When the U.S. Department of Defense (DoD), and the contracts it awards, get mentioned, certain names spring to mind: Lockheed Martin, Northrop Grumman, and the like. But lately, a different group of companies — ones working in a very different industry — have entered the picture.
As the federal government seeks to enhance the military’s 5G connectivity, traditional contractors have teamed with tech giants and communications groups to upgrade vital networks. In April 2022, Northrop Grumman and AT&T announced their intent to “research and develop … a 5G-backed ‘digital battle network’.” Prior to that, Lockheed Martin and Intel signed an expanded “memorandum of understanding … to align 5G-enabled hardware and software solutions for the DoD.”
So, how does the global chip shortage factor in? Without a steady stream of these valuable components, these proposals could remain unrealized — unless semiconductor manufacturers and suppliers step up to fill the void.
Opportunity Along the Supply Chain
Overall, the aerospace and defense industries rely on legacy semiconductors for their technology: 5G chips are an exception to the rule. While companies in the market for obsolete components may experience low supply, others seeking modern semiconductors — like the ones used in 5G chipsets — may benefit from priority manufacturing driven by profit margins. Shortages would persist, but their effects wouldn’t be quite as acute.
Semiconductor suppliers stand to benefit just as much as foundries. Although the push to onshore continues building momentum, the bulk of manufacturing remains in foreign countries: The United States accounts for only 12% of the world’s chip production, while three nations — Taiwan, South Korea, and China — account for 88%.
To win and fulfill the military’s 5G contracts, contractors and tech companies alike will need to turn to semiconductor suppliers with extensive international contacts, a record of reliability, and proven vetting processes capable of weeding out substandard components.
Collaborating on the Military’s 5G
As previously mentioned, the DoD’s drive for military 5G has led to some unique working relationships. And as this rollout grows, defense, aerospace, and telecommunications companies may begin working directly with yet another set of partners — semiconductor manufacturers and suppliers.
What’s more: These partnerships aren’t limited to multinational corporations. Instead of teaming directly with foundries, smaller companies can opt to work with a dedicated procurement company like A2 Global. These organizations leverage trusted worldwide networks to connect buyers with potential sellers, enabling them to source quality-assured legacy and advanced components.
5G connectivity has already become a staple of civilian life; with time and continued DoD investment, the technology will establish itself in military applications. For it to happen as smoothly as possible, the armed forces will have to nurture relationships with multiple suppliers, opening new opportunities for the semiconductor industry.
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