The Biden administration will give roughly $35 million to a subsidiary of BAE Systems in Nashua, N.H. to revamp an existing facility producing cutting-edge semiconductors for military systems. It’s the first grant doled out under the CHIPS and Science Act, the massive bipartisan law Congress passed last year to help close tech gaps with China.
Commerce Secretary Gina Raimondo told reporters that the planned funding would help strengthen the supply chain for the F-35 fighter jet, which relies on chips made in Nashua by BAE Systems Electronic Systems, a subsidiary of the British defense contractor.
The Commerce Department and the company will unveil an agreement Monday for the funding, which officials said would help BAE Systems make improvements like replacing equipment at the existing facility to expand production of chips.
A senior administration official estimated that the changes would lower the cost of these semiconductors by eventually helping the factory quadruple its production, though the official noted that it would take a “number of years” for the full weight of the changes to be realized.
White House national security adviser Jake Sullivan characterized the announcement as essential for both U.S. and allies’ security, given that the chips are used to produce U.S. military aircraft.
“We do not want to be in a position where critical national security needs are dependent on faulty, foreign supply chains. We do not want to be in a position where another country can cut us off in a moment of crisis,” he told reporters.
President Biden signed the CHIPS and Science Act into law in August 2022. In the months since, the Biden administration has been soliciting applications for large and small projects and finalizing rules for companies that apply for available funding. Raimondo said back in October that she hoped to announce the first awards this fall, but argued it is “more important to get it right than move fast.”
Raimondo said Monday’s announcement, which puts an emphasis on U.S. national security, would pave the way for more announcements “early next year.”
The goal of the law is for the U.S. to boost domestic semiconductor production and become less reliant on foreign suppliers for a critical technology used in everything from smartphones to weapons to artificial intelligence. The administration has also billed it as an important piece of U.S. competition with China, which has derided the law as economic “coercion.”
The Commerce Department will soon be fielding grant applications for research and development in advanced packaging, a key part of the semiconductor supply chain that stitches chips together to make more complex, faster, cheaper devices, Semafor reported.