First CHIPS Act award of $35M goes to defense supplier in NH

The chip industry celebrated the first grant under the CHIPS Act of $35 million to a New Hampshire-based military supplier that makes components for F-35 fighter jets. The action comes 16 months after the landmark law was passed on a bipartisan congressional vote and signed Aug. 9, 2022, by President Biden.

The non-binding preliminary memorandum was signed between the US Department of Commerce and BAE Systems to support modernization of BAE’s Microelectronics Center in Nashua, New Hampshire. The project will replace aging tools used in production of mature node chips deemed critical for defense projects including the F-35 fighter jet program, Commerce announced.

“As national security becomes as much about the chips inside of our weapons systems as the weapons themselves, this first CHIPS announcement shows how central semiconductors are to our national defense,” said Commerce Secretary Gina Raimondo in a statement.  “Thanks to President Biden’s Investing in America agenda, we have reached preliminary terms to make a substantial investment in New Hampshire’s expanding defense industrial base, which will help make our country and supply chains more secure and bolster the economy of the Granite State.”

Two large chip-related trade groups representing hundreds of companies praised the first award. Semiconductor Industry Association CEO John Neuffer called the news “an important milestone” while SEMI Americas President commended the “thoughtful approach” Commerce has taken.  SEMI represents companies in the design and manufacturing supply chain and has been focused on making sure that chipmaking equipment, materials and advanced packaging are a part of a “fortified ecosystem” of the chip supply, not only direct chip manufacturing.

Just days ago, Ramondo had warned that not all the applications for funds would be approved, given the large number of interested companies in the semiconductor trade.  Commerce has received more than 550 statements of interest and nearly 150 pre-applications or full applications and concept plans for CHIPS Funds.

Overall, the CHIPS And Science Act provides a 25% tax credit for US facilities that produce chips and equipment and $52 billion in funds for new or updated chip-related manufacturing.  Of that total, $39 billion is designated for grants available to chip manufacturers and equipment and materials suppliers, while more than $11 billion is set aside for federal semiconductor research.

CHIPS Act incentives have sparked substantial private investment by companies, SIA said, with dozens of projects across the US totaling more than $200 billion.  The projects will create more than 40,000 jobs in semiconductor work, SIA said. 

The BAE facility in Nashua is 110,000 square feet in size and accredited by Department of Defense to fabricate chips for DoD applications.  It is considered one of the only domestic defense-centered 6-inch Gallium Arsenide (GaAs) and Gallium Nitride (GaN) high electronic mobility transistor wafer foundries.  The funding will help modernize the facility and “fulfill the promise of the CHIPS and Science Act by increasing our capacity to serve national defense programs,” said Tom Arseneault, CEO of BAE.

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