Biden Administration Awards First CHIPS Act Grant to BAE Systems

The $35 Million Funding Will Quadruple Chip Production for Critical Defense Programs

The Biden-Harris Administration has announced a preliminary agreement to provide approximately $35 million in federal incentives to BAE Systems Electronic Systems under the CHIPS and Science Act. The funding will support the modernization of BAE's Microelectronics Center in Nashua, New Hampshire, quadrupling the production of chips necessary for critical defense programs, including the F-35 fighter jet program.
The CHIPS and Science Act, signed into law by President Biden in August 2022, aims to boost the development and manufacturing of semiconductors in the United States. The Act provides over $52 billion to incentivize the construction of chip factories in the U.S. and lure back a key type of manufacturing that has slipped offshore in recent decades.
The choice of BAE Systems, a defense contractor, for the first grant under the Act underscores the national security focus of the law. The U.S. currently manufactures only about 10% of chips made globally, and the lack of domestic manufacturing capacity is considered a serious national security vulnerability.
President Biden stated that over the coming year, the Department of Commerce will award billions more to make more semiconductors in America and invest in research and development capabilities. The incentives provided by the administration have already led to more than $230 billion in planned investments in semiconductors and electronics.
Government officials stated that the investment in the BAE Systems’ facility will ultimately save money for taxpayers. The money being paid out as the company hits benchmarks will help quadruple the plant’s production capacity, helping to halve the price of making the chips and leading to net savings for the federal agencies buying the chips.