Rocket Lab lands $41 million in Chips Act funding, $44m from New Mexico

Sir Peter Beck’s Rocket Lab has landed another big wodge of US Government funding - this time US$23.9 million ($41.3m) under what is popularly known as the Chips Act.

The grant will go towards boosting production at the Kiwi-American firm’s New Mexico plant, which makes radiation-hardened semiconductors in the form of solar cells for spacecraft, which Rocket Lab described in a market filing today as “important components for national defence and security satellites”.

Additionally, New Mexico’s state government has committed US$25.5m ($44.01m) in financial assistance and incentives to help the expansion.

Rocket Lab also said it intends to take advantage of a US Treasury investment tax credit to offset 25 per cent of its capital expenditure on the project.

The Chips and Science Act of 2022 was signed into law by President Joe Biden two years ago, providing US$56 billion in grants to boost domestic US production of semiconductors (aka silicon chips). The AI boom has compounded the global chip shortage that began in the pandemic. Boosting local production, and research, is seen as a matter of US economic and national security.

The first major funding under the Act came in February this year, with US$1.5b going to a firm called GlobalFoundries to expand fabrication facilities in New York and Vermont. The likes of Intel and Samsung have applications in. And the Biden administration is angling for the California-headquartered, Nasdaq-listed Nvidia to re-shore some of its manufacturing (the AI giant currently outsources most of its production to Taiwan’s TSMC).

Rocket Lab’s angle is radiation-hardened semiconductor systems for use in spacecraft - specifically, the solar panels made by its plant in Albuquerque, New Mexico - where it bought solar cell maker SolAero for US$80m in 2022.

The firm will use the funding to double its Albuquerque production by 50 per cent within three years, and “create a more robust and resilient supply of space-grade solar cells that power spacecraft and satellites”, according to the Department of Commerce.

100 new jobs

“Rocket Lab’s expansion will bring more than 100 new jobs to New Mexico,” said Senator Martin Heinrich (a New Mexico Democrat who sits on Congress’s Chips and Science Act Conference Committee).

The Kiwi-American firm currently employs some 1800 staff, including 750 in NZ, across facilities in California, Colorado, Maryland, Mississippi, New Mexico, Virginia, Ontario, Auckland, Mahia and other locations.

The 2022 SolAero deal made Rocket Lab “one of only two companies domestically, and three companies outside of Russia and China, that specialises in the production of highly efficient and radiation resistant compound semiconductors called space-grade solar cells - devices used in space to convert light to electricity”, Rocket Lab said in a market filing.

“The space-grade solar cells produced at Rocket Lab’s Albuquerque, New Mexico facility power critical space programmes such as missile awareness systems and exploratory science missions including the James Webb Space Telescope, Nasa’s Artemis lunar explorations, Ingenuity Mars Helicopter, and the Mars Insight Lander.”

Earlier support

Rocket Lab’s previous US Government funding has included US$24.35m from Space Force’s Space Systems Command for its Neutron rocket’s upper stage (the much larger, crew-cable Neutron is due for its first launch next year) and US$45m from Virginia toward the Neutron’s manufacturing, mission control and launch facility.

The Chips Act funding, allocated by the US Department of Commerce, is contingent on due diligence.

Shares in Beck’s firm were up 0.22 per cent to US$4.57 in late trading for a US$2.25b market cap.

Chris Keall is an Auckland-based member of the Herald’s business team. He joined the Herald in 2018 and is the technology editor and a senior business writer.