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Chinese-made printed circuit boards (PCBs) in U.S. military systems and infrastructure like power grids probably gives China kill switches and other backdoors that the nation could use in the event of war, a former Department of Defense (DoD) official says.

“You can’t put together a power grid without relying on Chinese circuit boards or non-domestic circuit boards,” Al Shaffer, former deputy undersecretary of defense, said. “If you rely on non-domestic circuit boards, and there’s a remotely triggerable kill switch, in essence, the potential adversary could control your power grid.”

PCBs are among the easiest places to hide a Trojan horse, kill switch or modified code, Shaffer added.

“You’re talking about something with over a hundred layers of substrate,” he said. “Each of those layers has the potential for having something embedded. I have almost no doubt that we have pretty extensive vulnerabilities to systems being modified or shut down. The other thing that can happen: if you modify the data stream, which you can do by injecting code in a weapons platform, and the data that you’re seeing is false? You lose.”

The U.S. PCB industry languishes even as the U.S. government rolls out $52 billion in CHIPS Act subsidies during 2024 to chipmakers like Intel and Micron to rebuild part of the shrinking American electronics ecosystem. None of that money will go to the few remaining U.S. PCB makers. The U.S. board industry, with more than 2,000 companies and 30% of global production in 2000, has fewer than 150 companies with only 4% of the market today, according to the PCB Association of America (PCBAA). Asia produces more than 90% of the world’s PCBs, with China accounting for more than 55%.

U.S. PCB makers have lost the ability to make state-of-the-art boards, Shaffer said.

“I look at the recently passed CHIPS Act, and I think they made a real fundamental mistake. The government is putting $50 billion into the production of semiconductors. Semiconductors don’t make anything work. You need to have them mounted into a system. We’re spending $50 billion to increase domestic capacity, and then we’re going to go mount these things on primarily Chinese- or Taiwanese-, Korean-made PCBs. A lot of those will be Chinese, because the Chinese have the largest share of state-of-the-art [boards]. We also know China uses microelectronics systems for espionage.”

Shaffer notes comments from FBI director Christopher Wray in January that China’s hackers are targeting American critical infrastructure, including the power grid, to “wreak havoc” in the U.S.

Shaffer said the only situation where China would try a widespread shutdown of U.S. systems would be in a “shooting war.”

In the past decade, China has eliminated some U.S. made electronics from government systems, also on concerns of vulnerability to hacking.

Shaffer advocates a shift to secure electronics, not just for the military, but for critical parts of the U.S. infrastructure. Such a switch would help revive electronics manufacturing in the U.S., he says.

“The DoD only has about 2% of the market. It’s not going to drive the market. If you add in healthcare, financial systems, electric grid, your distribution system, air traffic control network—all of a sudden, you talk about a market that will allow market forces to work.”

PCB Act

The PCBAA supports passage of H.R. 3249, which is currently before the U.S. House of Representatives. Also known as the PCB Act, the measure would provide about $3 billion in subsidies to the U.S. board industry.

U.S. PCB makers could apply for grants against the $3 billion in the same way that the CHIPS Act is administered. The PCB Act would create a 25% tax credit on the purchase of U.S.-made PCBs and IC substrates.

“The tax credit brings us into a cost-competitive position,” PCBAA executive director David Schild told EE Times. “That does two things. It creates a demand signal that makes this sustainable. It’s not simply a band-aid in the form of a grant that floats the industry for a few years. It creates a relationship between customers and suppliers. The second thing is it pushes private money off the sidelines. One of the most remarkable things about the CHIPS Act is that the $52 billion that the federal government has awarded has been matched, at least in terms of commitments, to the tune of about $450 billion in private money.”

Schild and Shaffer share the view that rebuilding commercial demand for U.S.-made PCBs is critical to making the industry sustainable.

“Imagine an EV-charging network dependent on foreign microelectronics,” Schild said. “Imagine a power grid, imagine banks, Wall Street, IT infrastructure, medical devices, hospital servers dependent on foreign microelectronics. I don’t think that makes anyone sleep soundly at night, right?”

It’s not clear how extensive the foreign-PCB infiltration is even in military systems, according to Shaffer.

“We don’t know exactly,” he said. “The DoD does not buy many semiconductors or PCBs. They buy radar systems, they buy comm systems. We cracked open a couple of systems. I can’t say which ones, but we had as much as 30% to 40% semiconductors and other microelectronic parts that were not domestically sourced. It’s too hard to go back in retrospect and open up all of our systems, and it would be too costly. We did it for a couple just to make sure there was a problem.”

The U.S. move to offshore electronics production decades ago was too focused on cutting cost, and now, new priorities have emerged, according to Shaffer.

“We have not put in place policies to require or use secure chips and PCBs, even in those industries where you can amortize the cost,” he said. “Would you pay five extra dollars a month to an electric company for having a secure electric grid? I would, but we haven’t incentivized that type of behavior. So, industry—including defense, industrial primes and sub-tiers—go to the lowest cost. Capitalism is wonderful until you start thinking about where the potential shortcomings are.”

U.S. Commerce Secretary Gina Raimondo has called for a part two to the CHIPS Act, dubbed CHIPS 2.0.

“If there is a follow-on CHIPS Act, the government has to extend that down into PCBs,” Shaffer said. “The initial CHIPS Act stops at semiconductor packaging and test. We established a situation where we’re paying a lot of money to make new chips. We’re not doing anything to ensure that they’re mounted into a system in a secure way.”

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