RUTHFULLY YOURS

The U.S. pioneered the technology that made today’s advanced weapon systems possible. But America’s competitive advantage in the digital economy is eroding at an alarming pace, along with its domestic high-tech manufacturing capacity. The majority of electronic systems first invented in the U.S. now are designed and made overseas, mainly in Asia. With few and dwindling exceptions, the U.S. no longer makes things like flat-panel displays, memory devices, light-emitting devices, lasers, imaging chips for digital cameras, and computer system packaging software.

As the manufacture of these component technologies has migrated offshore, so have many key systems suppliers. Intel is the only remaining U.S. company capable of fabricating high-density, high-performance computer chips in America. International Business Strategies estimates that investors are pouring $50 billion a year into advanced chip production facilities in Asia, more than 10 times the level of domestic spending. A state-of-the-art chip-fabrication plant can cost $20 billion to build and must be continuously upgraded.

The national-security implications of this industrial migration are dire. Without a domestic capability in critical electronic technologies, the U.S. may find itself unable to translate innovation into effective weaponry. Overseas supply chains are inherently insecure. Unless the manufacture of critical technology remains under domestic control, American systems are vulnerable to espionage and sabotage.

To be sure, critical defense technologies can be manufactured much more cheaply in Asia than they can in the U.S. But those cost savings come at the expense of American security. China, Japan and South Korea subsidize capital investment to encourage manufacturing facilities to move to their economies. If the U.S. loses all of its most advanced chip-fabrication capacity, it will be like a country without a steel industry in the age of artillery—at the mercy of its enemies.

America’s urgent national-security needs require a reversal of the great migration of manufacturing capacity. That would be costly and in some cases disruptive, and it requires bold and decisive steps:

• Domestic sourcing of the most sensitive defense technologies, which in turn necessitates returning important parts of the supply chain to domestic industry. American industry will require tax breaks and subsidies to do so in some cases.

• Ensuring that skilled professionals and workers are available to fill these high-tech jobs will require government incentives for science, technology and math education comparable to the Eisenhower administration’s response to the 1957 launch of Sputnik, as well as private-public partnerships for apprenticeship programs in manufacturing.

• Tax credits for research and development will be necessary to encourage U.S. corporations to re-establish in-house laboratories like the ones that produced digital-age breakthroughs.

• More direct federal funding of basic research and development. Such spending by the Defense Advanced Research Products Agency, National Aeronautic and Space Administration, and other government agencies reached 1.25% of gross domestic product in 1977 but has fallen to only 0.7% of GDP today. This must be restored, though it won’t help if America lacks the facilities to turn ideas into robust technology.

Bringing high-tech manufacturing back to American shores is an expensive proposition. Part of the cost can be defrayed by reducing funding for aging weapons systems and changing priorities. In the long term, defense R&D will generate profitable civilian spinoffs. But national security is the overriding priority.

Mr. Kressel is a technologist, inventor and private equity investor. Mr. Goldman, a columnist for the Asia Times, formerly headed research groups at Wall Street firms.