Hostile governments, particularly China, have strategically invested in their domestic industries to gain unfair leverage over the United States and challenge our global leadership, economically and militarily. The efforts to displace the U.S. manufacturing base are widely seen, but their efforts to dominate AI and displace our technology advantages deserve more attention.
As Secretary of State Marco Rubio said, “Winning the AI race is non-negotiable” for American economic and national security. To beat China, we must address one of our most pressing vulnerabilities — our dependence on adversaries for critical technologies and materials.
Consider semiconductors, the backbone of everything electronic, from military systems to AI development. While the United States once dominated semiconductor manufacturing, production has shifted overseas, particularly to Asia. The global center of innovation got its name “Silicon Valley” from our now-faded dominance in this industry. The U.S. share of global semiconductor manufacturing capacity has fallen from 37 percent in 1990 to 12 percent today, while East Asia now accounts for 75 percent of global production capacity. Should tensions escalate in the region, which has been rising for years, the threats to American supply chains across nearly all industries are significant.
The United States is advancing a range of policies to reshore manufacturing, secure supply chains and develop next-generation critical technology in America. Pentagon Chief Technology Officer Emil Michael recently announced a new strategy to empower small businesses in this global competition with a Critical Technology Initiative (CTI), a partnership between the Small Business Administration and Department of Defense aimed at increasing private investment in domestic small businesses that are innovating and growing critical technology industries.
Under the CTI program, private investment funds apply for an SBIC license focused on critical technology investments. SBA licensed funds provide capital exclusively to small businesses developing technologies essential to supporting semiconductors, artificial intelligence systems, advanced manufacturing and other industries we need. The program amplifies private investment through SBA leverage, enabling investment funds to deploy significantly more capital than would be possible without this partnership.
Unlike large corporations with complex global supply chains and existing foreign dependencies, small businesses can build America-first operations from the ground up. They can scale rapidly, bringing breakthrough innovations to market while driving economic growth and creating jobs.
For example, Bluestone Investment Partners, the first private equity firm licensed through the program, invested in Qualis Corp., an Alabama-based missile defense and space systems company. With that capital, Qualis will expand operations and develop next-generation defense technologies — precisely the growth-focused private capital that can accelerate military innovation beyond traditional contractors.
The CTI program is delivering results and will be even more effective thanks to the Pentagon’s recent announcement that it will narrow its current list of 14 critical technology areas to a more concentrated set. Technologies remaining on the final prioritized list will benefit from more focused resources and faster procurement timelines.
In addition, the bipartisan Investing In All of America, which is moving through Congress, would further enhance the CTI program by lifting the SBIC leverage cap for investments in the designated critical technology areas.
This focused approach will create clearer investment signals and more efficient resource allocation, the conditions where targeted initiatives like the CTI program can deliver maximum effect.
What makes the CTI program unique is the value it provides to American taxpayers. These SBA-licensed investment funds operate with no subsidies while generating state and local revenue through business growth. As SBA Administrator Kelly Loeffler emphasized during her confirmation, “Each taxpayer dollar entrusted to the SBA should have an economic multiplier effect — delivering productive capital to grow manufacturing, strengthen rural communities, create jobs, and develop critical technologies like AI and chips.”
America stands at a crossroads. We can either promote private investment in critical technology companies with the same strategic intensity as our adversaries or watch our technological edge slip away to authoritarians who want America to wither. Through initiatives like the CTI program, we can position the United States as a permanent global technology superpower with a sustained focus on leading the AI revolution, ensuring our prosperity and security for generations to come.
