U.S. has awarded semiconductor chip contracts to BAE Systems and Rocket Lab

The U.S. Commerce Department announced on Monday that it is in the process of finalizing nearly $60 million in government subsidies for BAE Systems and Rocket Lab. These funds will support BAE Systems in the production of semiconductor chips essential for jets and satellites, while Rocket Lab will utilize the funds to manufacture compound semiconductors for satellites and spacecraft.

Specifically, the department is allocating $35.5 million to BAE Systems to significantly increase production capacity in New Hampshire for critical semiconductor chips utilized in F-35 fighter jets and commercial satellites. This investment is expected to reduce the company’s planned modernization timeline by 50%, according to the Commerce Department.

The Pentagon has earmarked $1.7 trillion for the F-35 program, which includes the acquisition of 2,500 aircraft over the next several decades. These semiconductor chips are vital for the operation of both F-15 and F-35 aircraft.

Additionally, the Commerce Department is finalizing a $23.9 million subsidy for Rocket Lab’s subsidiary, SolAero Technologies Corp. This funding is projected to enhance the company’s solar cell production by 50% within the next three years.

Founded in 2006 by New Zealander Peter Beck, Rocket Lab is one of two U.S. companies that specialize in the development of highly efficient, radiation-resistant compound semiconductors known as space-grade solar cells.

The solar cells produced by the company play a crucial role in supporting various U.S. space initiatives, such as missile detection systems, the James Webb Space Telescope, NASA’s Artemis missions to the Moon, the Ingenuity Mars Helicopter, and the Mars Insight Lander.

This month, Commerce Secretary Gina Raimondo informed Reuters that the department is working diligently to finalize as many agreements as possible under the Biden administration’s $52.7 billion “Chips and Science” initiative before President-elect Donald Trump, who has expressed criticism of the program, assumes office on January 20.

Earlier this month, the Commerce Department announced its first significant award, providing a $6.6 billion subsidy to the U.S. branch of Taiwan Semiconductor Manufacturing Co.

Additionally, last week, Commerce confirmed a $1.5 billion subsidy for GlobalFoundries to enhance semiconductor manufacturing capabilities in Malta, New York, and Vermont.