Further jagged transitions, strategies, binaries fractures, major developments, and crucial events are compiled here as globalization is transformed and The Global Computer Chip IT Supply Chain Disruption continues astride as functions of the Global Polycrisis.
Globalization Transformed and The Global Chip IT Supply Chain Disruption
Polycrisis: A cluster of interdependent global risks create a compounding effect, such that their overall impact exceeds the sum of their individual parts. (1)
Globalization is transforming to regionalization due to strains from a global pandemic and emerging conceptions of national and economic security tied to geographic self-sufficiency. Globalization may suffer from the same binary fracture tendencies we discussed in the OODA Almanac 2023 – which will create more frequent pockets of instability and increase economic, health, and food disparities. We have been tracking these developments closely:
What Next? The BRICs Global Share of GDP May Overtake the G7 by 2028: Starting in 1992, the time-based “BRICs “Versus the G7” visualizes the It is this growing parity that is creating permission and incentive structures – along with new policy models and value proposition designs – to enable the BRIC countries to move away from legacy fiscal and monetary systems “controlled” by the U.S. and the G7 countries (including, again, the assumption that the dollar will remain the singular fiat reserve currency on which the global economy is based).
The Regional Impact of the CHIPS and Science Act: To better understand how the CHIPS and Science Act can promote regional economic growth and innovation, The Center for Strategic and International Studies’ (CSIS) Renewing American Innovation Project held an all day conference earlier this year on ‘Enhancing the Regional Impact of the CHIPS and Science Act’ cohosted by the Indiana University Public Policy Institute. Following are some of the key takeaways from the Building Regional Research Ecosystems panel – along with links to the transcript and videos from the event.
Potential BRICS Expansion Influence Offers Alternative to West: In July 2023, South Africa hosted a “Friends of BRICS” two-day meeting to discuss various global security challenges affecting their regions with cybersecurity topping the agenda. BRICS is a term to coined by Goldman Sachs to refer to the fast-growing and emerging economies of Brazil, Russia, India, China, and South Africa, whose low labor costs, favorable demographics, and abundant natural resources are expected to propel them as global leaders by 2050. The meeting was an opportunity for these governments to identify potential problem areas, discuss solutions, identify areas for potential cooperation, and prepare for the BRICS summit that will occur next month. BRICS weren’t the only countries in attendance in South Africa; “Friends of BRICS” included a group of countries that have expressed interest in joining BRICS, as well.
Globalization Transformed: Community Colleges and the CHIPS and Science Act: The Center for American Progress is on the U.S. regional and local innovation beat – with brilliant work on the future of the American Community College System and the Chips Act which explores many of the aforementioned aspects of globalization transformed.
OODA Network Perspectives on the Regional Chaos and Corruption Driving the Historic Diaspora to the North: OODA Network Perspectives on the Regional Chaos and Corruption Driving the Historic Diaspora to the North: The following perspective was part of the OODA Network monthly meeting held on Friday, April 21st, 2023 – a discussion that is now more prescient than ever in the wake of the expiration of Title 42 (effective in the early AM 4/21/23) – which is an OODA Network subject matter expert on the security conditions in Mexico, Central America, and South America provided the following intelligence on the general instability in Mexico, Central America, and South America.
Blockchain Meets Bio: The Recent Synthetic Biology Summit and “Sustainable Biomanufacturing for Future Network States”: The new framing and systems thinking that came out of the conclave highlighted here are kind of mindblowing – and exciting. This community of practice is eating the future whole. As a result, critical paths to the future and solutions for the future are emerging in this space – and they are more clearly drawn than the mixed promise of the future offered by other industry verticals. Enjoy this read – and our insights on the future metrics for success, nascent key performance indicators, leaning into the abundance, and an edgy vision of hope – while building the future through community, innovation, openness, collaboration, and creativity.
The Future of Food (In)Security and Agriculture Cybersecurity: Grain Hoarding, Rice Shortages and the War in Ukraine: Global Health Security is a research area we will be laying out in the next few months, including the role of cybersecurity and emerging and exponential technologies in the areas of: Pandemic Preparedness – Digital Wellness – Biological Agents and Infectious Diseases – Food and Agriculture Industry Sector and Cybersecurity – Domestic – Preparedness & Response – Medicine and Public Health – Cognitive infrastructure, Global Public Health, and Growing Food Insecurity – wrought by faltering economic and food security, which is where we start with a few broad perspectives on food security in Europe and Central Asia.
Opportunities for Advantage: Reshoring Manufacturing and Shortening Supply Chains; Global supply chains continue to experience the impact of the late March 2022 Shanghai and Shenzen Covid-19 lockdowns in China, which impacted the port operations of both cities, sending a long-term ripple effect into the global supply chain.
The Global Chip IT Supply Chain Disruption
The OODA team has been participating in “wargame” and red team exercises for over 25 years ranging from traditional DoD Office of Net Assessment games to scenario planning for the Fortune 500. We have personally witnessed the impact these exercises can have in establishing appropriate frameworks for thinking about future risks and opportunities. During one of our OODA Network monthly calls, one our members proposed that the OODA Network could be utilized for rapid wargaming on critical issues, with members suggesting the first be on the global computer chip supply chain.
The report – Scenario Planning for Global Computer Chip Supply Chain Disruption – is the outcome of our first OODA wargame, which we have branded as a Stratigame (Strategic Game), focusing on the global computer chip supply chain issues. Over 25 members of the OODA Network of Experts participated in this Stratigame where the OODA research team developed four scenarios and then led a structured discussion in which experts provided unique insights into potential impacts of these scenarios, adjacent risks and opportunities, and recommended actions that would allow us to avoid the negative impacts of a particular scenario or nudge us into a more favorable scenario.
Following are some recent developments we have tracked that map to the foresight strategy and insights of the Stratigame report:
A Vital Market Development in the Production Capacity of the Global Computer Chip Supply Chain: Since the publication of the OODA Stratigame, Netherlands-based ASML Holding has always figured prominently in our tracking and has been central to many of the export control controversies in the ongoing “Chip Wars.” Why? ASML was the singular global supplier of extreme ultraviolet (EUV) lithography machines vital to the production of a particular type of high performance semiconductor. It has been clear for a few years new competition and solutions to broaden this production capability globally was crucial to all future global computer chip supply chain scenarios. Japan-based Canon has entered the field. Details here.
China’s Gallium and Germanium-based Countermeasures in the Global Chip Supply Chain War: Tactically, China recently made a significant geopoltical and in the IT supply chain move, restricting exports of two minerals used in high-performance chips. Following is a summary of the new Chinese policy – followed by links to our original analysis series on rare earth, critical minerals and the global IT supply chain (disruption, innovation and weaponization).
Japan Challenges China with Rare Earth Metal Extraction from Seabed by 2024: Two of the clear strategic playing fields for competitive advantage are the future of battery production and high-performance computational capabilities. In both cases, rare earth minerals – crucial to the production of everything from semiconductors to electric vehicle (EV) batteries – are the critical risk factor in the future of a green global economy and emerging technologies. Geography and geopolitics matter when it comes to sourcing these materials, especially any future supply chain dependencies on other countries, including potential adversaries. Japan is getting its own strategic house in order – and is stepping up its efforts to access regional rare earth resources in a bid to challenge China on a variety of fronts.
The Secondary Chip and Hardware Markets: The Strategic Importance of Legacy Chips: In March, researchers at The Center for Strategic and International Studies (CSIS) released a report on “The Strategic Importance of Legacy Chips” – which addresses many of the questions we left open-ended and ripe for follow-on research in our 2021 OODA Stratigame: Scenario Planning for Global Computer Chip Supply Chain Disruption. Here, we take a look at how the CSIS report’s framing, insights and recommendations map to our ongoing tracking of what some are calling “The Chip Wars.”
The Current State of the U.S. Semiconductor Industry Shows Signs of Strategic Strength: In March, we extended our tracking of minerals for semiconductor production to the annual Unites States Geological Survey (USGS) 2022 List of Critical Minerals, which includes minerals like Palladium, C4F6, Helium, and Scandium – all of which are used in semiconductor production and or the manufacturing of sensors and memory. In April, we provided a general update on the global chip supply chain disruption in the context of more esoteric updates like: Fake chips as a growing threat to national security and critical systems; Neon output for chips cut in half since Russia’s attack on Ukraine; and Design concerns shifting towards component sourcing (brought on by component shortages which have created a concern for long-term sourcing, even for prototypes). We now widen the lens further to garner broad industry insights from the annual Semiconductor Industry Association’s (SIA) 2021 State of the U.S. Semiconductor Industry and SIA 2022 Factbook.
Semiconductor Innovation is More Than Just Reshoring the Traditional Industrial Base: Bob Gleichauf, EVP, Global Technology at In-Q-Tel, in a recently released position paper on the Chips and Science Act of 2022, explains why the legislation needs a “check engine light” to indicate problems and anticipate challenges, as well as maximize taxpayer return on their CHIPS investment.
Building Resilient Supply Chains and Semiconductor Manufacturing: In February 2021, The White House issued an Executive Order on securing America’s supply chains, calling for “an immediate 100-day review across federal agencies to address vulnerabilities in the supply chains of four key products…semiconductor manufacturing and advanced packaging; large capacity batteries, like those for electric vehicles; critical minerals and materials; and pharmaceuticals and advanced pharmaceutical ingredients (APIs).” The final review was delivered in June of 2021. The Department of Commerce (DoC) took the lead in authoring the section on semiconductor manufacturing. The final report is an exhaustive 250-page document, of which 60 pages are dedicated to a semiconductor and advanced packaging supply chain risk assessment, along with sections on opportunities and challenges ahead, concluding with recommendations.
China’s Formal Bid for Global Dominance of the Semiconductor Supply Chain: In an April 2021 report from the Congressional Research Service (CRS), the CRS summarizes the August 2020 China State Council issued “Notice on Several Policies to Promote the High-quality Development of the Integrated Circuit Industry and Software Industry in the New Era”, which provides a framework for building competitive advantage in the semiconductor industry. In March of 2021 implementation measures were announced by the Chines government, policies that encourage, according to the CRS, “U.S. and foreign semiconductor companies—including those from Taiwan, Hong Kong, and Macau—to transfer certain technology, intellectual property (IP), talent, and research and development (R&D) to operations in China. These policies offer preferential terms over the next ten years—including tax, tariff, financing, and IP protection—for firms willing to establish capabilities, including production facilities, in China.”
The State Department’s Sustained $500M Commitment to Bolster Global Computer Chip Supply Chain Security (as Prescribed by the 2021 OODA Stratigame): The State Department “unveiled details of its plans to use $100 million of funding provided under the 2022 CHIPS Act to improve semiconductor supply chain security and international information and communications technology security. The law provides the agency with $100 million of funding per year for those purposes for the five-year period beginning in fiscal year 2023.
Geopolitical Futures: The Americas, The Northern Frontier of Mexico, The Arctic, and Africa: In this era of global polycrisis, leaders are also reacting to the major macro economic trend of the last thirty years – the fundamental driver of the tetonic shifts in geopolitics and deep inside the economies of nation-states – which is that the BRICs global share of GDP May Overtake the G7 by 2028. Further geopolitical players and regions of the global polycrisis (jagged transitions, strategies, binaries fractures, major developments, and crucial events) summarized here include: The Americas, The Northern Frontier of Mexico, The Arctic, and Africa .
The Global Polycrisis: The Middle East, China, The Indo-Pacific, Russia, Ukraine, and NATO: Polycrisis: A cluster of interdependent global risks create a compounding effect, such that their overall impact exceeds the sum of their individual parts. The geopolitical players and regions of the global polycrisis (jagged transitiosn, strategies, binaries fractures, major developments, and crucial events) summarized here include: The Middle East, China and the Indo-Pacific, and Russia, Ukraine, and NATO.
Great power competition introduces new corporate risks, from supply chain disruptions to cyber threats. This competition extends to resources like food, water, and rare-earth elements, with heightened risks surrounding global computer chip supply.
Russian Invasion of Ukraine: Russia’s aggression against Ukraine prompts global repercussions on supply chains and cybersecurity. This act highlights potential threats from nations like China and could shift defense postures, especially in countries like Japan. See: Russia Threat Brief
Economic Weakness in China: China’s economy faces dim prospects exacerbated by disasters, COVID-19, and geopolitical tensions. Amid limited financial transparency, some indicators suggest China’s economic growth is severely stunted, impacting global economic stability. See: China Threat Brief
Networked Extremism: The digital era enables extremists worldwide to collaborate, share strategies, and self-radicalize. Meanwhile, advanced technologies empower criminals, making corruption and crime interwoven challenges for global societies. See: Converging Insurgency, Crime and Corruption
Food Security and Inflation: Food security is emerging as a major geopolitical concern, with droughts and geopolitical tensions exacerbating the issue. Inflation, directly linked to food security, is spurring political unrest in several countries. See: Food Security
Demographic Time Bomb: Industrialized nations face demographic challenges, with a growing elderly population outnumbering the working-age demographic. Countries like Japan and China are at the forefront, feeling the economic and social ramifications of an aging society. See: Global Risks and Geopolitical Sensemaking