WASHINGTON - The Biden administration has announced the first of its planned federal investments in computer chip production. On Monday, it confirmed that it would allocate $35 million to BAE Systems to increase production at a factory in New Hampshire. The factory manufactures chips for military aircraft, including F-15 and F-35 jets.
This initial allocation of incentives comes from the bipartisan CHIPS and Science Act, which was passed last year. The act provides over $52 billion to boost the development and manufacturing of semiconductors in the United States.
The decision to choose a military contractor instead of a conventional chip manufacturer highlights the national-security focus of the law. Advanced chips have become increasingly vital in modern weapons systems, with their capabilities potentially influencing the outcome of conflicts.
Commerce Secretary Gina Raimondo emphasized the need to diversify the supply chain for advanced technologies to safeguard national security. She referred to these investments as a "once-in-a-generation opportunity to advance our national and economic security and create a thriving, long-lasting domestic semiconductor-manufacturing industry."
President Joe Biden signed this legislation into law in August 2022 due to concerns that a military attack on Taiwan could disrupt the global supply of advanced computer chips, potentially leading to a recession in the United States.
The recent coronavirus pandemic exposed the vulnerability of computer-chip supplies as a worldwide shortage impacted U.S. auto production and caused prices to rise at the beginning of Biden's presidency.
Biden Announces Billions in Funding for Semiconductor Production
President Biden has announced that the Department of Commerce will be providing billions of dollars in funding to boost semiconductor production in the United States. This investment aims to reinforce America's position as a leader in new technologies.
According to Biden, the incentives already implemented by his administration have resulted in over $230 billion in planned investments in the semiconductor and electronics industry. The president has personally visited an Intel factory in Ohio, a Taiwan Semiconductor Manufacturing Co. plant in Arizona, and highlighted investments by IBM in New York. Biden views these financial commitments as a cornerstone of his economic strategy leading up to the 2024 elections.
The investment in BAE Systems' facility is expected to result in significant cost savings for taxpayers. By meeting specific performance targets, the company will receive financial assistance to quadruple the plant's production capacity. This increase in scale will lead to a reduction in chip manufacturing costs, resulting in net savings for federal agencies purchasing these chips.
In addition to benefiting NATO and Asian allies, expanding the domestic manufacturing base is crucial for national security. White House national security adviser, Jake Sullivan, emphasized the necessity of reducing dependency on foreign supply chains to protect critical national security needs. The goal is to avoid vulnerability to potential disruptions from other countries during times of crisis.
President Biden's commitment to increasing funding for semiconductor production underscores the administration's dedication to strengthening American technological capabilities and securing the country's economic future.
