Chip funding: Congress moves closer to vote on scaled-back semiconductor bill
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The Senate could vote on a slimmed-down measure to boost the U.S. semiconductor industry as soon as this week as lawmakers struggle to compromise on broader legislation targeting Chinese competitiveness. The scaled-back bill would likely provide $52B in grants, tax credits and other financial incentives to build out the American chip sector, but until now, it has been held up over R&D subsidies, as well as the possibility of it being attached to a broader reconciliation package. Congress will need to kick things into high gear before the August recess, which is only several weeks away.
Quote: "If we don't pass this, we're going to wake up, other countries are going to have these [chip] investments, and we're going to say, 'why didn't we do it?'" U.S. Commerce Secretary Gina Raimondo declared, urging lawmakers to pass the legislation. "We want as robust of a bill as possible, but all options are on the table because we're out of time."
Funding is even more critical to corporate investment plans, with Intel (NASDAQ:INTC) recently threatening to ditch its ambitious $20B foundry project in Ohio if the bill remains in limbo. "We've made super clear to McConnell, to the Democrats, to the Republicans, that if this doesn't pass, I will change my plans," announced CEO Pat Gelsinger. "The Europeans have moved forward very aggressively, and they're ready to give us the incentives that allow us to move forward." According to the Semiconductor Industry Association, the U.S. share of global chip-making capacity has tumbled from 37% in 1990 to 12% at the present.
Should you buy chip stocks? Market direction has been uncertain in recent weeks, though some buyers seem to be keen on the advancing chip legislation. Last week, it was revealed that House Speaker Nancy Pelosi and her husband, exercised 200 call options (20,000 shares) in Nvidia (NASDAQ:NVDA), which is one of the world's largest semiconductor companies. The stake, which could be worth up to $5M, comes at a time when Congress is debating whether its members and spouses should be allowed to trade individual stocks, though a vote on such bills has not yet been scheduled.