From Glenn O'Donnell's "The Chips Act Puts the Semiconductor Industry Back on the Right Path" posted Saturday by Barron's:
Beneficiaries of the Chips Act are obviously the chipmakers. Intel, Micron, Samsung, and TSMC are some of the more prominent names at the center of this movement because they actually own and run the fabs. Many others, such as AMD, Apple, NVIDIA, and Qualcomm, are one step away. This “fabless” group doesn’t manufacture their chips; someone like TSMC does. While chip makers will get help, a few points are worth noting:
- This isn’t a bailout like the automakers got in 2009. Detroit car makers were suffering from the Great Recession in 2009. They had already cut many jobs, and the prospects were grim for the rest. Because the auto industry is another major linchpin of the overall economy, the ripple effects were profoundly destructive to the economy. Chip makers face numerous pressures, but they are hardly destitute. This Chips Act is about building more manufacturing on U.S. soil, not about lining the pockets of wealthy tech behemoths.
- Don’t expect a windfall for any of the chipmakers. Even in government circles, $54 billion is a lot of money. As this pie gets sliced and diced, however, the actual amount each chipmaker will get is far smaller. Any of this money that is spent on a new fab must result in significant economic growth and skills development for the local community.
- Funds will indirectly benefit players in the chip supply chain. Chip making requires a lot of specialized equipment from companies like ASML, Lam Research, and Teradyne and a lot of chemicals and gasses from companies such as Air Products, DuPont, and Entegris. As chipmakers build more fabs, these suppliers will surge. They will also set up a local presence in the community where the new fab is built, adding more jobs.
- Foreign companies can get a share. A particularly interesting point here is that the act is not protectionist of U.S. companies. TSMC is Taiwanese and Samsung is South Korean. Both made huge commitments to building fabs in America. Chips Act funds can only be applied to fabs on U.S. soil, but the company’s HQ location doesn’t matter.
- Don’t expect immediate returns. Chip making is a long process. Building a chip fab takes even longer. The new fabs planned in places like Arizona, Texas, and Ohio will each take two to three years to build and cost about $20 billion each. Only a few of these proposed facilities have broken ground, and only recently. We won’t see them producing chips until the 2024–2026 time frame.
My take: I've got my eyes on the TSMC plant in Arizona. New Federal money tends to get poured into projects that are shovel-ready.