Despite Nvidia Selloff, Biden's Law and Taiwan Semi's Advantage Offer Growth Potential

Semiconductor chip stocks led by Nvidia Corp NVDA noted investor selloff since Friday after gaining from Micron Technology, Inc’s MU upbeat quarterly print and U.S. Fed rate cut to boost demand.

Broadcom Inc AVGO, Advanced Micro Devices, Inc AMD, Qualcom Inc QCOM, Texas Instruments Inc TXN, Arm Holdings plc ARM, Micron, Analog Devices, Inc ADI, Intel Corp INTC, Marvell Technology, Inc MRVL are trading lower Tuesday. Semiconductor ETFs VanEck Semiconductor ETF SMH and iShares Semiconductor ETF SOXX are down over 3%.

Also Read: Qualcomm Partners With STMicroelectronics To Boost AI-Powered IoT Connectivity

The street remains jittery over artificial intelligence prospects as analysts flagged Nvidia’s dependence on four customers, which are also developing in-house chips, and its delays in product releases.

Though China urges its companies to adopt domestic AI chipmakers, National Science and Technology Council (NSTC) Minister Wu Cheng-wen said China lags behind Taiwan Semiconductor Manufacturing Co’s TSM advanced technology semiconductor manufacturing by at least a decade. Taiwan Semiconductor is a crucial supplier for Nvidia and Apple Inc AAPL.

The U.S. Chips Act played a crucial role in helping America develop its semiconductor base by offering subsidies to chipmakers to boost artificial intelligence chip production in the country.

The semiconductor sector could see another tailwind if the Biden administration inks a bill to fastrack the specific semiconductor manufacturing projects that receive subsidies through the Chips Act by diluting the federal environmental scrutinies.

The legislation would exempt qualifying chip projects from reviews under the National Environmental Policy Act, the New York Times reports.

Struggling chipmaker Intel recently got a boost from $3 billion in direct funding under the Chips Act in addition to the $8.5 billion in grants and $11 billion in loans that the company previously won under the act.

Also Read:

• Micron Set for Profit Surge with High-Margin Products and AI-Driven Market Expansion, Analyst Says

Photo via Shutterstock