Taiwan Semi (NYSE:TSM) is trending today after the Biden administration announced that it would give the chipmaker a total of up to $11.6 billion. Of those funds, as much as $6.6 billion will be in the form of grants. In return, TSM is supposed to tremendously increase its production of chips in the U.S. TSM stock is climbing 1.7% in the wake of the news.
TSM and the CHIPS Act
In addition to the grants that TSM will obtain from the U.S., it will receive $5 billion in loans and tax credits. The firm has agreed to invest $65 billion in America.
Taiwan Semi is developing two chipmaking plants in Arizona and said today that it would build a third such plant in the state. It hopes to have all the factories operating by 2030.
The Biden administration awarded the funds to TSM under the authority granted to it by Congress through the CHIPS and Science Law. Passed in 2022, the legislation appropriated $50 billion to promote the domestic production of semiconductors in the U.S.
The Biden administration said that the lack of production of advanced chips in the U.S. threatens U.S. national security.
“These are the chips that underpin all artificial intelligence, and they are the chips that are the necessary components for the technologies that we need to underpin our economy,” Commerce Secretary Gina Raimondo stated.
Analysts Are Bullish on Taiwan Semi and TSM Stock
On March 6, JPMorgan increased its price target on TSM stock to 850 New Taiwan dollars from 770 New Taiwan dollars. The bank expects the firm to have a near monopoly on manufacturing AI chips for the next several years. JPMorgan estimated that AI chips will account for 25% of the company’s sales by 2027.
Heading into today, the shares have advanced 1.7% in the last month, and they have risen 36% so far in 2024.
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
