“Are Semiconductors the New Oil of the 21st Century”
“Are Semiconductors the New Oil of the 21st Century”
“U.S. announces a crash program to be ready for war by 2027 in the western Pacific”
In 1971, President Richard Nixon ended the U.S. dollar gold standard practice and started the inflationary cycle that continued into the early 1980s. In 1973, President Nixon reached an agreement with Saudi Arabia to trade oil in U.S. dollars. Saudi Arabia was the top oil producer in OPEC, and though it was the only one to sign this agreement with the U.S., the other OPEC nations eventually followed the Saudi Arabian lead. This was the start of the so-called petrodollar and the practice of petrodollar recycling, which eventually had a long-term impact of lowering inflation and interest rates in the United States. The 1979 Iranian Revolution caused another shock in the oil market, and at this time Saudi Arabia agreed to become the world's largest producer of oil and would stabilize the oil market supply and prices. In January 1980, President Jimmy Carter announced the Carter Doctrine, stating that the United States would use military force to ensure the flow of oil from the Persian Gulf, as it was now part of the U.S. national interest. Saudi Arabia had agreed to sell oil in U.S. dollars only and guarantee supply and price in the world oil market, and in return it received protection from the United States. Admiral Lisa Franchetti, the U.S. Navy Chief of Naval Operations, unveiled a new doctrine last week that aims to defend the western Pacific, seemingly echoing the start of a new Carter Doctrine.
Admiral Franchetti unveiled Project 33, a new naval doctrine for the Pacific that aims to counter the Chinese threat in the region. The plan responds to the People's Republic of China's declaration of war readiness by 2027. Project 33 calls for the U.S. to be ready for a war in the western Pacific by 2027, as well as meet the Chinese threat. Admiral Franchetti asserts that the United States will not initiate a war in 2027, nor is it actively seeking one, but rather must be prepared to confront the threat at the same time. It is true that China is a rising threat in the western Pacific and has become much more aggressive on the world stage. China, possessing the world's largest navy and boasting the second-largest economy, poses a formidable threat. The intriguing aspect is China's 2027 announcement, which raises questions about its feasibility as a foundation for a significant shift in U.S. defense policy.
The year 2027 is the year that the Chinese People’s Liberation Army, or PLA, turns 100 years old. Founded as a guerilla force, the PLA predates the Chinese Communist Party's rule over mainland China, which celebrated its 75th anniversary on October 1, 2024. The 2027 date appears to be more symbolic than a firm date for Chinese action. The Chinese Communist Party, or CCP, appears to have set the goal of having the PLA become a force capable of launching an overpowering invasion of its revolutionary foe on the island of Taiwan by 2027. This is not even a year that the U.S. or even the CCP agree upon, but it is a date that Admiral Franchetti is using as her benchmark for the United States to be ready for a war in the western Pacific against China.
Admiral Franchetti acknowledges in the CNO Navigation Plan that the United States Navy cannot scale up to a larger naval force in less than three years. The cost, but more importantly, the production time to make more warships to meet the Chinese threat or Chinese ship production capacity, makes it a hurdle that the U.S. cannot meet in less than three years. Project 33 aimed to bridge this gap and equip the navy to confront a Chinese threat in the western Pacific. By 2027, Project 33 mandates a surge in the deployment of robotic and other autonomous systems. The use of autonomous systems will not only reduce sailors' risks, but it will also increase the navy's ability to conduct its mission at a lower cost than building and deploying new warships. Compared to traditional manned warships, autonomous vehicles are smaller, quicker to produce, and more abundant.
Project 33 will leverage the U.S. Navy Disruptive Capabilities Office and the Department of Defense Replicator project to foster innovation and develop new autonomous solutions for the navy. The Deputy Chief of Naval Operations for Warfighting Requirements and Capabilities will oversee and ultimately be held accountable for implementation. Task Force 59 and the U.S. 4th Fleet, which operates in the Caribbean Sea and the Atlantic and Pacific Oceans around Central and South America, have been designated to focus on the steps to lead to the operational deployment of autonomous systems. It is expected that these new systems will require new and robust information collection and dissemination, as well as new command and control systems that are being created under programs like Project Overmatch.
This article will not delve into the specifics of Project 33, but it will underscore that the haste to achieve the 2027 goal involves the utilization of a recently constructed Department of Defense infrastructure, primarily for the creation, deployment, and support of autonomous technology within the United States military. Following the creation of the Carter Doctrine, the United States heavily relied on the Middle East, particularly Saudi Arabia, to maintain a stable oil flow and price. This was necessary to prevent the United States economy and military from collapsing. Oil and gas are still important to the U.S. economy and military, but technology has become equally essential in the world we live in today. The need for advanced microchips and semiconductors is only increasing. The western Pacific countries, led by Taiwan, South Korea, Japan, the U.S., and China, manufacture the vast majority of these advanced products. Just as the Persian Gulf was important to the U.S. economy and defense, the western Pacific is becoming equally essential.
The symbiotic relationship between technology and initiatives like Project 33 makes western Pacific security paramount to the United States. The U.S. position taking shape appears to be based on the premise that it cannot allow these producers of advanced chips and semiconductors to fall to an aggressive China, as it would make the U.S. vulnerable. If China manages to dominate the western Pacific semiconductor production through military action or intimidation, it could exert significant influence over the high-tech-hungry U.S. economy. Furthermore, it could severely hinder the U.S. military by denying them access to the technology needed for advanced weapons and systems which will only be more dependent on technology as it moves to more autonomous defense systems.
The AUKUS Pillar 2 Advanced Capabilities project aims to develop the most cutting-edge weapons and military technology, delivering them faster and at a reduced expense. This includes developing new technologies or utilizing existing ones for defense purposes. The concept involves the AUKUS partners pooling their resources and talents to pursue joint projects aimed at developing new technologies, with the ultimate goal of creating superior military technology to counter a more numerous adversary, such as China.
AUKUS Pillar II is considering allowing Japan and South Korea to participate in the project because of their expertise in advanced technologies and production capacity to create a greater collective response. Japan and South Korea are actively engaging with NATO, participating in the NATO Indo-Pacific Four program, and aligning their capabilities to meet NATO standards. If they participate in Pillar 2, NATO will reap significant benefits. It is not a coincidence that these two countries are also the world's second and third largest producers of advanced microchips and semiconductors.
The U.S. is forming loose alliances with countries in the western Pacific, indicating its intention to deter and potentially challenge an aggressive China, particularly in light of its threats to invade Taiwan, the largest producer of advanced semiconductors. Project 33 and AUKUS Pillar 2 are closely aligned, share complementary goals, and aim to support the alliance formations' defense and foreign policy. These formations appear to be less about defending the Western "rules-based order" and more about safeguarding the flow of semiconductors, with the unspoken goal of preventing China from gaining control over these assets.
As previously mentioned, these products are essential for the U.S. economy and military, and it is expected that the U.S. will act as a guarantor, similar to its role in securing oil from the Persian Gulf. If this were the case, the United States would dedicate itself to Taiwan's defense, safeguarding the flow of semiconductors produced in the western Pacific, preventing China from controlling or gaining access to these products, and preserving the U.S.'s current global standing.
The 2027 goal, based on an arbitrary statement from the CCP, aims to instill a sense of urgency in the adoption of evolutionary warfighting technologies and doctrine, safeguarding the U.S.'s access to advanced technologies for both its economy and military. China is a threat to the U.S. as it attempts to challenge the U.S. militarily and displace the dollar as the world reserve currency. Even though 2027 is an arbitrary and symbolic date, neglecting to enhance U.S. readiness in the western Pacific would be irresponsible, given the genuine nature of the Chinese threat and the need for credible deterrence in the region.
The U.S. should make it clear to its allies what the goal is in the western Pacific and the Indo-Pacific and provide something it has not up to this point and provide unambiguous leadership in the region so allies know the extent of the forming alliances, which up to now has been lacking. The warning is that if the U.S.-led alliance dominates the top 4 of 5 world semiconductor production and is essential for a thriving military and economy, will this incentivize China to strike, just as the U.S. oil embargo of the 1940s against Japan led to the Pearl Harbor attack? As a result, we must steer clear of the mistakes made during the Ukraine War and establish an efficient diplomatic channel that will allow for conflict avoidance and negotiation and dialogue, despite the challenge of the CCP avoiding meaningful engagement.
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References:
https://defensescoop.com/2024/08/15/navy-project-overmatch-rimpac-2024-steams-ahead/
https://commonslibrary.parliament.uk/research-briefings/cbp-9842/
https://sgp.fas.org/crs/row/R47599.pdf
https://www.hudson.org/events/aukus-pillar-2-new-partners-opportunities-masashi-murano-bryan-clark
https://www.forbes.com/sites/michaellynch/2024/06/03/is-saudi-arabia-becoming-the-swing-producer/
https://history.state.gov/historicaldocuments/frus1977-80v18/d45
https://media.defense.gov/2023/Apr/24/2003205865/-1/-1/1/07-AMONSON%20%26%20EGLI_FEATURE%20IWD.PDF
https://thehill.com/policy/defense/4904379-us-navy-strategy-south-china-sea/
https://worldpopulationreview.com/country-rankings/semiconductor-manufacturing-by-country