First Biden Admin Chips Grant Goes To Military Contractor For F-35 Program

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Micaela Burrow Investigative Reporter, Defense
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The Biden administration awarded the first national security-driven handout to build semiconductors to BAE Systems on Monday for use in the advanced F-35 fighter jet program.

Monday’s announcement totals $35 million and will quadruple BAE’s chip manufacturing capacity, ensuring a reliable supply of electronics considered critical to U.S. and allies’ defense, The New York Times reported, citing administration officials. Commerce Secretary Gina Raimondo said Sunday the decision to select a military contractor with headquarters in the United Kingdom as the recipient of the first award, rather than a commercial manufacturer, emphasized the administration’s focus on national security.

“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,” she said, according to the NYT. (RELATED: Navy Shipbuilding Plan Would Reduce Fleet Size During Time That China Might Invade Taiwan)

The chips covered under the grant facilitate electronic warfare and aircraft-to-aircraft communications for U.S. F-35 and F-15 fighter jets and are already produced at BAE System’s Nashua, New Hampshire, factory, according to the NYT and the White House. The money will help upgrade facilities and improve the machinery’s reliability, awarded to BAE in tranches over time.

“When we talk about supply chain resilience, this investment is about shoring up that resilience and ensuring that the chips are delivered when our military needs them,” White House National Security Adviser Jake Sullivan said, according to the NYT.

Other awards are anticipated in the coming months to larger companies like Intel, Samsung or the Taiwan Semiconductor Manufacturing Company as the Biden administration dolls out $39 billion authorized under the 2022 CHIPS and Science Act, the NYT reported.

The CHIPS Act is meant to incentivize companies to ramp up semiconductor production on U.S. soil, boosting the domestic manufacturing economy and ensuring America’s adversaries do not gain a monopoly on critical components.

At least some of the chips that go into products for U.S. military originate in China; even some defense firms don’t have a clear understanding of where the semiconductors used for military applications come from, according to the NYT.

The U.S. manufactures just 10% of the semiconductors produced globally, although American products still tend to be the most advanced, according to the NYT. U.S. firms rely on U.S. partners in Asia, mainly Taiwan and South Korea, to supply the bulk of its domestic needs.

Chip processors are integral components in high-demand electronics like computers and cars, but also in fighter jets, satellites, missiles and other weapons or military systems, prompting officials to view a lack of domestic production as a potential national security hazard. A pandemic-induced chip shortage and rising tensions in Asia have tamped down the U.S. economy, shuttering factories and disrupting supply lines for defense contractors, highlighting the degree to which the U.S. is dependent on vulnerable Asian partners.

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