The Biden administration allocates $35 million to BAE Systems in New Hampshire as the first disbursement from the CHIPS and Science Act, reflecting national security concerns over advanced chip production.
CHIPS Law and Incentives
The Biden administration announced the allocation of $35 million to BAE Systems in New Hampshire for increasing computer chip production in military aircraft. This marks the first allotment of incentives from the CHIPS and Science Act, a bipartisan law passed last year providing over $52 billion to enhance semiconductor development and manufacturing within the United States.
National Security Emphasis
The decision to allocate funds to a military contractor rather than a conventional chip manufacturer underscores the focus of the CHIPS law on national security. With advanced chips playing a critical role in modern weapons systems, the law aims to mitigate potential vulnerabilities in the supply chain and bolster domestic semiconductor manufacturing.
Rationale and Background
President Joe Biden signed the incentives into law in August 2022, driven by concerns about the global semiconductor supply chain’s susceptibility to disruptions, particularly in the event of a military conflict involving Taiwan. The ongoing worldwide chip shortage, which impacted U.S. auto production early in Biden’s presidency, further underscored the need for strategic investments in semiconductor production.
Economic and National Security Impacts
Commerce Secretary Gina Raimondo emphasized the significance of these investments in advancing national security and economic interests, aiming to establish a robust domestic semiconductor manufacturing industry. The administration’s initiatives have already prompted a substantial planned investment of over $230 billion in semiconductors and electronics, demonstrating their potential economic impact.
Strategic Investments and Political Messaging
President Biden has actively promoted these investments in semiconductor manufacturing, leveraging them as a key component of his economic agenda and touting them as a means of invigorating the U.S. economy. Notable visits to semiconductor facilities and strategic partnerships have been incorporated into the administration’s broader policy narrative, particularly in the build-up to the 2024 elections.
Future Prospects and International Partnerships
The Department of Commerce plans to disburse billions more over the next year to expand domestic semiconductor production and bolster research and development in cutting-edge technologies. Additionally, the investment in BAE Systems’ facility is projected to yield cost savings for federal agencies purchasing the chips, as well as enhance production capacity, benefitting both NATO allies and partners in Asia.
Significance of Expanded Manufacturing Base
The emphasis on the expanded manufacturing base is underscored by White House national security adviser Jake Sullivan, who stressed that protecting critical national security needs necessitates reducing dependence on foreign supply chains. This perspective aligns with the broader goal of ensuring a stable and resilient semiconductor supply for essential national defense capabilities.