About two weeks ago, NVIDIA, the high-tech semiconductor maker and stock market darling, took a big hit to its share price.
News was announced that the U.S. government was banning sales of the high-end chips to China due to national security. The U.S. thought the Chinese would rip off these semiconductors and use them in weapons. NVIDIA said the ban would cost the company $400 million.
The stock is trading at $143, down from its high last year of $346. Ouch! That will leave a mark.
China Is Bad
But NVIDIA isn’t the only chip company that's taking it on the chin. The federal government is saying that anyone who has taken money from the Biden administration’s CHIPS and Science Act will be barred from building “advanced technology facilities” in China for 10 years.
As I'm sure you remember, last month, President Joe Biden signed into law the Creating Helpful Incentives to Produce Semiconductors (CHIPS) and Science Act of 2022. Such a long and twisted way to go to create a bureaucratic acronym.
But I digress. This tasty bit of pork gave away $280 billion to high-tech manufacturing and scientific research.
Upon signing the act into law, Biden said:
You know, the CHIPS and Science Act supercharges our efforts to make semiconductors here in America… those tiny computer chips smaller than a fingertip that are the building blocks for our modern economy, powering everything from smartphones to dishwashers to automobiles.
One could make the argument that semiconductors were already being reshored as the long and slow supply chain from China was not working. Chinese cities are still being shut down. You can't turn a profit if your widget takes nine months to get here.
But as we know, lobbyists will have their cut. And who am I to go against the wind, especially when there is a profit in it?
Our analysts have traveled the world over, dedicated to finding the best and most profitable investments in the global energy markets. All you have to do to join our Energy and Capital investment community is sign up for the daily newsletter below.
Onshoring Is Good
Regardless, semiconductor companies are building new plants — or fabs, as they are called by people in the know — in the United States again.
In the wake of the CHIPS Act, Intel has announced plans to build a $20 billion fab in Ohio.
Wolfspeed Inc., a smaller chip company, says it plans to create a $5 billion plant in North Carolina to make wafers.
But I’ve found one small company that will do even better. It just went public in mid-2021, and it’s still under the radar of most mainstream investors.
What makes it exciting is that the Department of Defense recently classified this company as a “trusted supplier,” which is a very rare classification.
The DoD gave out this honor because this company is the only 100% U.S.-owned and -based chipmaker in existence, which is why the DoD just gave it $170 million to make custom chips for space and medical devices.
The company recently announced plans to invest $1.8 billion for a chip research and production facility in Indiana.
And on top of that, it got a $36 million grant from the Department of Commerce to build a clean packaging facility in Florida.
This stock has been rising off the bottom, putting in higher highs. Since late May, this stock went from $4.43 to over $19.00 before pulling back. The chart is showing a solid buy opportunity for the next leg up.
This means investors could be about to make a lot of money once these new facilities are up and running in the United States.
And because there’s only one 100% U.S.-owned and -based company capable of making custom chips for America’s top companies and our military…
The profits could be MUCH larger than we’ve ever seen before. Learn more about my favorite semiconductor play here.
To your wealth,
Christian DeHaemer Christian is the founder of Bull and Bust Report and an editor at Energy and Capital. For more on Christian, see his editor’s page.
Check us out on YouTube!
