U.S. weapons stockpile threatened by chip shortage amid Ukraine war

Supply chain issues and a shortage of microchips due to the ongoing war in Ukraine may threaten the U.S. weapons stockpile.

Several large U.S. defense contractors, including Raytheon, Lockheed Martin, Boeing and Northrop Grumman, warned on Thursday that a shortage of parts and chips could continue over the next two years, Financial Times reported.

James D. Taiclet, president, chair and CEO of Lockheed Martin, said during a recent earnings call that the company “continue[s] to anticipate growth over the long-term, but with residual pandemic impacts and supply chain challenges continuing, we now expect to return to growth in 2024, with 2023 sales being approximately equal to our 2022 outlook.”

The remarks come amid the war that has continued in Ukraine since Russia first launched its invasion on February 24. The U.S. and other Western allies have continued to supply Ukraine with military assistance, including weapons such as National Advanced Surface-to-Air Missile System (NASAMS), which are developed by Raytheon, as well as High Mobility Artillery Rocket Systems (HIMARS), which are developed by Lockheed Martin.

Kathy Warden, a top executive at Northrop Grumman, said during an earnings call that she doesn’t expect supply chain issues “to get significantly better,” according to the Times. Northrop Grumman makes equipment for the U.S. military‘s B-2 Spirit, otherwise known as the Stealth Bomber.

Frank St. John, COO of Lockheed Martin, said to the Times that since some of their weapons use dozens of chips, the shortage has led to increased development times for new technology.

Greg Hayes, CEO and chair of Raytheon, also spoke about supply chain issues during an earnings call this month and said the company had “overcome some significant headwinds in 2022, from transitioning out of Russia to record inflation and a strained supply chain.”

“We’re also seeing significant global demand for advanced air defense systems,” Hayes continued. “Especially in Eastern Europe, as the Russian and Ukraine conflict, unfortunately, continues. This includes two of our NASAMS system…that will help protect the people of Ukraine.”

Treasury Secretary Janet L. Yellen, while speaking at the Securities Industry and Financial Markets Association’s annual meeting, touched on the shortage of microchips in the U.S. and supply chain issues due to the war in Ukraine.

“The pandemic and Putin’s terrible war in Ukraine have taught us the costs of supply-chain vulnerabilities.” Yellen said. “We’ve seen empty shelves and volatile prices at the pump—as well as factories idled by the shortage of microchips. Three decades ago, the United States produced over a third of all microchips. Now we’re down to just 12 percent.”

She added, “By one estimate, the recent chip shortage resulted in $240 billion in lost U.S. economic output last year.”

President Joe Biden in September signed the CHIPS and Science Act of 2022, which the White House said will “strengthen American manufacturing, supply chains, and national security, and invest in research and development, science and technology, and the workforce of the future to keep the United States the leader in the industries of tomorrow, including nanotechnology, clean energy, quantum computing, and artificial intelligence.”

Dr. Robert Handfield, a professor of supply chain management at North Carolina State University, told Newsweek in April that supply chain issues could persist for the next few years due to the Russia-Ukraine war.

“When you have these major disruptions like the Russia-Ukraine war and the sanctions, those things also take a long time to work themselves out. They don’t work themselves out overnight,” he said.

Newsweek was directed to the earnings call after reaching out to Lockheed Martin for comment. Newsweek also reached out to Raytheon, Northrop Grumman and the Department of Defense for comment.