• New ITIF research warns that U.S. “national-power industries,” including semiconductors, are weakening in ways that affect national security and long-term tech leadership.
• Component buyers will see more scrutiny around country-of-origin, fab location, and single-sourcing risks even in non-defense sectors.
• Future sourcing strategies will prioritize multi-region supply, alternates, and compliance, not just price and specs.
• Companies that proactively audit their BOMs, diversify suppliers, and strengthen sourcing intelligence will gain a competitive advantage.
• Distributors will play a bigger role in cross-referencing, risk mapping, and building resilient BOMs.

The Information Technology and Innovation Foundation (ITIF) has released new research warning that key “national-power industries” in the United States, including semiconductors and advanced manufacturing, are steadily weakening. The think tank argues that this decline is now significant enough to influence national security and long-term technological leadership.

It’s also a clear signal for the semiconductor industry that expectations around supply-chain security, sourcing strategy, and long-term planning are changing.

What “National-Power Industries” Mean

ITIF defines national-power industries as sectors that support defense, critical infrastructure, and essential technologies while giving a country strategic leverage so it does not become overly dependent on potential adversaries. These industries include semiconductors and advanced electronics, telecom and networking, aerospace and defense systems, precision machinery, robotics, and advanced materials.

In simpler terms, these sectors power everything from cloud data centers and EVs to industrial automation and military platforms. ITIF’s concern is that the U.S. manufacturing base behind many of these industries is shrinking or shifting overseas, weakening both resilience and strategic strength.

From “Cheapest Wins” to “Resilient Wins”

Semiconductors sit at the center of ITIF’s warning because they are inherently dual-use technologies. The same chips that run consumer devices also power radars, satellites, secure communications, and advanced weapons systems. Yet production remains heavily concentrated in East Asia, where both geopolitical tensions and natural disruptions are persistent risks.

According to ITIF, any major disruption whether conflict, export restrictions, or a shutdown in a key manufacturing hub could leave countries without strong domestic or allied capacity struggling to keep factories running, maintain defense readiness, or continue innovating in AI, 5G/6G, automation, and mobility.

That era is ending when the electronics manufacturing followed a simple rule: if a component met specifications at the lowest price, it was good enough. Governments now treat semiconductors as strategic assets rather than commodities, and policy changes from subsidies to export controls reflect this.

Going forward, sourcing decisions will be judged on origin, resilience, and compliance, not just cost. Engineering, procurement, and operations teams will face growing expectations to reduce dependency on high-risk regions and build trusted, secure supply chains.

How This Shifts Everyday Sourcing and Component Buying

One of the biggest changes you’ll feel from ITIF’s warning is a stronger emphasis on where components are manufactured. RFQs and customer audits will begin asking more specific questions, such as whether a device is sourced from a U.S. or allied fab, or whether a non-Chinese alternative exists.

Country-of-origin and fab location will take on greater importance for defense, aerospace, critical infrastructure, industrial automation, and high-reliability automotive. These sectors already enforce strict COO requirements, and that level of scrutiny is now spreading across the broader electronics supply chain.

If semiconductors are now viewed as national-power assets, single-sourcing becomes harder to defend. Designs tied to a single fab in a high-risk region may face internal pushback early in development. Buyers may be encouraged to qualify multiple suppliers or at least multiple regions, especially for MCUs, memory, power devices, discretes, and communication ICs.

This shift increases the value of distribution partners that can provide credible drop-in alternatives. Teams will rely more heavily on distributors not just for pricing, but for cross-references, multi-region visibility, and early warnings about supply constraints.

Planning Projects in a More Regulated Chip World

Over the next two to five years, ITIF’s recommendations align with global trends: more incentives for domestic and allied fabs, and more rules around what chips can be used in defense, telecom, infrastructure, and high-security projects.

For engineering and procurement teams, this means adding policy checks to early design gates and developing scenario plans around geopolitical and regulatory changes.

Teams will benefit from maintaining a watchlist of new onshore and nearshore fabs, trusted-foundry programs, and government-backed semiconductor initiatives that could improve local availability.

What You Can Start Doing Now

Companies can turn ITIF’s warning into a competitive advantage by taking a few proactive steps:

• Audit existing BOMs and identify parts dependent on a single geography.
• Update AVL criteria to include geo-risk and origin—not just cost and specs.
• Design new products with alternates in mind to avoid future redesigns.
• Work with sourcing partners who can provide market intelligence, cross-references, and multi-region supply options.
• Educate internal teams on why chips are now treated as national-security assets and how this impacts qualification cycles, lead times, and budgets.

How IBS Electronics Supports This Shift

As governments rethink how they support national-power industries and secure semiconductor supply chains, companies at the design and sourcing front line need partners who understand the full landscape. IBS Electronics combines global component sourcing with real-time market intelligence and engineering support to help teams qualify alternates and design resilient, future-proof BOMs.

Whether you’re reviewing current platforms or planning next-generation designs, now is the right time to stress-test your semiconductor sourcing strategy. IBS can help identify exposed parts, map alternative options, and build a stronger, more secure supply chain around the components that matter most.