The Missing Brains: Australia’s Dependence on Foreign Chips
Every system we rely on runs on foreign chips. When we lose control of technology, we lose control of our future.
Part 2 of 3 — The Unmaking of a Nation Series
In the old economy, a nation’s strength was measured in steel, ships and oil. In the new one, it’s measured in semiconductors — the chips that power everything from tractors and tanks to hospitals and homes.
They are the invisible nervous system of modern life. Every grid, machine and satellite depends on them. Yet in 2025, Australia, a country that once built cars and aircraft, cannot make a single advanced chip.
We mine the materials that go into them. We use them in every industry, but we don’t produce them.
The Great Dependency
There’s a phrase used in defence circles: hardware is sovereignty. It sounds dramatic, but it’s true.
You can’t secure borders, run hospitals or keep the lights on without hardware you control. Software might be clever, but it doesn’t exist without silicon and almost all of that silicon comes from somewhere else.
Around 90 per cent of the world’s advanced chips are made in Taiwan and another nine per cent come from South Korea. The rest are scattered in small volumes across the U.S., China and a few others. Australia’s share? Essentially zero.
We design small, specialised chips for defence and operate a few compound-semiconductor labs like BluGlass and Silanna, but there’s no high-volume fabrication plant on Australian soil. None.
If those supply lines were cut — by war, blockade or shortage — Australia would feel it within weeks. Power grids would falter, communications would stall, hospitals and logistics would grind down. Even our military would be affected, because many imported systems can’t be repaired locally.
The Silent Weakness
We talk endlessly about being a “smart economy,” yet most of what we call innovation sits on top of other people’s hardware.
Our software runs on chips we don’t make. Our medical devices depend on sensors we import. Even renewables — solar inverters, battery controllers, smart meters — rely on microelectronics built in Asia.
When COVID shut down factories in China and Taiwan, chip deliveries blew out to more than a year. Car plants stopped. Local producers of audio gear and farm equipment had to scale back because parts simply weren’t available.
That was a glimpse of what dependency looks like.
The New Arms Race
The rest of the world learned that lesson fast.
The U.S., Japan and the EU are now pouring hundreds of billions into local chipmaking. Even India is investing heavily. They’ve all realised that semiconductors are the new oil — the thing you must control if you want to stay independent.
Everyone except us.
Australia talks about “sovereign capability,” but the money never matches the rhetoric. We have research strengths in materials science, quantum computing and photonics but no industrial policy to turn that into production. We’re brilliant in the lab but absent on the factory floor.
Why It Matters
This isn’t about competing with Taiwan or the U.S. It’s about having enough domestic capacity to function when the world tilts.
Think of it like food security. We don’t need to grow every crop, but we need enough to feed ourselves if trade stops. The same principle applies to technology.
If we can’t make or repair the chips that run our systems, we don’t really own those systems. We just rent them.
Who controls the chips controls the data — and who controls the data controls the decisions.
What We Could Do
Australia can’t match the superpowers, but we can build strategic capability.
We already have the raw materials — silicon, gallium, rare earths — and strong research institutions. What we lack is coordination.
A national strategy could link universities, defence and private investment to develop mid-range chip production — the kind used in vehicles, agriculture and energy.
We could partner with trusted allies such as Japan, South Korea and the U.S. We could train engineers instead of importing them. We could treat technology as infrastructure, not as a luxury.
The truth is simple: if we can’t manufacture or maintain the technology that runs our systems, then those systems are not truly under our control.
The Question That Follows
In the twentieth century, a country without steel couldn’t build its own future.
In the twenty-first, a country without chips can’t even maintain it.
Our prosperity still lies in the ground, but our future lies in silicon. The nations that control it will shape the century. Those that don’t will simply follow.
That brings us to the next question — and the third part of this series: Powering a Nation: Why Low-Cost Energy Is the Key to Rebuilding Industry
How do you power the industries you want to rebuild?
The ability to make things depends on something even more fundamental than silicon — energy.