BAE Systems will announce its half year financial results for 2022 today.
The UK-based defense group—a world-leading developer and manufacturer of defense-related security and technology assets—reported that companywide sales grew by 5% in 2021. Total sales have maintained an upward trend in the first half of 2022 due to growing geopolitical tensions in Europe, US-based intelligence bids and mounting worldwide semiconductor instability.
The US is hurryingly addressing development of microchip production to battle China’s space endeavors—shifting the Washington-Beijing power competition closer to supply efficacy. The USA secured a contract with BAE in December 2021 to produce 12-nanometer circuit chips for use in space environments. As the US cannot maintain chip self-sufficiency—and its support of Taiwan’s semiconductor industries is amplifyingregional geopolitical tensions—this new contract should bolster supply of internal microchip production. Furthermore, the US Congress has introduced legislation to subsidize microchip production sites. As final votes are set to be cast soon, the economic value of its passage is $54.2 billion.
Expect BAE Systems’ half-year results to reflect the growing impact of semiconductor supply—with successful US Intelligence & Security bids at the forefront of business. Anticipate the manufacture of the new 12-nanometer circuit chips to directly affect BAE Systems’ profits as the US seizes further regional production support via congressional grants.
Joseph is a Current Developments Analyst with regional expertise in Northeast Asia. He focuses primarily on South Korean-Japanese geopolitics.