The CHIPs Act has been a boon for the industry. Have investors benefited?

The CHIPs Act, signed into law in August 2022 by President Biden, was called a “once-in-a-generation” piece of legislation to provide a stronger and more secure economy. Since then, more than $35B of the $52.7B in federal subsidies has been doled out to various companies, the latest being Polar Semiconductor, partially owned by Allegro Microsystems (ALGM).

While the legislation has provided an economic benefit to the broader industry, the benefit to investors so far has been mixed.

“The CHIPs Act, while well-intentioned, has hit some stumbles as it has proven an inescapable reality: money alone can’t buy innovation,” Julian Lin, Investing Group Leader for Best Of Breed Growth Stocks, said via email.

Some of the early issues are concerns over staffing, Seeking Alpha analyst Michael Del Monte added.

“Given that the U.S. manufactures a mere 12% of the global capacity for semiconductors, additional staff will need to be trained in order to bring these facilities online,” Del Monte said, pointing out that Taiwan Semiconductor (TSM) is collaborating with Purdue University to overcome the staffing issue.

In April, Commerce Secretary Gina Raimondo said she expects all the grant money under the CHIPS Act to be allocated by the end of the year.

Seeking Alpha has compiled a list of companies that have received funding, the date of the announcement and how the company’s share price has performed since the announcement.

BAE Systems

BAE Systems (OTCPK:BAESY) was the first company to receive funding as part of the CHIPS and Science Act.

The U.S. Department of Commerce announced on Dec. 11, 2023, that BAE Systems would receive approximately $35M in initial funding to modernize the Microelectronics Center in Nashua, New Hampshire for chips used in F-35 fighter jets and commercial satellites.

Shares of BAE Systems closed at $52.96 on the day of the announcement, and recently changed hands at more than $67.

Microchip Technology

Microchip Technology (MCHP) became the second company to receive funding from the CHIPs Act, receiving $162M on January 4.

The grant provides Microchip with $90M to improve a plant in Colorado Springs, Colorado and another $72M to expand a factory in Gresham, Oregon, with the investments enabling the chipmaker to triple its domestic production.

The majority of the investment will support the making of microcontrollers, which are used in the military, autos, household appliances and medical devices sectors.

Shares of Microchip closed at $83.40 on the day of the announcement, and recently changed hands at more than $76.

GlobalFoundries

GlobalFoundries (NASDAQ:GFS) became the third company to receive funding from the legislation, getting a total of $1.5B in grants and another $1.6B in loans. The announcement was made on Feb. 19, 2024.

The grants that GlobalFoundries received will be used to expand its existing fab in Malta, New York and modernize its facility in Essex Junction, Vermont.

Shares of GlobalFoundries closed at $54.50 on Feb. 20 (the market was closed on the day of the announcement), and recently changed hands at more than $39.

Intel

Intel (NASDAQ:INTC) has perhaps been the biggest beneficiary of the CHIPs Act so far. On March 20, the Biden administration officially announced that Intel would receive $8.5B in grants and federal loans of up to $11B to expand its operations in Arizona, New Mexico, Ohio and Oregon.

The money will be used for modernizing and expansion of leading-edge nodes, as well as advanced packaging.

(Intel also received $3B in direct funding from the CHIPs Act for in September for the Defense Dept.’s Secure Enclave program.)

In August 2022, Bank of America said that while it thought that Intel would be the biggest beneficiary, it would not prove to be a “silver bullet.”

Shares of Intel closed at $42.20 on March 20, and recently changed hands at more than $23.

Micron

Micron Technology (NASDAQ:MU) is another one of the legislation’s biggest beneficiaries, as it was awarded approximately $6.1B in grants on April 25 to build three new fabs, aimed at leading edge production.

The grant will support the construction of two fabs in Clay, New York, and one in Boise, Idaho. It’s also designed to help unleash roughly $50B in private investment by 2030.

The grant is also the first step of Micron’s $125B total investment in New York and Idaho over the next two decades to build a leading-edge memory manufacturing ecosystem.

Shares of Micron closed at $111.58 on March 20, and recently changed hands at more than $95.

(Micron shares rose in premarket trading on Wednesday on the back of stronger-than-expected fourth-quarter results and guidance.)

Polar Semiconductor

In addition to receiving an award earlier this week, Polar Semiconductor was granted $120M on May 13 to modernize and expand its Bloomington, Minnesota plant.

Allegro Microsystems, which owns 30% of Polar, closed at $27.27 on May and recently changed hands at more than $22. Polar’s other owner, Sanken Electric, is not traded in the U.S.

Absolics

Absolics, which is an affiliate of Korea-based SKC, received $75M to build a new facility in Covington, Georgia that will support the development of substrates technology for use in advanced packaging.

SKC is not traded in the U.S.

Solaero

Solaero, a subsidiary of Rocket Lab (RKLB), signed a non-binding preliminary memorandum of terms with the U.S. Department of Commerce to receive up to $23.9M in direct funding on June 11.

The proposed investment would enable the aerospace firm to increase its production of semiconductors for spacecraft and satellites, as part of an expansion and modernization of its facility in Albuquerque, New Mexico.

Shares of Rocket Lab closed at $4.57 on June 11, and recently changed hands at more than $8.

Entegris

Entegris (ENTG) signed a non-binding preliminary memorandum of terms to receive up to $75M in direct funding on June 26.

The funding would support the development of the company’s facility in Colorado Springs. It is expected to begin initial commercial operations in 2025.

Shares of Entegris closed at $133.23 on June 11, and recently changed hands at more than $111.

Rogue Valley Microdevices

Rogue Valley Microdevices signed a non-binding preliminary memorandum of terms to receive up to $6.7M in direct funding on July 1.

The investment would support the construction of RVM’s pure play microelectromechanical systems (MEMS) and sensor foundry facility in Palm Bay, Florida.

Rogue Valley Microdevices is not publicly traded.

Global Wafers

Taiwanese company GlobalWafers was awarded up to $400M on July 17 to ramp up domestic silicon wafer production.

The funds will be used to produce 300 millimeter wafers for advanced semiconductors and support the construction of new wafer manufacturing facilities.

GlobalWafers and four other companies dominate the global 300 millimeter silicon wafer manufacturing market, with over 80% of the market. Roughly 90% of silicon wafers are produced in East Asia.

GlobalWafers is not traded in the U.S.

Amkor Technology

Amkor Technology (AMKR) reached a non-binding preliminary memorandum of terms on July 24 to receive up to $400M in grants and receive access to $200M in proposed loans.

Amkor announced plans in November 2023 to build its first domestic outsourced semiconductor assembly and test facility in Peoria, Arizona. Upon completion, this plant will be the largest outsourced advanced packaging and test facility in the U.S.

The first phase of the manufacturing facility is targeted to be ready for production within three years.

Shares of Amkor closed at $38.96 on July 24, and recently changed hands at more than $30.

SK hynix

SK hynix said on Aug. 6 that it signed a tentative agreement to receive up to $450M in proposed direct funding and access to potential loans of $500M to help build a production base for semiconductor packaging in Indiana.

South Korea-based SK hynix is not publicly traded in the U.S.

Texas Instruments

Texas Instruments (NASDAQ:TXN) signed an agreement on Aug. 16 to receive up to $1.6B in proposed direct funding to support three 300mm wafer fabs under construction in Texas and Utah.

Shares of Texas Instruments closed at $200.53 on Aug. 16, and recently changed hands at more than $205.

HP

HP (HPQ) signed a tentative agreement on Aug. 27 to receive up to $50M in proposed direct funding under the CHIPs Act.

The proposed aid would support the expansion and modernization of HP’s existing facility in Corvallis, Oregon, used for mature nodes.

Shares of HP closed at $35.60 on Aug. 27, and recently changed hands at more than $36.