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What is the CHIPS Act and how does it affect semiconductor stocks?

AlphaOS investment intelligence · Research and education only — not investment advice · Updated Sep 27, 2026

About semiconductors

Direct answer

The CHIPS and Science Act is a bipartisan U.S. federal law enacted in August 2022, allocating approximately $52.7 billion in subsidies for domestic semiconductor manufacturing, research and development, and workforce development to bolster U.S. competitiveness and supply chain resilience, directly impacting semiconductor stocks by incentivizing onshore production and innovation. This legislation aims to reduce reliance on foreign manufacturing, particularly from Asia, by providing grants, tax credits, and other financial assistance to companies building or expanding semiconductor fabrication facilities (fabs) within the United States, thereby enhancing the long-term growth prospects and operational stability of domestic semiconductor firms.

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Key Takeaways

  • The CHIPS Act provides $52.7 billion in funding, including $39 billion for manufacturing incentives and $13.2 billion for R&D and workforce development.
  • The primary goal is to increase domestic semiconductor manufacturing capacity and reduce reliance on foreign supply chains, particularly from Taiwan and South Korea.
  • Companies receiving CHIPS Act funding are restricted from expanding advanced semiconductor manufacturing in China or other 'countries of concern' for 10 years.
  • The Act includes a 25% investment tax credit for manufacturing facilities for semiconductors and related equipment.
  • Major beneficiaries include companies like Intel, Samsung, and TSMC, which have announced significant U.S. fab investments.
  • The legislation aims to create thousands of high-paying jobs in the semiconductor industry and related sectors.
  • Increased domestic production is expected to enhance national security and economic resilience by securing critical technology supply.
  • The Act addresses the global chip shortage experienced during the COVID-19 pandemic by diversifying manufacturing locations.

Evidence & Analysis

  • The Semiconductor Industry Association (SIA) reported that the U.S. share of global semiconductor manufacturing capacity declined from 37% in 1990 to 12% in 2020, a trend the CHIPS Act aims to reverse.
  • Intel announced plans to invest over $20 billion in two new fabs in Ohio, with potential for up to eight fabs, contingent on CHIPS Act funding.
  • TSMC is investing $40 billion in two fabs in Arizona, with the first expected to begin production in 2025.
  • Samsung is investing $17 billion in a new fab in Taylor, Texas, with potential for further expansion.
  • The CHIPS Act includes a 25% advanced manufacturing investment tax credit, estimated to be worth $24 billion.
  • The U.S. Department of Commerce has announced initial CHIPS Act funding awards, including $8.5 billion for Intel and $6.6 billion for TSMC.

Key Companies

INTC

Intel Corporation

Major beneficiary, committed to building new fabs in Ohio and Arizona, receiving significant CHIPS funding.

TSM

Taiwan Semiconductor Manufacturing Company Limited

Beneficiary, investing billions in Arizona fabs, subject to 'guardrail' restrictions.

NVDA

NVIDIA Corporation

Indirect beneficiary through increased domestic fab capacity, though not a direct fab builder.

AMAT

Applied Materials, Inc.

Beneficiary as a leading supplier of semiconductor manufacturing equipment, demand for which increases with new fabs.

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