The many billions of dollars in direct funding or incentives the US Chips Act has bestowed on domestic manufacturers continue to obscure the basic adage that a chain is only as strong as its weakest link.

That truism was tested, again, in late November as Denkai America, the US-based subsidiary of the Japanese materials company, announced its intentions to close and liquidate its copper foil manufacturing plant in Augusta, South Carolina, the last such factory in the United States.

The news comes just two years after its parent company, Nippon Denkai, heralded the site as the future of foil production, with tens of millions of dollars in investments planned and hundreds of new jobs expected. The company cited financial problems stemming from semiconductor shortages, a decrease in exports of batteries manufactured domestically, lower demand for smartphones, and other factors for the decision.

Industry trade groups recognize the potential issues ahead. In a statement for PCD&F/CIRCUITS ASSEMBLY, the Printed Circuit Board Association of America said, “Single points of failure in the microelectronic supply chain will have consequences for PCB manufacturers and related industries. With no more US copper foil vendors, PCB manufacturers will have to qualify other vendors or find alternative materials. This will likely disrupt delivery of certain DoD programs of record as well as commercial customers supporting the nation’s critical infrastructure. DoD Industrial Base Policy needs to double down on domestic single-source/single-point of failures in the microelectronics supply chain.”

The impact is made all the more problematic because of the timing: The incoming Trump administration has made clear its intention to renegotiate – again – international trade agreements, including the USMCA free trade agreement that was just ratified in 2020.

To wit, while Circuit Foil, the materials subsidiary of Solus Advanced Materials, has a distribution center in Canada, President Trump has said he plans to impose a 25% tariff against the neighbors to the north. And as PCD&F/CIRCUITS ASSEMBLY contributing editor Dr. Hayao Nakahara notes, “The final objective of PCB users is price.” So while there are alternate suppliers just over the border, the ripple effects mean there is no guarantee of supply chain continuity.

Much of the US defense strategy of late has centered on keeping advanced technology onshore through export controls or bans, or incentivizing key companies to develop domestic capacity (read: the Chips Act). But the focus, as usual, has been on blue chip, media-savvy firms like Intel, Samsung and TSMC. In a classic case of too little, too late, the Department of Commerce has revived the President’s Export Council Subcommittee on Export Administration (PECSEA), a panel of outside experts who advise export controls and scarce commodities in the interest of advancing national security interests.

The US does have other tools to help prevent the loss of critical suppliers to the Defense Department. The Committee on Foreign Investment in the United States, or CFIUS, was established to review transactions involving foreign investment in the US, and has the authority to negotiate or impose conditions to mitigate national security risk arising from a covered transaction. If the government determines the loss of a company would have a detrimental effect on the defense supply chain, it can force the business to stay open. Whether the powers that be recognize the significance of Denkai’s closing, however, is unclear.

So here we are, in 2025, with wars ongoing in Eastern Europe and the Middle East, the Chinese playing wargames off the coast of Taiwan, and the US down to one (or soon to be fewer) domestic manufacturers of vital materials such as dry-film photoresist and copper foil, and equipment like etchers, laser drills and mechanical drills.

Quoting Nakahara again, “My gut feeling is that more than 50% of PCBs produced in the US go to military applications. If you consider major PCB makers in the US, more than 60% of their output go to military applications.”

Engineers are risk-averse, politicians even more so. As we revisit this sad story, what’s their risk tolerance for a broken supply chain, particularly with the nation's defense at stake?

P.S. One person who could be counted on to be shouting from the mountaintops about this looming crisis was Harvey Miller. Sadly, Harvey passed away on Nov. 27, at the age of 102. He was truly a beloved and vital figure for his work, especially in the area of market research on the PVB industry; his passion for searching for understanding what the data are actually saying; and his willingness to slay so many of our industry's sacred cows. We will all miss him.

Mike Buetow is president of PCEA (pcea.net); mike@pcea.net.