Watch: Our thoughts on the "Chips" Act

Wednesday, Aug 3rd 2022

Commentary

A new $283 billion dollar semiconductor bill could set the tone for American manufacturing

 Titan’s Takeaway: While the $283 billion “Chips and Science” could help onshore domestic semiconductor production, we believe that it falls materially short in addressing a production process that is truly global in nature. 

Last week the U.S. Senate passed the CHIPS bill in a rare instance of bipartisan support and it was officially signed by President Biden yesterday. The 280 billion dollar   "Chips and Science" act provides 52 billion dollars in subsidies for onshore chip manufacturing and investment tax credits for chip plants worth 24 billion dollars  

The Bill attempts to bring chip production back onshore, where U.S.  semiconductor manufacturing has slipped to 12 percent of global output. From smartphones to your car, silicon-based chips are powering the world in this information age. However, with chip demand soaring, factory shutdowns in Asia from COVID exacerbated a situation already overstrained. 

The bill could help restart U.S. investment in space and lead to more domestic manufacturing jobs, a welcome side for an industry that has lagged behind China over the past decade. 

 However, the Bill may have some blind spots. Some accuse the "Chips Act" of being too partial to the most prominent chip players, like Intel, and discouraging domestic competition. 

Others insist it just simply isn’t big enough. The current Bill falls materially short of the estimated 250 billion dollars  China has allocated to building out its semiconductor ecosystem. Even more, comparatively, 52 billion dollars covers just two years of equipment spend by Chinese firms. 

Chip production is truly a global process. The typical semiconductor production process can span at least four countries, 25,0000 miles, 12 days in transit, and nearly three trips worldwide. There are lots of small slices in a very large operational pie and it's unclear how the new bill will significantly change that reality.

 While we applaud the incentive for domestic production, in a world that is only becoming more reliant on chips, the 283 billion dollar bill might be more bark than bite.

Back to Research ↗

Learn with titan

Investment articles and resources

Become the smartest investor you've ever been through straightforward, easy-to-read investment articles.

What Are Required Minimum Distributions (RMDs)?


What Is an Investment Advisor?


What to Know About Active Investing Strategies


Do ETFs Pay Dividends?

Let's Get Started

Ready to become a client?

Create an account with us in two minutes.

Or scan to get the app

We're building the best investment platform, ever

Refer to Titan's Program Brochure for more information. Certain investments are not suitable for all investors. Before investing, consider your investment objectives and Titan’s fees. The rate of return on investments can vary widely over time, especially for long term investments. Investment losses are possible, including the potential loss of all amounts invested. Brokerage services are provided to Titan Clients by Titan Global Technologies LLC and Apex Clearing Corporation, both registered broker-dealers and members FINRA/SIPC. For more information, see our disclosures. Contact: 508 LaGuardia Place NY, NY 10012. Information provided by Titan Support is for informational and general educational purposes only and is not investment or financial advice. Check the background of these firms on FINRA's BrokerCheck.

© Copyright 2022 Titan Global Capital Management USA LLC. All Rights Reserved.