On Monday, the Biden administration announced that it would give $35 million to BAE Systems so that the factory in New Hampshire, which produces computer chips for F-15 and F-35 jets and other military aircraft, could ramp up production.
The bipartisan CHIPS and Science Act of last year, which provides more than $52 billion to support semiconductor development and manufacturing in the US, is being used for this first round of incentive payments.
The focus that the Commerce Department placed on national security in selecting a military contractor over a traditional chip manufacturer is evident in the increasing reliance of weapons systems on sophisticated chips that have the potential to be pivotal in both averting and waging war.
In August 2022, President Joe Biden signed the incentives into law, in part due to worries that a military takeover of Taiwan might deny the world access to cutting-edge computer chips and send the United States into a deep recession.
The investments are a “once in a generation opportunity to advance our national and economic security and prosperity,” according to Commerce Secretary Gina Raimondo, who stated, “We can’t gamble with our national security by depending solely on one part of the world or even one country for crucial advanced technologies.”
Around the beginning of Biden’s presidency, the coronavirus pandemic exposed the vulnerability of computer chip supplies by causing a global shortage that reduced U.S. auto production and raised prices.
In a statement, Biden stated that over $230 billion in planned investments in semiconductors and electronics have already resulted from the incentives his administration is offering.
In addition to visiting a new Taiwan Semiconductor Manufacturing Co. facility in Arizona and an upcoming Intel factory in Ohio, Biden was also praised for IBM’s investments in New York. Ahead of the 2024 elections, the president has included these financial pledges in his pitch to voters, claiming that his policies have revitalized the American economy.
“To maintain America’s leadership in emerging technologies, the Department of Commerce will allocate billions more in funding to increase semiconductor production in the country and enhance research and development resources,” Biden stated in a statement.
Taxpayers will ultimately save money thanks to the investment made in the BAE Systems facility, according to government officials. The funds that the company will pay out as it meets benchmarks will help to quadruple the plant’s production capacity, which will lower the cost of producing the chips and result in net savings for the federal agencies that purchase them.
The augmented capacity will also benefit NATO allies and partners in Asia, according to White House national security adviser Jake Sullivan. However, he emphasized that protecting the industry required a larger manufacturing base.
