against potential violations of the agreement.” (p.85) However, the prospect of this “ideal scenario” coming true would become increasingly unlikely if the United States significantly built up its nuclear forces as the Commission recommends. 

Capacity and budget

The Commission recommends an overhaul and expansion of the nuclear weapons design and production capacity. That includes full funding of all NNSA recapitalization efforts, including pit production plans, even though the Government Accountability Office has warned that the program faces serious challenges and budget uncertainties. The Commission appears to brush aside concerns about the proposed pit production program.

Overall, the report does not seem to acknowledge any limits to defense spending. Amid all of the Commission’s recommendations to increase the number of strategic and tactical nuclear systems, there is almost no mention of cost in the entire report. Fulfilling all of these recommendations would require a significant amount of money, and that money would have to come from somewhere. 

For example, the Congressional Budget Office estimates that developing the SLCM-N alone would cost an estimated $10 billion until 2030, not to mention another $7 billion for other tactical nuclear weapons and delivery systems. The amount of money it would take to field new systems, in addition to addressing other vital concerns such as IAMD, means funding would necessarily be cut from other budget priorities. 

The true costs of these systems are not only the significant funds spent to acquire them, but also the fact that prioritizing these systems necessarily means deprioritizing other domestic or foreign policy initiatives that could do more to increase US security. 

Implications for U.S. Nuclear Posture

The Strategic Posture Commission report is, in effect, a congressionally-mandated rebuttal to the Biden administration’s Nuclear Posture Review, which many in Congress have critiqued for not being hawkish enough. The report does not describe in detail its methodology for how it arrives at its force buildup recommendations, and includes several claims and assumptions about nuclear strategy that have been critiqued and called into question by recent scholarship. In some respects, it reads more like an industry report than a Congressionally-mandated study.

While the timing of the report means that it is unlikely to have a significant impact on this year’s budget cycle, it will certainly play a critical role in justifying increases to the nuclear budget for years to come. 

From our perspective, the recommendations included in the Commission report are likely to exacerbate the arms race, further constrict the window for engaging with Russia and China on arms control, and redirect funding away from more proximate priorities. At the very least, before embarking on this overambitious wish list the United States must address any outstanding recommendations from the Government Accountability Office to fix its planning and budgeting processes, otherwise it risks overloading the assembly line even more. 

In addition, the United States could consider how modified presidential employment guidance might enable a posture that relies on fewer nuclear weapons, and adjust accordingly. 

This research was carried out with generous contributions from the New-Land Foundation, Ploughshares Fund, the Prospect Hill Foundation, Longview Philanthropy, and individual donors.

STRATCOM Says China Has More ICBM Launchers Than The United States – We Have Questions

In early-February 2023, the Wall Street Journal reported that U.S. Strategic Command (STRATCOM) had informed Congress that China now has more launchers for Intercontinental Ballistic Missiles (ICBMs) than the United States. The report is the latest in a serious of revelations over the past four years about China’s growing nuclear weapons arsenal and the deepening strategic competition between the world’s nuclear weapon states. It is important to monitor China’s developments to understand what it means for Chinese nuclear strategy and intensions, but it is also important to avoid overreactions and exaggerations.

First, a reminder about what the STRATCOM letter says and does not say. It does not say that China has more ICBMs or warheads on them than the United States, or that the United States is at an overall disadvantage. The letter has three findings (in that order):

It is already well-known that China is building several hundred new missile silos. We documented many of them (see here, here and here), as did other analysts (here and here). It was expected that sooner or later some of them would be completed and bring China’s total number of ICBM launchers (silo and road-mobile) above the number of US ICBM launchers. That is what STRATCOM says has now happened.

STRATCOM ICBM Counting

The number of Chinese ICBM launchers included in the STRATCOM report to Congress was counted at a cut-off date of October 2022. It is unclear precisely how STRATCOM counts the Chinese silos, but the number appears to include hundreds of silos that were not yet operational with missiles at the time. So, at what point in its construction process did STRATCOM include a silo as part of the count? Does it have to be completely finished with everything ready except a loaded missile?

We have examined satellite photos of every single silo under construction in the three new large missile silo fields (Hami, Julin, and Yumen). It is impossible to determine with certainty from a satellite photo if a silo is completely finished, much less whether it is loaded with a missile. However, the available images indicate it is possible that most of the silos at Hami might have been complete by October 2022, that many of the silos at the Yumen field were still under construction, and that none of the silos at the Julin (Ordos) fields had been completed at the time of STRATCOM’s cutoff date (see image below).

Commercial satellite images help assess STRATCOM claim about China’s missile silos.

The number of Chinese ICBM launchers reported by the Pentagon over the past three years has increased significantly from 100 launchers at the end of 2020, to 300 launchers at the end of 2021, to now more than 450 launchers as of October 2022. That is an increase of 350 launchers in only three years.

To exceed the number of US ICBM launchers as most recently reported by STRATCOM, China would have to have more than 450 launchers (mobile and silo) –  the US Air Force has 400 silos with missiles and another 50 empty silos that could be loaded as well if necessary. Without counting the new silos under construction, we estimate that China has approximately 140 operational ICBM launchers with as many missiles. To get to 300 launchers with as many missiles, as the 2022 China Military Power Report (CMPR) estimated, the Pentagon would have to include about 160 launchers from the new silo fields – half of all the silos – as not only finished but with missiles loaded in them. We have not yet seen a missile loading – training or otherwise – on any of the satellite photos. To reach 450 launchers as of October 2022, STRATCOM would have to count nearly all the silos in the three new missile silo fields (see graph below).

Pentagon estimates of Chinese completed ICBM launchers appear to include hundreds of new silos at three missile silo fields.

The point at which a silo is loaded with a missile depends not only on the silo itself but also on the operational status of support facilities, command and control systems, and security perimeters. Construction of that infrastructure is still ongoing at all the three missile silo fields.

It is also possible that the number of launchers and missiles in the Pentagon estimate is less directly linked. The number could potentially refer to the number of missiles for operational launchers plus missiles produced for launchers that have been more or less completed but not yet loaded with missiles.

All of that to underscore that there is considerable uncertainty about the operational status of the Chinese ICBM force.

However – in time for the Congressional debate on the FY2024 defense budget – some appear to be using the STRATCOM letter to suggest the United States also needs to increase its nuclear arsenal.

Comparing The Full Arsenals

The rapid increase of the Chinese ICBM force is important and unprecedented. Yet, it is also crucial to keep things in perspective. In his response to the STRATCOM letter, Rep. Mike Rogers – the new conservative chairman of the House Armed Services Committee – claimed that China is “rapidly approaching parity with the United States” in nuclear forces. That is not accurate.

Even if China ends up with more ICBMs than the United States and increases its nuclear stockpile to 1,500 warheads by 2035, as projected by the Pentagon, that does not give China parity. The United States has 800 launchers for strategic nuclear weapons and a stockpile of 3,700 warheads (see graph below).

Even if China increases it nuclear weapons stockpile to 1,500 by 2035, it will only make up a fraction of the much larger US and Russian stockpiles.

The worst-case projection about China’s nuclear expansion assumes that it will fill everything with missiles with multiple warheads. In reality, it is unknown how many of the new silos will be filled with missiles, how many warheads each missile will carry, and how many warheads China can actually produce over the next decade.

The nuclear arsenals do not exist in a vacuum but are linked to the overall military capabilities and the policies and strategies of the owners. 

The Political Dimension

STRATCOM initially informed Congress about its assessment that the number of Chinese ICBM launchers exceeded that of the United States back in November 2022. But the letter was classified, so four conservative members of the Senate and House armed services committees reminded STRATCOM that it was required to also release an unclassified version. They then used the unclassified letter to argue for more nuclear weapons stating (see screen shot of Committee web page below):

“We have no time to waste in adjusting our nuclear force posture to deter both Russia and China. This will have to mean higher numbers and new capabilities.” (Emphasis added.)

Lawmakers immediately used STRATCOM assessment of Chinese ICBM launchers to call for more US nuclear weapons.

Although defense contractors probably would be happy about that response, it is less clear why ‘higher numbers’ are necessary for US nuclear strategy. Increasing US nuclear weapons could in fact end up worsening the problem by causing China and Russia to increase their arsenals even further. And as we have already seen, that would likely cause a heightened demand for more US nuclear weapons.

We have seen this playbook before during the Cold War nuclear arms race. Only this time, it’s not just between the United States and the Soviet Union, but with Russia and a growing China.

Even before China will reach the force levels projected by the Pentagon, the last remaining arms control treaty with Russia – the New START Treaty – will expire in February 2026. Without a follow-on agreement, Russia could potentially double the number of warheads it deploys on its strategic launchers.

Even if the defense hawks in Congress have their way, the United States does not seem to be in a position to compete in a nuclear arms race with both Russia and China. The modernization program is already overwhelmed with little room for expansion, and the warhead production capacity will not be able to produce large numbers of additional nuclear weapons for the foreseeable future.

What the Chinese nuclear buildup means for Chinese nuclear policy and how the United States should respond to it (as well as to Russia) is much more complicated and important to address than a rush to get more nuclear weapons. It would be more constructive for the United States to focus on engaging with Russia and China on nuclear risk reduction and arms control rather than engage in a build-up of its nuclear forces.

Additional Information:

Status of World Nuclear Forces

This research was carried out with generous contributions from the John D. and Catherine T. MacArthur Foundation, the New-Land Foundation, Ploughshares Fund, the Prospect Hill Foundation, Longview Philanthropy, the Stewart R. Mott Foundation, the Future of Life Institute, Open Philanthropy, and individual donors.