Semiconductor stocks are trending today after the U.S. Senate last night advanced a measure that would, if signed into law, provide billions of dollars of funding to the sector.
The CHIPS Act
The Senate voted 64-34 to move the legislation, known as the CHIPS (Creating Helpful Incentives to Produce Semiconductors for America) Act, forward. In the coming days, the bill will have to be voted on multiple, additional times by both houses of Congress. This back and forth stems from the two chambers working out any potential changes to the bill before finally sending it to the president’s desk. Still, the legislation is expected to pass “by the end of next week,” Reuters reported.
The bill’s final text hasn’t been released yet. However, according to Reuters, unnamed Senate aides reported that the bill:
Includes about $54 billion in subsidies for U.S. semiconductor companies, as well as a new, four-year 25% tax credit to encourage companies to build plants in the United States.
Seen as favoring semiconductor stocks, particularly Intel (NASDAQ:INTC), that manufacture their own chips, the legislation has received mixed reviews from other semiconductor companies. According to some reports, however, the bill does include provisions that will benefit chip makers which do not actually manufacture their own semiconductors, but pay other companies to do so.
The legislation is supposed to ease the chip shortage that has hurt many sectors, including consumer electronics makers and auto manufacturers, in recent years. Supporters say that the bill will also boost the entire U.S. economy.
INTC Stock Likely to Lead Semiconductor Stocks Rally
Intel is seen as one of the biggest beneficiaries, known as the CHIPS Act. In a July 6 column, InvestorPlace contributor Chris Lau predicted that the company’s shares would “rise sharply” going forward.
Writing that “Intel… is among the cheapest computer chip suppliers,” Lau is very bullish on the company’s upcoming Arc A380 graphics processing unit. He’s calling the product a “Huge Positive Catalyst” for INTC stock.
On the date of publication, Larry Ramer did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.