Analysis & Opinions - The National Interest

The Market Rewards Companies That Prioritize National Security

| Aug. 12, 2022

Companies that demonstrate they are committed to ensuring U.S. national security and securing their data centers and supply lines from geopolitical upheaval will be rewarded by the market.

Massive container ships crisscross the world’s oceans, some traveling west, some traveling east. They are a symbol of the interconnectedness of today’s modern economy—vast, moving monuments to global trade. The ships traveling to the Western world carry products manufactured in Asia, bound for American and European markets. The ships traveling to the East—many of them, at least—carry garbage.

Companies that rely on certain countries in Asia for their supply lines will face continued challenges as geopolitical stresses, let alone global pandemics, cause supply shortages. Beyond causing economic harm, these shortages pose a direct threat to U.S. national security interests.

Nowhere is our overreliance on Asia more apparent than in the global computer chip market. Currently, 75 percent of the world’s chip supply is manufactured in Asia, leaving the United States open to fluctuations in the availability of chips due to economic stressors and geopolitical tensions.

For a quick example of what such disruptions might look like, look no further than the market for new cars. The massive disruption in the chip supply chain has led to a severe shortage in new car inventories and a 14 percent decline in new car sales, causing a severe dent in the American economy.

The free market is stepping up to the plate and addressing this threat. Intel announced in March that it plans to spend $20 billion on two new manufacturing plants in Arizona. The market immediately rewarded Intel with a 3.6 percent bump in its stock price. The market will invariably reward other companies that capitalize on domestic solutions to supply chain threats once these are outlined in corporate impact reports.

For more information on this publication: Belfer Communications Office
For Academic Citation: Dobriansky, Paula J. and Nate Morris.“The Market Rewards Companies That Prioritize National Security.” The National Interest, August 12, 2022.