The Biden administration is poised to unveil substantial subsidies to bolster domestic semiconductor manufacturing, as reported by The Wall Street Journal on Saturday. These subsidies are integral components of the $53 billion Chips Act, a legislative initiative aimed at revitalizing the chip manufacturing sector within the United States. Although the act was passed in 2022, the administration has thus far only awarded two relatively small grants.
Aside from Intel and Taiwan Semiconductor, the administration is considering extending awards to other key players in the semiconductor industry, including Micron Technology, Texas Instruments, GlobalFoundries, and Samsung Electronics. These subsidies are anticipated to support chip projects spanning various states, with Intel, for instance, advancing chip projects in Arizona, Ohio, New Mexico, and Oregon, totaling over $43.5 billion. Similarly, Taiwan Semiconductor has two chip fabrication plans underway near Phoenix, with a combined investment of around $40 billion, with the first plant slated to commence operations in 2025. Notably, Taiwan Semiconductor has deferred the start of the second fab to 2027-2028, indicating that U.S. government incentives may influence the extent of its advancements.
Additionally, Samsung Electronics is engaged in a $17.3 billion project near Dallas, further illustrating the significant investments being made in semiconductor manufacturing within the country.
In terms of stock market implications, it remains uncertain whether the announcement of subsidies would directly impact share prices. While the Chips Act grants were expected to materialize eventually, the forthcoming announcements are deemed preliminary, with final agreements and fund disbursements anticipated to occur in stages.
Recent market trends show Intel experiencing a notable decline in its stock price, dropping by 11.9% to $43.65 in Friday’s trading session, dipping below the 50-day line. Despite surpassing expectations for Q4 performance, Intel’s guidance for Q1 fell well below market expectations. Conversely, Taiwan Semiconductor’s stock has seen an increase of 12.75% in 2024, reaching 23-month highs. The surge in Taiwan Semiconductor’s stock follows bullish guidance for 2024 provided earlier in the month.
Texas Instruments, on the other hand, witnessed a 5.5% decline in its stock price last week, slipping below its 200-day line subsequent to reporting weaker-than-expected earnings and guidance. Micron Technology, however, saw a modest increase of 0.5% in its stock price last week, trading near its 52-week highs. GlobalFoundries experienced a 4.8% decline on Friday, paralleling Intel’s downturn and falling below key moving averages.
In conclusion, the proposed subsidies under the Chips Act signify a significant effort by the Biden administration to bolster domestic semiconductor manufacturing, with potential implications for key players in the industry and the broader stock market.
