US boosts semiconductor production with $35M award to BAE Systems

The U.S. Commerce Department announced a $35 million award to BAE Systems to enhance domestic semiconductor production, according to a recent Reuters report. This funding, part of the $52.7 billion “Chips for America” program, aims to quadruple chip production in New Hampshire, crucial for F-35 fighter jets and commercial satellites.

The investment in BAE Systems Electronic Systems, a unit of BAE Systems, is focused on modernizing the Nashua, New Hampshire Microelectronics Center. This initiative marks the first allocation from the substantial “Chips for America” program, established by Congress in August 2022 to reduce reliance on Asian semiconductor production.

President Joe Biden emphasized the strategic importance of this move, stating that “over the coming year, the Department of Commerce will award billions more to make more semiconductors in America.” This step is not only about boosting production but also about enhancing research and development in the semiconductor sector.

The Pentagon’s commitment to the F-35 program, with plans to spend $1.7 trillion including the purchase of 2,500 planes in the coming decades, underscores the critical need for these chips. White House National Security Adviser Jake Sullivan highlighted the importance of these semiconductors for F-15s and F-35s, stressing the need for the U.S. to avoid reliance on other countries in times of crisis.

The Commerce Department’s recent actions to prevent chip subsidies from benefiting China and to halt shipments of advanced artificial intelligence chips to China further illustrate the national security implications of semiconductor production.

Industry-wide implications and future prospects

Major companies like Intel, Micron, and GlobalFoundries are among those seeking significant funding from the chip program. Commerce Secretary Gina Raimondo anticipates that this initial award to BAE Systems is just the beginning, with more announcements expected to accelerate in the first half of the next year.

The New Hampshire project is expected to halve the future cost of chips, more than compensating for the $35 million investment. These chips are integral for electronic warfare systems in battle environments, particularly for F-35s manufactured by Lockheed Martin.

BAE Systems CEO Tom Arseneault expressed that the funding would enhance their microelectronics capabilities, crucial for defense and aerospace customers. This first chip award underlines the program’s focus on national security and the goal of establishing a robust, long-lasting domestic semiconductor manufacturing industry.

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