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BAE Systems and Microchip Take Large Slices of CHIPS Act Funds

January 10, 2024 by Jake Hertz

The incentives of the CHIPS Act are rolling forth, with $35M going to BAE Systems and $162M going to Microchip.

In 2022, the U.S. government passed the CHIPS Act, signaling strong intentions to build the future of the domestic semiconductor supply chain. The U.S. Department of Commerce is now allocating funds from this $52B legislation; BAE Systems received a $35M injection in early December 2023, and Microchip accepted $162M just days into the new year. 

How do these manufacturers plan to use the new funds to realize the incentives of the CHIPS Act? 

 

Bankrolling BAE Systems to Strengthen National Security

BAE Systems, a defense, security, and aerospace company, plans to use its new cash flow to modernize its microelectronics facility. BAE secured these funds in large part because of the success of its Department of Defense-accredited semiconductor chip fabrication and foundry facility. This facility is notably one of the only in the country to produce gallium nitride and gallium arsenide wafers. 

 

A Bae Systems GaN wafer

A Bae Systems GaN wafer. Image used courtesy of Bae Systems
 

This grant will support the CHIPS Act's focus on enhanced national security by not only expanding Bae Systems' capacity but also incorporating its technologies into critical defense systems for higher performance and reliability. 

 

A Boost to Modernize Microchip Facilities 

The U.S. Department of Commerce strategically invested in Microchip to help onshore the company's semiconductor supply chain, particularly focusing on the U.S. production of microcontrollers and other specialty semiconductors.

 

Microchip’s Oregon production facility

Microchip’s Oregon production facility. Image used courtesy of Microchip
 

The CHIPS Act funding will be allocated to two major projects: approximately $90M for modernizing and expanding a fabrication facility in Colorado Springs, Colorado, and $72M for expanding another facility in Gresham, Oregon. These expansions are expected to nearly triple the semiconductor output at these sites and to create more than 700 direct jobs in construction and manufacturing​.

 

U.S. Department of Commerce Launches Semiconductor Review

Beyond fund allocation, the U.S. Department of Commerce is also pursuing the CHIPS Act initiatives by launching a survey evaluation of how U.S. semiconductor companies are currently sourcing legacy chips. 

This review, slated for January 2024, aims to identify vulnerabilities and opportunities for upgrading or replacing legacy systems with more advanced, secure, and efficient technologies. By understanding the current landscape, the government hopes to make informed decisions on where to direct future investments, how to encourage the adoption of modern technologies, and ways to foster a more robust and resilient semiconductor ecosystem.