How to build both national security and economic prosperity


The missing middle of technology investment—insufficient funding for commercial production—is evident in each and every one of these failures, but the loss of expertise is an added dimension. For example, lithium polymer (LiPo) batteries are at the heart of every FPV drone. LiPo uses a solid or gel polymer electrolyte and achieves higher specific energy (energy per unit of weight)—a feature that is crucial for lightweight drones. Today, you would be hard-pressed to find a LiPo battery that was not manufactured in China. The experienced workforce behind these companies has contributed to learning curves that have led to a 97% drop in the cost of lithium-ion batteries and a simultaneous 300%-plus increase in battery energy density over the past three decades.

China’s dominance in LiPo batteries for drones reflects its overall dominance in Li-ion manufacturing. China controls approximately 75% of global lithium-ion capacity—the anode, cathode, electrolyte, and separator subcomponents as well as the assembly into a single unit. It dominates the manufacture of each of these subcomponents, producing over 85% of anodes and over 70% of cathodes, electrolytes, and separators. China also controls the extraction and refinement of minerals needed to make these subcomponents.

Again, this dominance was not inevitable. Most of the critical breakthroughs needed to invent and commercialize Li-ion batteries were made by scientists in North America and Japan. But in comparison to the US and Europe (at least until very recently), China has taken a proactive stance to coordinate, support, and co-invest with strategic industries to commercialize emerging technologies. China’s Ministry of Industry and Information Technology has been at pains to support these domestic industries.

The case of Li-ion batteries is not an isolated one. The shift to Chinese dominance in the underlying electronics for FPV drones coincides with the period beginning in 2000, when Shenzhen started to emerge as a global hub for low-cost electronics. This trend was amplified by US corporations from Apple, for which low-cost production in China has been essential, to General Electric, which also sought low-cost approaches to maintain the competitive edge of its products. The global nature of supply chains was seen as a strength for US companies, whose comparative advantage lay in the design and integration of consumer products (such as smartphones) with little or no relevance for national security. Only a small handful of “exquisite systems” essential for military purposes were carefully developed within the US. And even those have relied upon global supply chains.

While the absence of the high-tech industrial capacity needed for economic security is easy to label, it is not simple to address. Doing so requires several interrelated elements, among them designing and incentivizing appropriate capital investments, creating and matching demand for a talented technology workforce, building robust industrial infrastructure, ensuring visibility into supply chains, and providing favorable financial and regulatory environments for on- and friend-shoring of production. This is a project that cannot be done by the public or the private sector alone. Nor is the US likely to accomplish it absent carefully crafted shared partnerships with allies and partners across both the Atlantic and the Pacific.

The opportunity to support today’s drones may have passed, but we do have the chance to build a strong industrial base to support tomorrow’s most critical technologies—not simply the eye-catching finished assemblies of autonomous vehicles, satellites, or robots but also their essential components. This will require attention to our manufacturing capabilities, our supply chains, and the materials that are the essential inputs. Alongside a shift in emphasis to our own domestic industrial base must come a willingness to plan and partner more effectively with allies and partners.

If we do so, we will transform decades of US and allied support for foundational science and technology into tomorrow’s industrial base vital for economic prosperity and national security. But to truly take advantage of this opportunity, we need to value and support our shared, long-term economic security. And this means rewarding patient investment in projects that take a decade or more, incentivizing high-capital industrial activity, and maintaining a determined focus on education and workforce development—all within a flexible regulatory framework.

Edlyn V. Levine is CEO and co-founder of a stealth-mode technology start up and an affiliate at MIT Sloan School of Management and the Department of Physics at Harvard University. Levine was co-founder and CSO of America’s Frontier Fund, and formerly Chief Technologist for the MITRE Corporation.

Fiona Murray is the William Porter (1967) Professor of Entrepreneurship at the MIT School of Management where she works at the intersection of critical technologies, entrepreneurship, and geopolitics. She is the Vice Chair of the NATO Innovation Fund—a multi-sovereign venture fund for defense, security and resilience, and served for a decade on the UK Prime Minister’s Council on Science and Technology.

Latest articles

spot_imgspot_img

Related articles

Leave a reply

Please enter your comment!
Please enter your name here

spot_imgspot_img