The Department of Commerce on Monday said it has selected BAE Systems for $35 million in potential funding to modernize the company’s defense-focused Microelectronics Center (MEC) as part of the Biden administration’s efforts to bolster the U.S. industrial base for advanced computer chips.
The 110,000 square-foot MEC in Nashua, N.H. “is one of the only domestic defense-centric six-inch Gallium Arsenide and Gallium Nitride High Electronic Mobility Transistor wafer foundries,” BAE said, noting that the new funds will allow the facility to increase production to meet Defense Department technology needs that include the F-35 fighter program, and for non-defense industries such as satellite communications, and test and measurement equipment.
The funding for the MEC will come from the 2022 CHIPS and Science Act, which provides billions of dollars to help on-shore semiconductor manufacturing. The Commerce Department said it signed a non-binding preliminary memorandum of terms (PMT) with BAE Systems’ Electronic Systems unit for the potential incentives. Electronics Systems is part of BAE Systems, Inc., the U.S.-based subsidiary of Britain’s BAE Systems plc.
“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,” Commerce Secretary Gina Raimondo said in a statement. “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.”
BAE said the federal funding, combined with its own investments, will be used to purchase new manufacturing tools to lower supply chain risk, increase production capacity and speed production, and increase its technical workforce.
Following the signing of the PMT, the Commerce Department said it will conduct “due diligence” of BAE’s proposed project. Once the final assessment is done, the government “may enter into final award documents with the applicant,” Commerce said. Final award terms may differ from the PMT, it said.
The bipartisan CHIPS and Science Act is aimed at boosting the domestic supply chain of critical components and production of semiconductors used in various technologies and systems to reduce dependencies on production in East Asia, which accounts for 75 percent of global production, the White House said in August 2022 when President Biden was about to sign the bill into law. The U.S. is concerned with semiconductor supply chain vulnerabilities related to China, which hosts significant production capacity.