CHIPS Act: Intel's Gain And Taiwan Semiconductor's Pain

Sep. 11, 2022 2:36 AM ETIntel Corporation (INTC), TSMTXN172 Comments

Summary

  • The primary goal of the CHIPS Act passed by congress last is to make the U.S. less dependent on semiconductor chips made in China and Taiwan.
  • Admittedly, the full impact won’t be felt several years down the road.
  • However, it is quite clear to me that domestic chip stocks, especially those with a fab operation such as Intel, will be the major beneficiaries.
  • In contrast, Taiwan Semiconductor Manufacturing not only won’t benefit too much but also would suffer headwinds on multiple fronts.
  • With heightened global geopolitical tensions, I see the act sets a tectonic shift in motion for the chip ecosystem similar to the deglobalization since 2008.
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Thesis and the 2022 CHIPs Act

On August 9, President Biden signed the 2022 CHIPS act into law. Both the U.S. and China now recognize the competition in the chip space is not only a matter of business and profits but also

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