The Albanese government should invest $1.5 billion to establish a domestic industry to manufacture semiconductors, rather than continue to rely on increasingly risky overseas providers, principally Taiwan, Australia’s pre-eminent national security think-tank has recommended.

In a new report, the Australian Strategic Policy Institute said the COVID-19 pandemic, as well as coercive trade practices by China, demonstrated that Australia could no longer rely on free-trade principles for the supply of such a crucial product.