The announcement is the first from the US$52.7 billion “Chips for America” semiconductor manufacturing and research subsidy programme approved by Congress in August 2022 to ramp up US chips production amid concerns about reliance on Asia.
President Joe Biden said in a statement “over the coming year, the department of commerce will award billions more to make more semiconductors in America” and boost research and development.
The department said it signed a non-binding preliminary memorandum of terms to provide US$35 million to BAE Systems Electronic Systems, a unit of BAE Systems, to support modernising the company’s Nashua, New Hampshire microelectronics centre.
The Pentagon plans to spend US$1.7 trillion on the F-35 programme including buying 2,500 planes in the coming decades. The White House’s national security advisor Jake Sullivan said the chips were critical to F-15s and F-35s.
“We do not want to be in a position where another country can cut us off in a moment of crisis,” Sullivan told reporters.
The commerce department in September issued rules to prevent chip subsidies from being used by China and moved in October to halt shipments to China of advanced artificial intelligence chips.
Companies like Intel, Micron, and GlobalFoundries are among those seeking significant funding from the chip programme.
Commerce secretary Gina Raimondo said the BAE award “is the first of many announcements. We expect the pace of these announcements to accelerate in the first half of next year.”
The New Hampshire project will reduce the price of future chips by half, more than offsetting the US$35 million cost, an administration official said.
The chips are used for electronic warfare systems in battle environments for F-35s built by Lockheed Martin.
The first chip award underscores the programme “is about national security,” Raimondo said, adding the aim is to create “a thriving long-lasting domestic semiconductor manufacturing industry.”
BAE Systems’ chief executive officer Tom Arseneault said in a statement funding would boost its microelectronics which are key to “defence and aerospace customers – from next-generation aircraft and satellites to military-grade GPS and secure communications.”