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24 Nov 21. U.S. puts Chinese firms helping military on trade blacklist. The U.S. government put a dozen Chinese companies on its trade blacklist on Wednesday for national security and foreign policy concerns, citing in some cases their help developing the Chinese military’s quantum computing efforts. The department also said several entities and individuals from China and Pakistan were added to the Commerce Department’s Entity List for contributing to Pakistan’s nuclear activities or ballistic missile program.
The latest U.S. action on Chinese companies comes amid growing tensions between Beijing and Washington over the status of Taiwan and trade issues.
In total, 27 new entities were added to the list from China, Japan, Pakistan, and Singapore.
Commerce Secretary Gina Raimondo said in a statement that the new listings will help prevent U.S. technology from supporting the development of Chinese and Russian “military advancement and activities of non-proliferation concern like Pakistan’s unsafeguarded nuclear activities or ballistic missile program.”
China’s embassy in Washington charged that the United States “uses the catch-all concept of national security and abuses state power to suppress and restrict Chinese enterprises in all possible means.
“China is firmly opposed to that,” embassy spokesperson Liu Pengyu said.
He said the United States should “follow the spirit” of a virtual meeting between U.S. President Joe Biden and Chinese leader Xi Jinping last week and “meet China halfway instead of going further down the wrong path.”
The Commerce Department said Hangzhou Zhongke Microelectronics Co Ltd, Hunan Goke Microelectronics (300672.SZ), New H3C Semiconductor Technologies Co Ltd, Xi’an Aerospace Huaxun Technology and Yunchip Microelectronics were placed on the Commerce Department’s entity list for their “support of the military modernization of the People’s Liberation Army.”
It also added Hefei National Laboratory for Physical Sciences at Microscale, QuantumCTek (688027.SS) and Shanghai QuantumCTeck Co Ltd to the list for “acquiring and attempting to acquire U.S.-origin items in support of military applications”.
The eight Chinese firms were listed to prevent U.S. technology being used to help China develop quantum computing applications for its military.
The Commerce Department wants to stop the Chinese military from developing its counter-stealth technology, which could include equipment like advanced radars, and counter-submarine applications such as undersea sensors. The action also blocks U.S. material from being used to help China break encryption or develop unbreakable encryption, the Commerce Department said.
Suppliers to companies on the entity list will need to apply for a license before they can sell to them, which is likely to be denied.
Separately, the Moscow Institute of Physics and Technology was added to the Commerce Department’s military end user list, but the listing did not provide additional information other than it had produced military products.
The entity list has increasingly been used for national security and foreign policy aims since the Trump administration. Chinese telecom company Huawei (HWT.UL) was added in 2019, cutting it off from some key suppliers and making it difficult for them to produce mobile handsets. (Source: Reuters)
23 Nov 21. DoD Announces the Establishment of the Airborne Object Identification and Management Synchronization Group (AOIMSG). Today, Deputy Secretary of Defense Kathleen Hicks, in close collaboration with the Director of National Intelligence, directed the Under Secretary of Defense for Intelligence & Security to establish within the Office of the USD(I&S) the Airborne Object Identification and Management Synchronization Group (AOIMSG) as the successor to the U.S. Navy’s Unidentified Aerial Phenomena Task Force. The AOIMSG will synchronize efforts across the Department and the broader U.S. government to detect, identify and attribute objects of interests in Special Use Airspace (SUA), and to assess and mitigate any associated threats to safety of flight and national security. To provide oversight of the AOIMSG, the Deputy Secretary also directed the USD(I&S) to lead an Airborne Object Identification and Management Executive Council (AOIMEXEC) to be comprised of DoD and Intelligence Community membership, and to offer a venue for U.S. government interagency representation.
Incursions by any airborne object into our SUA pose safety of flight and operations security concerns, and may pose national security challenges. DOD takes reports of incursions – by any airborne object, identified or unidentified – very seriously, and investigates each one. This decision is the result of planning efforts and collaboration conducted by OUSD(I&S) and other DoD elements at the direction of Deputy Secretary Hicks, to address the challenges associated with assessing UAP occurring on or near DOD training ranges and installations highlighted in the DNI preliminary assessment report submitted to Congress in June 2021. The report also identified the need to make improvements in processes, policies, technologies, and training to improve our ability to understand UAP. In coming weeks, the Department will issue implementing guidance, which will contain further details on the AOIMSG Director, organizational structure, authorities, and resourcing. (Source: US DoD)
23 Nov 21. ‘No company is immune’: Supply chain woes weigh on defense firms. More than a year and a half after the COVID-19 pandemic began to rock supply chains around the world, the defense industry is still wrestling with its fallout — and figuring out how to move forward amid the turmoil.
From massive deliveries of steel and aluminum needed to build the military’s newest ships and aircraft to landing gear brakes to items as small as semiconductors, supply chain shortages or delays have upended the plans of defense firms of all sizes.
Much of the nation’s broader attention on supply chains has focused on the rising costs of feeding a family or worried parents scrambling to order presents well before Christmas to ensure Santa will have something to leave under the tree.
But those in the defense industry are increasingly making clear the challenges they’re facing — and Pentagon officials are taking notice and considering what this means for their own logistics.
Supply chain woes sparked by the pandemic were a recurring theme during recent contractor earnings calls. One major defense firm after another pointed to the problems they faced, in some cases as an explanation for lower-than-expected sales.
These issues dealt a significant blow to the aerospace and defense industry, according to the Aerospace Industries Association. In 2020, the industry as a whole lost more than 87,000 jobs, or about 4% of the 2019 headcount, according to AIA’s facts and figures report released in September.
And 64 percent of those losses — or at least 55,700 jobs — were due to the supply chain problems that particularly ensnared small and medium-sized businesses nationwide, John Luddy, AIA’s vice president for national security policy, said in a statement to Defense News.
Supply chains problems can stem from a variety of issues, such as a lack of raw materials to make vital parts; bottlenecks when trying to transport finished items, like a shortage of shipping containers; backlogged ports without enough people to unload shipments; or a dearth of trucks available to drive them across the country. Financing challenges also dealt another blow to those small firms, AIA said.
“Because end-use manufacturers rely on the vital components and products those [small and medium-sized aerospace and defense] companies produce, such as bolts, wiring, hoses and electronics, those losses in employees, revenue and products had serious ripple effects throughout the rest of the A&D industry,” Luddy said.
Some firms have seen COVID-driven workforce problems contribute to supply chain issues. Before the vaccines, this was typically driven by the need to maintain social distancing and a workforce concerned about contracting the dangerous virus. Now, controversies involving vaccine mandates are throwing a new curveball into companies’ efforts to remain fully staffed.
Small companies with slimmer profit margins have found weathering supply chain upheavals particularly challenging, said ML Mackey, chair of the small business division for the National Defense Industrial Association and chief executive of the defense IT contractor Beacon Interactive Systems.
“When something hits us, the waves are much harder,” Mackey said in a Nov. 19 interview. “A big ship can handle the waves, but a canoe, it’s bobbled around.”
Those small firms tend to be “niche” companies that specialize in one component or a handful, Mackey said. Those parts, while niche, can be critical for the military to keep planes, weapons systems or other pieces of equipment operational, she said.
But when those small businesses encounter turmoil — from workforce challenges or programming inconsistency from the Pentagon, which is relying on continuing resolutions until formal spending bills are passed — the upheaval throws a wrench in the broader supply chains they feed.
“Our bottoms are closer to the bottom line,” Mackey said. “There’s no extra in our game. … It’s not that [small businesses] need it to be easy, it just has to be consistent so we know how to engage and compete effectively.”
For want of a nail
Multiple defense firms contacted by Defense News declined to elaborate on their supply chain issues, instead pointing to statements made by executives during earnings calls or in other public forums.
But even those limited statements speak volumes about how supply chain issues have tested the defense industry.
John Mollard, acting chief financial officer for Lockheed Martin, said in an Oct. 26 call larger-than-expected supply chain problems in its aeronautics division — particularly in F-35 production — as well as in its missiles and fire control and space divisions, spanning multiple suppliers, reduced sales in the third quarter. Mollard said these disruptions “underscore the fact that many of our suppliers are still dealing with the financial stress caused by the global pandemic.”
He said dual-use suppliers — those who make parts used by both the military and civilian aerospace sectors — accounted for much of the supply chain challenges Lockheed faced.
For example, he said, a company that makes landing gear brakes for both military and commercial aircraft saw a cash flow crunch as the pandemic kneecapped the commercial air sector.
Lockheed has taken steps to help its suppliers stay afloat, Mollard said, including by accelerating billions in payments to the companies that make up its supply chain.
And, he said, Lockheed plans to keep steering these payments to suppliers hit by the pandemic — particularly small and medium-sized businesses — through the end of 2022, to make sure they can continue operating. Lockheed originally thought it would be able to cease those accelerated payments after this year, Mollard said.
“While it’s voluntary, it’s not 100% altruistic,” he acknowledged. “We need our supply chain to be successful for us to be successful.”
Greg Hayes, Raytheon Technologies’ chief executive, said in an Oct. 26 call his company took a $275m sales hit due to a combination of supply chain issues and not having enough employees to do the work. Hayes said the “people part” accounted for about a third of that $275m loss, meaning supply chain issues cost the company some $180m.
Hayes said the supply chain problems aren’t stemming from a single supplier, but pointed instead to widespread challenges obtaining components and raw materials.
“Think about aluminum prices going up, think about all of the steel, all of the basic raw materials, lead times pushing out, and it’s just harder to get material in the door on time,” Hayes said.
Although Raytheon has benefited from long-term agreements for raw materials, he said, lead times on some of them have doubled. Hayes said Raytheon has an adequate supply of computer chips — but executives are still keeping a close eye to make sure they don’t fall short.
Hayes said the labor shortage problem is likely to continue into the new year. The vaccine mandate could also put more pressure on the supply chain in the short term, he said. In the long term, however, he said broader vaccinations could restore people’s confidence in the safety of air travel and hasten the industry’s recovery.
Chris Kubasik, the chief executive of L3Harris Technologies, said in the company’s Oct. 29 earnings call that electronic component shortages in recent months dealt it a blow — particularly in its communication systems division, as well as intelligence, surveillance and reconnaissance aircraft — and led it to slightly trim its sales growth expectations.
“No company is immune, including L3Harris, to global supply chain pressures,” Kubasik said.
He said he expects supply chain issues to continue well into 2022, with recovery beginning in the latter half of the year.
But L3 has also sought to find workarounds. Jay Malave, L3′s chief financial officer, said the company has looked for alternative sources and parts and even redesigned some of its electronic components.
Shipbuilders have also strained at times to keep the supplies needed for new ships flowing. Thomas Stiehle, chief financial officer for Huntington Ingalls Industries, said in a Nov. 5 earnings call that copper cabling was one example of a material putting pressure on suppliers.
“We’re a little light on material, specifically at Ingalls” Shipbuilding in Pascagoula, Mississippi, Stiehle said. “When we’re talking about shipbuilding, the material lag-behind [cost] roughly about $40m in the quarter. And as we look forward into [the fourth quarter], that could persist.”
Dirk Lesko, president of General Dynamics Bath Iron Works in Maine, told Defense News the supply chain issues are occurring across a variety of industries and vendors.
“It’s kind of unpredictable,” Lesko said. “And it’s for everything, simple and complex things that we buy.”
Lt. Gen. Clinton Hinote, the Air Force’s deputy chief of staff for strategy, integration and requirements, said in a Nov. 16 online panel the military is seeing the same supply chain issues as the civilian world. If a major conflict were to break out, the military’s fragile logistics infrastructure could prove to be a vulnerability, Hinote said.
“We certainly see the problems in the civilian supply chain right now,” Hinote said. “Those also manifest themselves in military supply chains. In many ways, those supply chains are brittle, and we could make decisions to make those more resilient and less brittle.” (Source: US DoD)
22 Nov 21. The Pentagon needs a new AI strategy to catch up with China. Defence leaders unfamiliar with artificial intelligence, cyber or hypersonics should educate themselves or get out of the way. Nicolas Chaillan, the writer was formerly the first chief software officer at the US Air Force and Space Force. He is now chief technology officer at cyber security firm Prevent Breach When I resigned from the Pentagon in September, I warned that without urgent action we would lose the artificial intelligence war against China within a year. Due to our complacency, we have watched the Chinese Communist party not only catch up with the US in many warfighting capabilities but, worse, lead in some of the most crucial ones like AI and cyber security. Pentagon leaders like to call China a “near peer adversary”, but this demonstrates how badly they have underestimated Beijing. I don’t, and you shouldn’t. Whoever wins the AI race will control the planet. When the US has conducted virtual exercises pitting AI-powered jets against top pilots, the AI systems have prevailed. China’s hypersonic missiles will only be stopped using AI-enabled defences. The solutions to this threat are clear. The Pentagon must embrace agility and understand that innovation involves failure. It should set up a joint IT office, centralising all functions such as IT procurement, cloud services, data warehousing, AI, cyber security and training into a dedicated Technology and Information Merged Enterprise, which reports directly to the Department of Defense’s deputy secretary.
The department also needs to boost public-private partnerships, be more accountable to the taxpayer and devote at least 10 per cent of its budget to developing lean and autonomous methods of warfare. However, as I have observed, defence leaders often fail to understand the technology itself, and refuse to empower those who do. If you are a leader and you don’t know the subject matter, then educate yourself and be prepared to take advice, or step out of the way. We must mandate at least one hour per day of continuous learning for employees. The other common mistake is to create more siloed AI and data teams or even worse, a “cyber force”. We do not need specialist units rushing in to save the day. Software, cyber and AI must be baked-in to every DoD team. Concepts such as the Pentagon’s Defense Digital Service, set up ostensibly to deliver new technology across the DoD, have failed in part because they exist in a vacuum. We must also create respected career paths for software, cyber security, data science, AI and machine learning, with progression of pay and titles so they are not seen as dead ends. To update its workforce, the Pentagon should collaborate more with industry. The US has incredible companies innovating across all sectors, from self-driving cars to space exploration and quantum computing. Unfortunately, the DoD continues to over-classify information. This prevents it from informing industry partners about the extent of China’s aggressions — which range from embedding spies in our companies to stealing intellectual property and conducting cyber attacks.
As a result, many US companies still refuse to work with the Pentagon. I believe that if it was able to share more about the nature of the threat, more would want to partner with the military to win this fight. Bringing in expertise from outside defence means fixing the clearance processes, so people can move in and out of government to gain skills and experience. We must allow DoD folks to spend time working at start-ups and innovative companies such as Tesla and SpaceX, and return to implement their knowledge for the military. Without sufficient talent, US defence cannot succeed. Finally, we must stop preparing for the wrong battles. The next war will be software-defined, it won’t be won with a $1.7tn programme of fifth generation F35 fighter jets or $12bn aircraft carriers. China can take down our power grid without firing a single shot, because of kindergarten-level cyber security in our critical national infrastructure. This shows we are investing in the wrong defence capabilities. As we have seen recently with the Colonial Pipeline hack, the risk is tangible. We must act now to trade off some F35 jets for scalable autonomous systems such as drone swarming, self-flying jets and ships, hypersonic and cyber capabilities, and military advances in space. Reports claiming the US has as much as 10 years to take meaningful action in AI are just wrong. Analysts forget that AI innovation progresses exponentially, based on the speed of deployment and the volume of data available to train its models. Since China has more experts engaged in this field, and more data, the US is already at a disadvantage. By this time next year, it will be too late to catch up. (Source: FT.com)
20 Nov 21. Austin: U.S. ‘Committed to Preventing Iran from Gaining a Nuclear Weapon.’ America’s allies and partners in the Middle East and elsewhere share deep concerns about the Iranian government’s destabilizing actions — including its support for terrorism, its dangerous proxies and its nuclear program, Secretary of Defense Lloyd J. Austin III said. The secretary delivered a major policy speech on the Middle East and North Africa today at the International Institute for Strategic Studies Manama Dialogue 2021 in Manama, Bahrain.
“The United States remains committed to preventing Iran from gaining a nuclear weapon. And we remain committed to a diplomatic outcome of the nuclear issue. But if Iran isn’t willing to engage seriously, then we will look at all the options necessary to keep the United States secure,” Austin said.
Next week, Iran’s negotiating team is set to return to Vienna, Austria, to restart talks on a mutual return to compliance with the Joint Comprehensive Plan of Action, he said.
“We and our partners will return to those talks in good faith. But Iran’s actions in recent months have not been encouraging — especially because of the expansion of their nuclear program,” he said.
“If Iran comes back with constructive positions, we still think we can quickly resolve our lingering differences to make a mutual return to the JCPOA possible,” he added.
Iran’s neighbors have tried to talk and improve relations, Austin said. The United States fully supports those efforts.
“We urge Iran to do its part, and to take steps to reduce violence and conflict. But whatever Iran decides, we will continue to work closely with our partners. Iran should have no illusions that it can undermine our strong relationships in this region. And we will defend ourselves, and we will defend our friends and we will defend our interests,” the secretary said.
Austin said the Defense Department is working with partners in the region to address threats from Iran, its proxies and terrorist organizations. Those threats include unmanned aerial vehicles, boats loaded with explosives and ballistic missiles.
Working with partners to counter those and other threats includes joint exercises and training in places such as the United Arab Emirates’ Air Warfare Center, he said.
“Thanks to our shared investments, our partners here have their own formidable capabilities to handle the dangers from UAVs,” he said.
For example, Saudi Arabia’s ground and air forces can now take out 90% of UAVs or missiles fired from Yemen and he said the department is working with the kingdom to get that figure up to 100%.
Also, across the Middle East, the department is supporting efforts to better integrate air and missile defenses, to strengthen regional security cooperation and to interdict dangerous material at sea.
“We’re going to build on our longstanding investments in this crucial region — in security cooperation, and training, and professional military education, capacity building and intelligence sharing and joint exercises,” Austin said, adding that diplomacy is first and foremost the tool of choice.
“America’s commitment to helping our friends defend their sovereign space is unwavering,” he emphasized.
Austin also touched on a number of other topics.
Regarding the COVID-19 pandemic, he said the United States has donated more than 8.2 million vaccine doses in this region, including donations to Egypt, Iraq, Jordan, Morocco, the Palestinian territories, Tunisia and Yemen. “We’re going to keep driving hard with our partners to end this pandemic.”
On climate change, Austin said America is intensely focused on it and that it’s an existential threat to everyone.
“All countries will be far less secure in a warming world that’s stressed, volatile and chaotic. And it’s easy to see the risk of new Middle East conflicts in jostling over resources that span borders,” he said. (Source: US DoD)
25 Nov 21. Pentagon to study UFO sightings in restricted US airspace. US defence officials have announced the launch of a task force to investigate reports of unidentified flying objects in restricted airspace. The group will assess objects of interest and “mitigate any associated threats”, the Pentagon said on Tuesday. A highly anticipated military report in June failed to explain dozens of reported UFO sightings and warned of possible national security risks. The new group will be overseen by top military and intelligence leaders.
The Airborne Object Identification and Management Synchronization Group will “detect, identify and attribute objects of interest in [special use airspace]”, Deputy Defence Secretary Kathleen Hicks said in a memo to senior Pentagon leadership on Tuesday.
Their directives include reducing gaps in intelligence detection capabilities, analysing intelligence and counterintelligence data, and recommending policy in the area.
The defence department has said it takes any reports of aerial incursions – identified or unidentified – “very seriously, and investigates each one”.
Tuesday’s statement acknowledges challenges highlighted by a Pentagon report to Congress in June.
Lawmakers had demanded the report after the US military reported numerous instances of unidentified objects seen moving erratically in the sky.
It said of 144 reports made about the phenomena since 2004, they could not explain all but one. While the Pentagon said there were “no clear indications” of any otherworldly activity, it did not rule out the possibility that the objects were extra-terrestrial.
Several possible explanations were offered at the time, including advanced technologies from another nation like China or Russia, natural atmospheric phenomena – like ice crystals – that could register on radar systems, and “developments and classified programmes by US entities”.
The one case identified “with high confidence” was deemed to be a “a large, deflating balloon”. (Source: BBC)
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