Infrastructure Briefing — December 11, 2023
The U.S. Commerce Department’s preliminary agreement with BAE Systems commits up to $35 million in CHIPS funding to modernize the Nashua, NH defense microelectronics plant that supplies F-35 radar modules.
Executive briefing: On December 11, 2023 the U.S. Department of Commerce announced a preliminary memorandum of terms with BAE Systems Electronic Systems for up to $35 million in CHIPS and Science Act funding. The investment will expand and modernise BAE’s Nashua, New Hampshire facility that builds monolithic microwave integrated circuits and other radio-frequency components for U.S. Department of Defense platforms including the F-35 Lightning II.
Key industry signals
- First defence-focused CHIPS award. The memorandum is the inaugural allocation under the CHIPS for America Defence Fund, signalling priority on secure domestic production for national security systems.
- Capacity and yield improvements. BAE plans to add cleanroom space, advanced lithography, and automated test equipment to boost output of gallium arsenide chips used in AESA radar modules.
- Supply-chain resilience. The upgrade reduces reliance on foreign suppliers for specialised RF components, strengthening delivery timelines for F-35, F-15, and naval radar programmes.
Control alignment
- DoD Trusted Supplier Program. Facilities must maintain accreditation for handling classified microelectronics, with surveillance audits tied to upgrade milestones.
- DFARS 252.204-7012 & CMMC 2.0 Level 2. Modernisation plans should embed incident reporting, media sanitisation, and multifactor access controls across new tooling and data systems.
- ANSI/ESD S20.20 & MIL-PRF-38534. Production lines need documented electrostatic discharge and hybrid microcircuit quality controls that match expanded capacity.
Detection and response priorities
- Instrument manufacturing execution systems so defence customers receive real-time telemetry on yield, rework rates, and security events during the build cycle.
- Validate insider-threat monitoring as staffing grows to support the expansion, including tamper detection and asset tracking.
- Exercise contingency sourcing scenarios with alternate domestic suppliers for critical RF die to satisfy programme delivery schedules.
Enablement moves
- Engage procurement and engineering teams to update multi-year contracts with revised capacity forecasts and quality assurance checkpoints.
- Coordinate with programme offices to align acceptance testing and configuration management on the upgraded production lines.
- Prepare compliance artefacts that evidence adherence to ITAR, EAR, and DFARS clauses as new equipment and software are commissioned.
Zeph Tech analysis
- Defence programmes gain leverage. Domestic redundancy for RF components should reduce lead-time risk on radar and electronic warfare upgrades.
- Audit scope widens. The capital infusion will draw heightened scrutiny from DCMA and programme security offices, necessitating proactive documentation.
- Signal for future awards. Other defence electronics primes can expect similar requirements around telemetry, cyber controls, and workforce readiness to secure CHIPS funding.
Zeph Tech is advising operators on integrating CHIPS-funded supplier telemetry into reliability dashboards so mission programmes can monitor throughput and compliance in real time.