Kudos, Secretary Raimondo: First Chips Act Grant Supports U.S. Legacy Chip Production  

Give credit where it’s due: The Commerce Department has made a notable decision in using the first CHIPS Act grant to support U.S. legacy chip production.  

On December 11, the Commerce Department announced that a U.S. subsidiary of BAE Systems would receive $35 million “to support the modernization of the company’s Microelectronics Center, a mature-node production facility in Nashua, New Hampshire.”  

The release continued: “The project will replace aging tools and quadruple the production of chips necessary for critical defense programs including the F-35 fighter jet program.”  

Here are three reasons why this announcement is important:  

  1. It signals to the rest of the U.S. government and the semiconductor supply ecosystem that a trusted supply of all chips MATTERS – not just advanced chips. So far, the government’s sales pitches for the CHIPS Act and China-focused U.S. export controls have focused overwhelmingly on ensuring a U.S. lead in advanced chips. Those chips are important, but the U.S. must not neglect legacy-node chips that are found in virtually every electronic device and are critical to defense systems. This disbursement to make upgrades to a legacy-node facility is a welcome signal that the Commerce Department is coming around to a point we’ve stressed: Every Chip Matters.  
  1. It will further support the production of critical defense chips inside the U.S. We need these chips in our defense systems, which – right now – are anything but clean. The intelligence firm Govini found in 2020 that with regard to semiconductors specifically, the number of China-based companies participating in the Pentagon’s supply chain increased 364% (65 companies) from 2010-2019. That leaves us open to already known risks of sabotage, malfunction, and cyberattacks. “In order to defend our great country, we need to make the chips that go into military equipment in the United States of America, by Americans,” said Secretary of Commerce Gina Raimondo. Spot on.  
  2. It keeps national security at the core of the CHIPS Act. Congress and the Biden Administration asked a lot of the American people in requesting $39 billion to subsidize the American semiconductor industry. Many were skeptical of how the money would ultimately be used. Let’s hope that this decision sets the tone for the remaining CHIPS Act disbursements to fulfill the most essential function of the federal government: defending national security.