Commerce announces more semiconductor funding for military aircraft, commercial satellites

WASHINGTON — In an effort to bolster domestic manufacturing of chips for national security and the space industry, the Department of Commerce announced it is awarding BAE Systems Inc. and Rocket Lab a CHIPS Incentive Award worth up to a combined $59.4 million. The funding comes from the Biden administration’s CHIPS and Science Act. 

BAE Systems Inc., the US subsidiary of British company BAE Systems, will receive $35.5 million in direct funding to build chips used for military jets and commercial satellites, according to a press release from the Department of Commerce. 

Rocket Lab, the parent company of space power provider SolAero Technologies Corp., will receive up to $23.9 million for space-grade solar cells — space devices used to convert light to electricity which help operate missile awareness systems and “world-leading science missions,” per the Monday release.

The award announcements come after BAE Systems Inc. received a preliminary agreement for the funding in December 2023 and Rocket Lab received a preliminary agreement this past June.

“From satellites in space to defense systems on the ground, our most advanced defense and commercial technology rely on mature-node and compound semiconductors to operate,” Laurie Locascio, under secretary of Commerce for Standards and Technology and the director of the National Institute of Standards and Technology, said in the release. 

“By finalizing these awards, we are strengthening America’s domestic semiconductor supply chain resilience and broadening our manufacturing capabilities.” 

The money awarded to BAE Systems Inc. is specifically going to BAE Systems Electronics, a unit within the company responsible for producing commercial and defense electronics for flight and engine control, electronic warfare, surveillance, geospatial intelligence and power and energy management. It will support the company’s microelectronics center in New Hampshire, which was founded by the Department of Defense last year. 

With this funding, the company will increase its production capacity fourfold for Monolithic Microwave Integrated Circuit chips which are used to operate military aircraft and commercial satellite systems, per the Department of Commerce. 

“The investment will also cut the company’s modernization timeline in half, bolstering the facility’s ability to serve mission-critical defense programs,” the release added. 

Rocket Lab will use its funding to “create a more robust and resilient supply” of space-grade solar cells. It is one of two companies in the US that specializes in producing these types of semiconductors. 

“The Department’s investment will support the modernization and expansion of Rocket Lab’s facility in Albuquerque, New Mexico, which will increase the company’s compound semiconductor production by 50% within the next three years — helping to meet the growing national security and commercial demand for these solar cells in the United States,” the release said. 

Intel Corporation, another chip building company, was also awarded $7.87 billion from the Department of Commerce on Tuesday. This is less than the $8.5 billion outlined in the preliminary agreement, which was announced in March. 

“The award will directly support Intel’s expected U.S. investment of nearly $90 billion by the end of the decade, which is part of the company’s overall $100+ billion expansion plan,” Tuesday’s release said. 

These recent awards from the Department of Commerce appear to be a last-ditch effort to finalize investments under the Biden administration’s CHIPS Act before president-elect Donald Trump takes office in January. Trump has recently criticized the program over the last several weeks.