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U.S. Boosts Defense and Space Chip Manufacturing with $60M in CHIPS Act Subsidies
Published: 8.5.2025
BAE Systems will receive $35.5 million to expand its chip production in Nashua, New Hampshire to produce radiation-hardened microelectronics vital to F35 fighter jets, secure communications systems, and commercial satellite platforms.
At the same time, Rocket Lab’s SolAero Technologies, based in Albuquerque, New Mexico, has been awarded $23.9 million to scale the production of compound semiconductors—specifically solar cells used in satellites and deep-space missions, including NASA’s James Webb Space Telescope and Artemis lunar program.
“This is not just about chip production—it’s about national security,” said Commerce Secretary Gina Raimondo. “By strengthening our domestic capabilities, we ensure that U.S. missions in space and defense are not reliant on vulnerable foreign supply chains.”
These funds are part of a broader effort under the CHIPS & Science Act, a $52.7 billion initiative launched in 2022 to revive American semiconductor leadership and reduce dependency on overseas production.
Defense and Aerospace at the Forefront
The expansion of BAE’s facility is expected to improve delivery timelines and increase production yield for critical components, while SolAero’s grant will accelerate innovations in high-efficiency solar power—a technology essential for powering satellites and spacecraft navigating extreme environments.
Industry analysts view this move as a sign of deeper alignment between the U.S. semiconductor roadmap and strategic national security objectives.
“We’re seeing Washington move from rhetoric to execution. The subsidies for BAE and Rocket Lab represent a clear pivot to dual-use semiconductors, where military and commercial needs intersect,” said Dr. Alan Breyer, senior analyst at DefenseTech Advisory.
“With global tensions and space exploration accelerating, the need for self-reliant, radiation-tolerant, and ultra-efficient chips has never been more critical.”
A Signal to Industry
The announcement also sends a message to the broader semiconductor ecosystem: The U.S. government is not just incentivizing general manufacturing but also prioritizing specialized technologies used in sensitive, high-stakes applications.
This may lead to a ripple effect in the private sector, with more companies seeking government alignment and potentially re-shoring their production to qualify for future subsidies.
