Military spending on semiconductors is relatively small, given the popular view about overspending on development and procurement. On the other hand, military procurement departments tend to be conservative in their use of new technology, often waiting several years before replacing mechanical devices with electronic ones or adopting new components over older ones. Ostensibly, this avoids teething problems with raw, untried technologies. In fact, it's sometimes counterproductive because older parts might be nearly obsolete or have undesirable features that are improved in newer chips. Since the 1980s, the U.S. military has made a concerted effort to avoid custom, one-off, and expensive "military specials" and stick to commercial, off-the-shelf (COTS) components wherever possible.
What semiconductors the military does buy can be excruciatingly expensive. Depending on the intended application, chips might have to undergo rigorous testing to prove their immunity to extremely high and low temperatures, dampness, harsh vibration, radio interference, and even nuclear radiation. So-called "rad hard" chips must be able to operate in space (for satellites) or in battlefield conditions (for weapons). Military-grade chips must be housed in special ceramic packages rather than the traditional, low-cost plastic. Semiconductor vendors supplying the military must often guarantee that the same exact parts, with no updates, modifications, or changes whatsoever, will remain in production for many years. In this fast-moving industry, that requirement alone drives up costs considerably.