Chip Stocks Fall As White House Reportedly Seeks Equity For CHIPS Grants

Core Viewpoint - Key semiconductor stocks experienced declines in both Asia and the U.S. following reports that the Trump administration may seek equity stakes in companies receiving federal grants under the CHIPS Act [1][2]. Government Plans - U.S. Commerce Secretary Howard Lutnick is considering a plan for the government to acquire equity stakes in chip-producing companies, specifically mentioning Intel, in exchange for grants under the CHIPS Act [1][2]. - The potential deal with Intel could result in the government obtaining a 10% stake in the company [2]. Impact on Other Companies - The equity stake condition may extend to other companies receiving grants under the CHIPS Act, including Micron, TSMC, and Samsung [3]. - A significant portion of the grant money allocated to these companies has yet to be disbursed [3]. Market Reactions - Intel's shares fell over 1% to $25.02 after a nearly 7% increase the previous day [4]. - AMD shares dropped 1.4% in premarket trading after a 5.4% decline on Tuesday, while Micron's shares fell 5.16% [4]. - In Asia, TSMC's shares decreased by 4.2% to TWD 1,135, and SK Hynix shares fell by 2.9% to KRW 255,500 [4]. Nvidia's Position - Nvidia's shares rose slightly to $175.85, as the company has not received any grants under the CHIPS Act due to its reliance on external chip manufacturers like TSMC and Samsung [5]. Political Context - Former President Donald Trump has criticized the Biden-era CHIPS Act, labeling it ineffective and suggesting that the government should seek equity for the funds provided to companies [6]. - Lutnick emphasized the shift in approach, stating that the Biden administration was giving money without seeking equity, while the Trump administration aims to secure a stake in return for financial support [6]. Additional Developments - SoftBank announced a deal to purchase $2 billion worth of Intel stock at $23 per share [7].