Trump whacking CHIPS Act? When you hold the checkbook, you make up the new rules

• News reports that Trump will change CHIPS Act to suit his views
• We specifically predicted this months ago as deals closed 11th hour
• Blue states, enemies list & foreign entities likely to get cut
• Big changes/cuts likely to a program Trump roundly criticized

Reuters: Exclusive: Trump prepares to change US CHIPS Act conditions, sources say

We had said that Trump would likely stop the checks on CHIPS Act for funding even on done deals. For all we know he might even try to claw back checks that are already cashed.

As with everything else we are seeing from the new administration he will likely gut what he doesn’t like or turn it into something that benefits his views.

Blue states, political enemies, foreign firms, China deals – all at risk

The Reuters report suggests that companies with a China angle may get scrutinized or cut. Globalwafers of Taiwan was specifically mentioned. Trump has also accused Taiwan of stealing the Chip industry from the US and may want to seek revenge on Taiwanese companies….maybe even including TSMC.

Projects in Texas and Arizona are likely OK for the most part. Ohio being a swing state likely would make it safer from getting whacked.

Micron in Idaho is likely OK but Schumer sponsored Micron New York will likely get more scrutiny.

Additional projects like the national semiconductor technology center which was planned to go hand in hand with a HIGH NA EUV installation in New York may also be at risk.

Companies doing business in China, such as Intel, mentioned in the Reuters article may also get extra scrutiny.

Basically, as we have seen with other things, the CHIPS Act will get twisted for political advantage

DEI in CHIPS Act likely to DIE

The CHIPS Act had some controversial clauses that we, and many others, thought went too far. Such as guaranteed child care for workers.

Union workers, another clause, is not too bad in our view, as the government has long supported unions, but with Musk around now, unions may not be so safe.

Trump loves to “renegotiate” done deals…..

Trump is famous for renegotiating deals, stiffing contractors, reneging on deals. We are sure Trump will want to improve on every CHIPS Act deal and will likely withhold funding to extract better terms.

Trump doesn’t need a reason or an excuse to change , gut or just plain renege on CHIPS Act deals. Saving money is a core principle that Musk is wielding as a hatchet.

The stocks

Aside from the bad Applied Materials news this evening. This news about the CHIPS Act just adds to the many headwinds facing the industry; China, crappy memory pricing, Intel & Samsung falling behind, weak trailing edge, emerging China competition both in chips and chip equipment, weak PC and mobile phone etc, etc.

Whacking the CHIPS Act does not just impact the $39B associated with it but likely hundreds of billions of projects that CHIPS Act was a catalyst for.

Lets also not forget the goal of bringing back semiconductor dominance to the US. But then again, Trumps view is that we can bring back chips to the US by tariffing the heck out of imported chips. Somehow I don’t see that working.

The CHIPS Act was a nice idea while it lasted……

About Semiconductor Advisors LLC
Semiconductor Advisors is an RIA (a Registered Investment Advisor), nspecializing in technology companies with particular emphasis on semiconductor and semiconductor equipment companies. We have been covering the space longer and been involved with more transactions than any other financial professional in the space. We provide research, consulting and advisory services on strategic and financial matters to both industry participants as well as investors. We offer expert, intelligent, balanced research and advice. Our opinions are very direct and honest and offer an unbiased view as compared to other sources.

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