The Commerce Department said today it is closing in on its first agreement to provide funding under the CHIPS and Science Act, which was approved by Congress last year to make available up to $52 billion of funding to incentivize semiconductor makers to establish new manufacturing operations in the United States.
If all goes as planned, the inaugural $35 million of funding would go to BAE Systems Electronic Systems to support the modernization of its Microelectronics Center in Nashua, N.H. The money would allow the company to quadruple its output of chips necessary for defense programs, including for the F-35 fighter jet program.
The Commerce Department and BAE currently have in place a “non-binding preliminary memorandum of terms (PMT)” for the $35 million of CHIPS and Science Act funding, the agency said.
The next step for the Commerce Department after signing a PMT is to conduct due diligence on the proposed project, followed by negotiation of a final award agreement.
The Commerce Department said it has received more than 550 statements of interest and nearly 150 pre-applications, full applications, and concept plans for CHIPS incentives thus far, and is “continuing to conduct rigorous evaluation of applications to determine which projects will advance U.S. national economic security, attract more private capital, and deliver other economic benefits to the country.”
“Today’s announcement is the first step of many to come,” said President Biden in a statement today. “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, strengthen our national security, and create good-paying jobs.”
“We have been clear since day one that the CHIPS for America Program is about advancing our national security and strengthening domestic supply chains, all while creating good jobs supporting long-term U.S. economic growth,” said Commerce Secretary Gina Raimondo. “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.”
The preliminary agreement with BAE “demonstrates our vision for the CHIPS for America program to ensure that we have a robust production capacity for the chips vital to U.S. national security,” said Dr. Laurie Locascio, who is Under Secretary of Commerce for Standards and Technology and head of the National Institute of Standards and Technology (NIST).
She emphasized that the preliminary agreement with BAE marks “the first of many announcements” for CHIPS and Science Act funding “that will enhance our nation’s manufacturing capacity and create new jobs and opportunities in communities across the country.”
“This funding will help modernize our Microelectronics Center and fulfill the promise of the CHIPS and Science Act by increasing our capacity to serve national defense programs, growing our technical workforce, and helping to strengthen the nation’s onshore supply chain,” said Tom Arseneault, CEO of BAE Systems.
Today’s announcement also drew praise from Reps. Doris Matsui, D-Calif., and Michael McCaul, R-Texas, who co-authored legislation that led to the CHIPS and Science Act approved last year.
“We introduced the original CHIPS Act three and a half years ago to solve an urgent national security threat,” the members of Congress said.
“Our military depends on a secure and predictable supply of semiconductors to build its most vital and sensitive equipment,” they said. “Today’s announcement shows the CHIPS Act is working as intended – enhancing domestic manufacturing capacity and building a resilient, diversified supply chain; two national security imperatives.”
