Semiconductor stocks benefitting from CHIPS ACT Funding? 

Recently, there's several news of semiconductor companies being awarded grants amounting to billions of US dollars to set up manufacturing plants in US. The key motivation behind the huge generosity from the US government is due to the severe semiconductor supply chain disruption and culmination of years of political wranglin to bolster US competitiveness in the semiconductor industry, which is viewed as essential to national and economic security. Particularly, US semiconductor manufacturing capacity has dropped from nearly 40% of global supply in 1990 to 12% today.

This act is basically to limit China's rise in power; the funding recipients are prohibited from expanding semiconductor manufacturing in China or any countries that pose a threat to US national security.

Using $NVIDIA Corp(NVDA)$   as an example, the company has billions of dollars of unfulfilled orders for its earlier chips with China as one of its biggest markets, historically contributing about 20% of its revenue. Similarly, China was $Intel(INTC)$   's largest market in 2023 with 27% of revenue, while $Advanced Micro Devices(AMD)$   drew about 15% of its sales from the country.

The CHIPS Act may present semiconductor companies with an opportunity, but realizing its potential will require a rethinking of global strategy as well as a plan for digital transformation, capital project management and financial planning. Geopolitical uncertainty, combined with recent dramatic shifts in the market, requires companies to make careful assessments about their place in the semiconductor value chain and how they can improve their position.

The rising political tensions among the world's big countries will definitely have some negative impact on various semiconductor companies $Semiconductor Bull 3X Shares(SOXL)$  $Taiwan Semiconductor Manufacturing(TSM)$   as China is one of the biggest markets for all these advanced semiconductor chips.

What do you think?? Let me know your thoughts!!

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