The Biden administration announced that a computer chip plant in New Hampshire would be the first to receive funding from the CHIPS law.

The Biden administration announced on Monday that it will give BAE Systems $35 million to boost production at a New Hampshire facility that manufactures computer chips for military aircraft, such as F-15 and F-35 jets.

The initial distribution of rewards from the bipartisan CHIPS and Science Act, passed last year, allocates over $52 billion to enhance the growth and production of semiconductors in the US.

The decision made by the Commerce Department to select a military contractor over a traditional chip maker highlights the emphasis on national security within the legislation. With the increasing reliance on sophisticated chips in weapons systems, they could play a crucial role in both deterring and engaging in conflicts.

In August 2022, President Joe Biden enacted the incentives in response to fears that a potential military strike on Taiwan could lead to a shortage of high-tech computer chips and trigger a recession in the United States.

According to Gina Raimondo, the Commerce Secretary, relying on a single region or country for vital advanced technologies puts our national security at risk. She believes that investing in these technologies is a rare chance to enhance our economic and national security, as well as establish a successful domestic semiconductor manufacturing industry.

The COVID-19 crisis exposed the vulnerability of computer chip availability, causing a global shortage that impacted American auto manufacturing and resulted in increased prices at the beginning of President Biden’s term.

According to Biden’s statement, the incentives offered by his administration have resulted in over $230 billion in planned investments in semiconductors and electronics.

Biden has recently visited an Intel factory in Ohio and a new plant owned by Taiwan Semiconductor Manufacturing Co. in Arizona. He also highlighted investments made by IBM in New York. The president has been using these financial commitments as a selling point to voters for the upcoming 2024 elections, claiming that his policies have boosted the American economy.

“In the upcoming year, the Department of Commerce plans to allocate billions more towards increasing semiconductor production in the United States and investing in research and development capabilities to maintain America’s position as a leader in emerging technologies,” stated Biden.

According to government officials, investing in the BAE Systems’ facility will result in cost savings for taxpayers. By meeting certain milestones, the company will receive payments that will contribute to a fourfold increase in the plant’s production capability. This will lead to a 50% reduction in the cost of chip production and ultimately result in savings for the federal agencies purchasing the chips.

Jake Sullivan, the White House’s national security advisor, stated that not only will NATO allies and partners in Asia see advantages from the heightened capacity, but he also emphasized the importance of broadening the manufacturing base in order to safeguard the U.S.

Sullivan expressed concern about relying on unreliable foreign supply chains for important national security needs. He emphasized the potential danger of being vulnerable to another country’s ability to disrupt our access during a time of crisis.