CHIPs Comes With Strings Attached -- I'm Shocked! Shocked -- February 28, 2023

A reader sent me this link:

Companies receiving money to build domestic semiconductor facilities under the $53 billion Chips Act will have to meet a series of requirements imposed by the government to ensure billions of dollars in taxpayer funding is protected and its national security goals are met.

Such conditions include financial requirements to share part of their profits with the government and restrain stock buybacks and dividends.

Companies are also expected to use union workers for the construction of facilities and provide child care for construction and factory workers. In a move that could limit their business potential for one of the world’s largest chip markets, the government puts tough limits on the expansion of companies’ operations in China for a decade

My not-ready-for-prime-time reply

Yes, it was very, very disheartening to see the strings attached.

Everything suggests that the semiconductors are going to have a very, very tough year (or years) and I would strongly suggest folks not invest in these companies if they want to sleep well at night.

Obviously, when Buffett sold all his TSM he saw something very concerning. Maybe he saw the strings attached to the CHIPS bill or maybe he felt he was way over-weight with tech (AAPL comprises more than 40% of his portfolio).

My "new money" allotment remains the same with 20% going to the semiconductor space but I have a long time horizon. I will never see the end result and that amount being invested in semiconductors does not affect my quality of life.

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All my posts are done quickly: there will be content and typographical errors. If anything on any of my posts is important to you, go to the source. If/when I find typographical / content errors, I will correct them. 

Again, all my posts are done quickly. There will be typographical and content errors in all my posts. If any of my posts are important to you, go to the source.