Semiconductors have become the backbone of modern life, serving as the brain behind everything from smartphones to household appliances and from electric cars to artificial intelligence and national defense systems. These tiny chips quietly power our nation, enabling the most critical aspects of the government, economy, healthcare system, and daily life. Few technologies are as essential to modern life as semiconductors. With accelerating global demand and intensifying geopolitical competition, chip manufacturing has become a strategic asset to a nation’s success.

The Building America’s Manufacturing Edge panel, hosted by Axios, illustrated that the future of U.S. manufacturing is dependent on strengthening domestic supply chains through technological innovation, strategic investment, workforce development, and public-private partnerships. Artificial intelligence is reshaping supply chain management, increasing supply chain visibility, identifying vulnerabilities, and helping investors make more informed decisions.

“Visibility mapping through AI, AI is critical to all of this. There’s no way you can tackle these problems and have the visibility that companies and government partners need today by not leveraging AI,” said Carrie Wibeen Kaupp, president of Exiger.

While the supply chain is facing widespread challenges, semiconductor production remains one of the greatest obstacles, as chips rely on globally dispersed manufacturing, allowing other countries to influence the United States’ success given their critical role in the nation’s operations. The price of technology is rapidly increasing as supply chain constraints continue to affect the United States’ technological market. Circuit boards manufactured in the United States cost approximately four times more than those produced in China.

While the U.S. is a global leader in chip design and research, it produces only a fraction of the world’s semiconductor hardware. American manufacturing remains heavily reliant on China and Japan for key stages of production, including inputs such as specialized chemicals and materials that are limited domestically. Semiconductors serve as the foundation of modern electronics by controlling electrical signals ranging from smartphones to defense systems.

At a seminar hosted this week by Axios, industry leaders discussed the efforts to strengthen the U.S. semiconductor supply chain, with microchip manufacturing emerging as a central focus. Kevin O’Hanlon, vice president of North America Government Relations for Global Electronics Association, said, “We don’t have the capacity to then take those chips, do the testing and the packaging to ultimately put them onto a circuit board. Those microelectronics are being flown from the U.S. to Taiwan, South Korea, Japan, but they have to be tested and packaged… some of those electronics that leave the U.S. will go to 40 different stops before ultimately being sold back into the U.S. market.”

While the higher costs affect the price and availability of consumer electronics, the consequences extend beyond consumer markets. Semiconductors are critical to U.S. defense systems, making supply chain resilience a national security priority.

Former President Joe Biden signed the CHIPS and Science Act of 2022 into law, appropriating $52.7 billion to expand semiconductor manufacturing capacity in the United States. This legislation provides grants, subsidies, and tax incentives to encourage private investment in domestic semiconductor research, development, and production with the goal of strengthening both supply chain resilience and national security.

The law helped drive investment in semiconductor manufacturing facilities, workforce development, and advanced production. Despite those efforts, however, U.S. manufacturers remain heavily reliant on overseas suppliers for specialized chemicals, raw materials, and other critical inputs needed throughout the semiconductor supply chain.

At the same time, the 2025 tariffs on Chinese imports, including advanced semiconductors and key manufacturing materials, have increased hardware costs for U.S. businesses and consumers. Supply chain constraints have also contributed to higher prices for computers, smartphones, servers, and electric vehicles.

The implications extend beyond consumer technology. Semiconductors and microelectronics are essential components for military systems, including drones, radar systems, communications equipment, satellites, and fighter aircraft. As a result, continued dependence on foreign suppliers remains a significant national security concern.

As U.S. manufacturing makes strides toward expanding domestic production, significant supply chain gaps remain, leaving American consumers to bear the financial burden.

Other key takeaways from Axios’ Building America’s Manufacturing Edge event included:

Achieving greater supply chain visibility by leveraging artificial intelligence to identify the strongest and most reliable investments in real time

Investing in communities improves accessibility and affordability while fostering innovation across U.S. manufacturing

Strengthening domestic production to support manufacturing resilience by better aligning supply with demand

Modernizing and rebuilding U.S. supply chains via venture capital investments in digital technology and AI

This article was originally published by RealClearPolitics and made available via RealClearWire.