Biden admin fuels up Rocket Lab with $24M for space-grade solar cell chip shop

Funding will expand manufacturing by 50% in three years, says Uncle Sam

The Biden administration's push to bring more semiconductor manufacturing to the US has reached new heights with $23.9 million to expand Rocket Lab's New Mexico space chip bakery.

The US Commerce Department announced the preliminary agreement this morning, saying that the deal will boost Rocket Lab's ability to manufacture compound semiconductors used in space-grade solar cells by 50 percent over the next three years.

Rocket Lab is one of only two companies in the United States – and three outside of Russia and China, it pointed out – that make such chips. 

"Solar cells are important for keeping our communication and space technology powered and operational, and this proposed award would help our military, NASA, and our commercial space industry have access to the specialty semiconductors they need," Commerce Secretary Gina Raimondo said.

The expansion of Rocket Lab's New Mexico chip fab will necessitate new jobs too, and the company believes around 100 direct manufacturing roles will be needed to meet increased production capacity.

Along with the $23.9 million slated to come from the CHIPS Act pool, the state of New Mexico has also committed to providing $25.5 million in funding to support Rocket Lab's planned plant expansion in Albuquerque. The company said it also intends to take advantage of the Treasury's investment tax credit, allowing it to offset 25 percent of its capital expenditures on the project.

In other words, Rocket Lab making semiconductors for its solar cells is paying dividends now that the federal government is throwing cash at anyone able to argue that their chips are important to national security.

It wasn't always that way, however. Rocket Lab didn't even have its own chip fab until it acquired SolAero Holdings in early 2022 for $80 million in cash.

SolAero was founded in 1998 in Albuquerque to manufacture solar cells, panels, and composite structure products for space operations. Prior to merging with Rocket Lab, SolAero's products had flown on more than 1,000 successful space missions "with 100 percent reliability and mission success to date," Rocket Lab said. 

According to the Commerce Department, Rocket Lab's space-grade solar cells and the chips it makes to drive them have supplied power to the James Webb Space Telescope, Artemis Moon missions, the Mars Insight lander, and the Ingenuity Mars helicopter, to name a few. With the exception of the first Artemis mission, we note that all those milestones occurred before Rocket Lab acquired SolAero.

It's not immediately clear if Rocket Lab plans to use the CHIPS Act funding to expand its chipmaking capabilities outside of space solar projects, or whether it only intends to expand its existing capacity. We've asked, but haven't heard back. ®

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