A New World for Supply Chain Management

The Sept. 11 terrorist attacks on the United States could not have come at a worse time for the semiconductor and, by extension, the entire electronics industry.

Not only did this take place during one of the worst economic slowdowns to hit the industry, it also occurred just a few days after the Senate approved an amendment to the Export Administration Act (EAA).

The EAA provides the legal framework for the U.S. export control regime on dual-use technologies, or products that have both commercial and military applications. Under these rules, companies must obtain licenses to export products to countries viewed by the State Department as potentially hostile to U.S. interests, including China, North Korea, several nations in the Middle East and Eastern Europe, Pakistan and India.

Electronics industry representatives have complained in recent years that the industry has been hurt by the dual-use criteria, which pertain to computers and computer-related products, telecom equipment and certain semiconductors. Observers note that many restricted goods can be obtained by customers from other sources. Indeed, the latest amendment allows U.S. exporters to file for a license exemption if the product can be easily obtained from a foreign source or bought in the local marketplace.

However, a more liberalized EAA that lifts many export control restrictions now faces stiffer scrutiny in the House, where congressional leaders will do everything within their power to stop technology from getting into the hands of terrorists.

For the semiconductor industry, globalization is fundamental to staying competitive, expanding market share and reaping financial rewards.

It is clear that managing efficient supply chains in an increasingly dangerous world is getting harder to do, with managers facing greater considerations as they seek to explore global markets. In the meantime, terrorists are showing a clever ability to operate effectively regardless of the rule of law.