Yahoo Finance's Brian Cheung and Akiko Fujita discuss the response from chip makers and the Street as President Biden signs a package of semiconductor investment into law.
AKIKO FUJITA: President Biden just a short time ago signing that CHIPS Act into law, aiming to boost domestic production. We're talking about $52 billion in subsidies for chip manufacturing and research, roughly $24 billion in investment tax credit for chip plants.
But take a look at how shares are doing there in terms of chips as a whole. Not getting a big lift on the back of this largely because of what we have heard from these chip companies. Micron as well as Nvidia warning about slowdown in revenue. Micron specifically warning of revenue for the current quarter falling to the low end of their recent guidance.
Now, going back to the CHIPS bill, Brian, we've talked about this, really, to a very large extent in terms of what that's likely to mean for the chip sector here in the US. The White House today touting additional investments that have come in, Micron announcing a $40 billion investment in memory chip manufacturing in the US. It's going to be deployed between now and 2030. Qualcomm and GlobalFoundries announcing a new partnership, $4.2 billion in manufacturing chips.
So this is great news for the White House. They've been pushing this for some time. The question waiting on the other side is, this is going to spur investment in the US. Is there enough demand when those-- the manufacturing starts to kick in because we're talking about several years. I mean, these are not overnight projects.
BRIAN CHEUNG: It's a long process. And I think that when we talk about the stock movement as well, I mean, that's a reason why, yes, the CHIPS Act got signed, but you're not going to see these stocks retire instantly because there are just so many factors over the long-term, which is really the horizon by which a lot of these changes will be implemented.
I mean, I was looking at a note from the UBS chief investment officer noting that the funds are going to be released over a period of time as well. I mean, the investment is not even going to be the case where, oh, it just takes a while to build a factory or to build a foundry. But even the money itself is going to be released on kind of a timed basis.
So that's going to take a number of years just from breaking ground to actually getting facilities to actually getting the production. And who knows what the global demand picture is going to look like at that time? But I think broadly speaking, we've had so many conversations about chips on this show. The trend is more products, like cars, for example, are going to require more chips. So that story should probably still be secular, moving forward.
AKIKO FUJITA: Well, and at the end of the day, it is about reducing reliance on other countries. We're not talking just about China. Taiwan, obviously, a big one, South Korea. So a story that we're going to continue to watch there because there are large implications across sectors.