The U.S. Commerce Department announced on Tuesday that it plans to grant Rocket Lab (NASDAQ:RKLB) $23.9 million to significantly enhance the production of compound semiconductors used in satellites and spacecraft.

This funding will be allocated to Rocket Lab's unit, SolAero Technologies Corp, to bolster the manufacture of space-grade solar cells that power spacecraft and satellites.

This initiative is expected to increase Rocket Lab's production of compound semiconductors by 50% over the next three years.

The investment is part of the Biden administration's broader $52.7 billion subsidy program aimed at boosting chip manufacturing and research, which has already seen contributions to major industry players like Samsung Electronics, Intel, and Taiwan's TSMC.

In addition to federal funding, the State of New Mexico has pledged financial assistance and incentives totaling $25.5 million to support Rocket Lab’s facility expansion in Albuquerque.