The Game-changing Plan
The Biden administration is reportedly gearing up to announce subsidies worth billions of dollars for major semiconductor companies, including Intel and Taiwan Semiconductor Manufacturing Co. under the $53 billion Chips Act. This strategic move aims to reshore advanced microchip production to the U.S., countering the growing chip industry of China, as reported by The Wall Street Journal.
Implications and Challenges
While the law offers $39 billion in manufacturing grants and other financial support, its slow implementation has frustrated key industry players. The delay is attributed to permitting, negotiations, and worker shortages, resulting in only two small grants being awarded out of 170 applications.
Key Beneficiaries and Projections
Industry executives anticipate larger sums, in the billions, to accelerate the production of advanced semiconductors powering various sectors including smartphones, AI, and defense systems. The expected announcements before Biden’s State of the Union address on March 7 are aimed at showcasing economic achievements ahead of the upcoming election season. Intel and TSMC stand as key beneficiaries, with projects already in progress in critical battleground states like Arizona, Ohio, and New Mexico.
Despite the hurdles, including permitting delays and workforce requirements, the Chips Act has garnered private sector investments exceeding $200 billion, offering a ray of hope amid the criticism.
Concerns and the Road Ahead
However, the legislation faces challenges stemming from permitting delays and workforce requirements, complicating funding negotiations. Delays and workforce requirements have contributed to skepticism about the economic stewardship of the Biden administration among voters ahead of the elections.
Industry Insights and Outlook
Industry experts stress the need for predictability to encourage significant investments and ensure global competitiveness. Moreover, the shortage of skilled workers, with an estimated shortfall of 67,000 workers in the industry by 2030, adds to the existing challenges.
Broader Implications
The impact of this initiative extends beyond individual companies, with other prominent stocks such as Samsung Electronics, Micron Technology, and Texas Instruments, along with related ETFs like the PHLX Semiconductor ETF (SOXX) and the VanEck Semiconductor ETF also under the spotlight in light of this development.
This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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