Rocket Lab Signs Preliminary Terms to Receive up to $23.9M in Funding Under the CHIPS Act to Expand Production of Semiconductors that Power Spacecraft
Rocket Lab USA, Inc. (Nasdaq: RKLB) (“Rocket Lab” or “the Company”), a global leader in launch services and space systems, has announced the signing of a non-binding preliminary memorandum of terms (PMT) with the Department of Commerce that would see Rocket Lab receive up to $23.9M in direct funding under the CHIPS and Science Act. The proposed investment would enable Rocket Lab to increase its production of compound semiconductors for spacecraft and satellites, as part of an expansion and modernization of the Company’s facility in Albuquerque, New Mexico. This proposed CHIPS investment would create more than 100 direct manufacturing jobs.
Rocket Lab acquired SolAero Technologies Inc in 2022, making Rocket Lab one of only two companies domestically, and three companies outside of Russia and China, that specializes 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. The space-grade solar cells produced at Rocket Lab’s Albuquerque, New Mexico facility power critical space programs 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. Rocket Lab's technology also serves a booming commercial satellite market, such as powering the OneWeb broadband internet satellite constellation.
This proposed CHIPS investment would help create a more robust and resilient supply of space-grade solar cells. The modernization and expansion project would also increase Rocket Lab’s compound semiconductor production by 50% within the next three years—helping to domestically meet the growing national security and consumer demand for these solar cells.
In addition to these proposed federal incentives, the State of New Mexico has also committed to providing financial assistance and incentives with a total value of $25.5 million to Rocket Lab in support of this effort.
"Semiconductors are central to modern life, to our economy, and to America's future. We are proud to be strengthening that future with the support of the CHIPS Office by expanding our production facilities to meet growing demand for the semiconductors that power the nation's most critical science, defense and commercial space missions," said Rocket Lab founder and CEO, Sir Peter Beck. "For more than two decades the SolAero team, now part of Rocket Lab, has played a crucial role in the domestic production of semiconductors. This program is a continuation of our commitment to ensuring resilient U.S. supply chains and creating highly productive local jobs."
“Rocket Lab has called New Mexico home for 25 years, first as SolAero Technologies and now as a thriving modern company manufacturing space solar-cell technology,” said Gov. Michelle Lujan Grisham. “New Mexico’s space economy is growing every day, and Rocket Lab’s expansion will bring more than 100 new jobs to New Mexico. This is just the latest example of how the CHIPS and Science Act is fueling new technology and high-wage jobs.”
“This major investment from our CHIPS and Science Act will further solidify New Mexico’s role as a leader in advanced manufacturing and create more than an estimated 100 manufacturing jobs. It will also further cement our state as the best place in America to manufacture novel technologies with emerging space defense applications,” said Senator Heinrich, a member of the 2022 Chips and Science Act Conference Committee. “For years now, I’ve been proud to bolster New Mexico’s bases, defense research labs, and private industry partners so we can keep excelling in emerging defense fields. That includes supporting the growth of SolAero, now Rocket Lab—a homegrown New Mexico defense technology company that has become an industry leader in manufacturing solar cells for space-based defense systems and commercial satellites. This exciting investment is just the latest downpayment to maintain New Mexico’s longtime leadership in national security and innovation.”
“I am so excited that SolAero will get almost $24 million to expand and modernize their facilities right in the heart of New Mexico’s 1st Congressional District,” said Rep. Melanie Stansbury. “Thanks to the Biden Administration and the CHIPS and Science Act, more than 100 new manufacturing jobs will be created, and New Mexico will continue leading the way in technological manufacturing. The future is bright!”
“These 100-plus good-paying jobs will support hard-working New Mexicans, while strengthening our national security through domestic semiconductor manufacturing,” said Rep. Gabe Vasquez. “This funding for Rocket Lab will help ensure that vital semiconductors are made in America and solidify New Mexico's role as a leader in space technology. Recognizing New Mexico’s robust workforce and investment potential is crucial, and I will always work to bring good-paying jobs to our state.”
“Not only will this $23.9M investment help strengthen our national security and increase the amount of advanced semiconductor manufacturing in the United States, it will create more than 100 good paying jobs for New Mexicans,” said Congresswoman Teresa Leger Fernández. “With this funding, our satellites won’t be dependent on foreign sources for solar power, and instead use American-manufactured solar cells made from compound semiconductors. Manufacturing is growing in New Mexico and this is exactly the kind of growth we had in mind when we passed the CHIPS and Science Act.”
Rocket Lab has indicated that it plans to claim the Department of the Treasury’s Investment Tax Credit, which is expected to be up to 25% of qualified capital expenditures. As explained in its first Notice of Funding Opportunity, the Department may offer applicants a PMT on a non-binding basis after satisfactory completion of the merit review of a full application. The PMT outlines key terms for a potential CHIPS incentives award, including the amount and form of the award. The award amounts are subject to due diligence and negotiation of award documents and are conditional on the achievement of certain milestones. After the PMT is signed, the Department begins a comprehensive due diligence process on the proposed projects and continues negotiating or refining certain terms with the applicant. The terms contained in any final award documents may differ from the terms of the PMT being announced today.