Shares of chipmakers and their suppliers advanced Monday after the Biden Administration announced the first-ever grant to encourage semiconductor manufacturing in the U.S. under the CHIPS and Science Act of 2022.

The White House said defense contractor BAE Systems (BAESY) was to receive $35 million to modernize an aging factory in Nashua, New Hampshire, which will allow the company to quadruple its production capacity for chips "essential to our national security, including for use in F-35 fighter jets."

BAE CEO Tom Arseneault said the money would be used to upgrade the company's Microelectronics Center "and fulfill the promise of the CHIPS and Science Act by increasing our capacity to serve national defense programs, growing our technical workforce, and helping to strengthen the nation's onshore 澳洲幸运5官方开奖结果体彩网:supply chain."

In a statement, President Biden indicated that the U.S. went from producing nearly 40% of the world's semiconductors to 10%, "undermining America's national security and making our economy vulnerable to global supply chain disruptions."

The CHIPS and Science Act was signed in August 2022 and provided for approximately $52 billion to be spent to support 澳洲幸运5官方开奖结果体彩网:semiconductor research and manufacturing.

The president added that, over the coming year, the Department of Commerce will be awarding companies billions more to manufacture chips domestically.

The PHLX Semiconductor Sector Index rose 3.4% Monday, hitting its highest level of the year. Shares of Intel (INTC) and Advanced Micro Devices (AMD) each gained 4.3%.