First CHIPS Act grant nets $35 million for BAE

The Biden administration said Monday it will grant $35 million to BAE Systems to expand operations at the British company’s New Hampshire plant, which is pivotal in producing computer chips for military aircraft.

This funding initiative marks the inaugural allocation from the CHIPS and Science Act, a bipartisan effort passed last year. The Act commits more than $52 billion towards advancing the domestic development and manufacturing of semiconductors in the United States.

“As national security becomes as much about the chips inside of our weapons systems as the weapons systems themselves, this first CHIPS announcement shows how central semiconductors are to our national defense,” Secretary of Commerce Gina Raimondo said in a news release. “Thanks to President Biden’s Investing in America agenda, we have reached preliminary terms to make a substantial investment in New Hampshire’s expanding defense industrial base, which will help make our country and supply chains more secure and bolster the economy of the Granite State.”

The BAE facility, spanning 110,000 square feet, has been accredited by the Department of Defense for manufacturing chips specifically for DoD applications. This facility is unique in the United States, being one of the few that focuses on defense and specializes in producing 6-inch Gallium Arsenide (GaAs) and Gallium Nitride (GaN) high electronic mobility transistor wafers. BAE said the funding allocated will be used to modernize the facility and enhance its capacity to support national defense programs.

According to data from the White House, the United States’ contribution to global semiconductor production has decreased from 37% to 12% over the last three decades. Concurrently, China’s involvement in chip manufacturing has increased by nearly 50% in the past two years, now accounting for around 18% of global supply.

Motivated by the CHIPS Act, major semiconductor companies such as Intel, Samsung, Micron, TSMC, and Texas Instruments have announced plans to establish new chip fabrication facilities in the US. Qualcomm, in collaboration with GlobalFoundries, has also committed to investing $4.2 billion to double the chip production capacity at its Malta, NY plant.

President Biden noted that the incentives offered by his administration have already resulted in over $230 billion in projected investments in the semiconductor and electronics sectors.

“Over the coming year, the Department of Commerce will award billions more to make more semiconductors in America, invest in research and development capabilities to keep America at the forefront of new technologies,” Biden said in a statement.

Micron has announced plans to invest as much as $100 billion over the next two decades to expand its facilities in the United States. Meanwhile, TSMC has committed to a $40 billion investment in its US chip production plant, marking the largest foreign investment in Arizona and one of the most significant in the history of the United States.

Wayne Rickard, the CEO of Terecircuits, a company that has developed a semiconductor manufacturing process, said that governments need to do more to support chip-making industries.

“And companies are realizing that they also need to think very carefully about supply chain disruption to protect their own markets, and that government has a role to play there,” he added. “So I think this is an important inflection point. And it’s also brought a lot of awareness of how important semiconductors are to the general public.”