The CHIPS and Science Act (CHIPS) was enacted by Washington in 2022 to encourage semiconductor companies to manufacture their products in the United States.
From the website GRANTHORTON.COM: “Enacted last August, the CHIPS Act authorizes the federal government to provide direct funding, direct loans and loan guarantees to eligible companies investing in the domestic semiconductor manufacturing industry. The legislation also creates a 25% tax credit, projected to provide up to $24 billion to semiconductor manufacturers over the next few years, with no cap on the total amount allocated.”
These chips power everything from cars to zoo electronics. One of the latest applications of semiconductor chips is artificial intelligence (AI), which will soon create electronic humans of all shapes and sizes. These are currently one of the most popular stock sectors that investors are flocking to.
There are 68 semiconductor manufacturers listed on stock exchanges around the world. The combined value of these assets is estimated to be more than $5.3 trillion, and their total annual revenue is estimated to be more than $5 trillion. Twelve percent of all chips are manufactured in the United States, with the rest scattered around the world.
It has been argued that relying on foreign-made 88% of chips is a threat to U.S. national security, as it is the critical brain behind most things that require complex functionality, and that the government wants to do something about it. ing.
The Chip Act began as a free handout to U.S.-based chip manufacturers to build more factories here in the state, and when first conceived, the allocation was 52 billion. Not all of the money has been allocated, but Intel, a public company, received the largest share of his $8 billion just last week.
While some might argue that U.S. national security trumps the idea of funding a public company, this analyst doesn't see it that way.
Investments in semiconductor (chip) companies have been attracting the most attention lately, with the stock prices of chip manufacturers NVDIA and Micron Technology literally rising. Some wonder if free money has anything to do with it.
After all, what's not to like when a company receives government funding?
Over the past 12 months, Micron stock is up over 80%, Advance Micro Devices is up over 83%, and NVDIA is up over 252%. Intel stock was a laggard, but the CEO's performance wasn't bad.
The salaries and net worth of the CEOs of each company are as follows.
intel– In 2021, the most recent year of compensation data available, Patrick Gelsinger earned a total of $179 million. His base salary was only $1.1 million. He received his $1.75 million in cash recruiting bonuses and nearly $170 million in stock compensation.
micron technologies– Sanjay Mehrotra, CEO of Micron Technology, has an estimated net worth of at least $136 million. His total compensation for 2022 is $28,840,809, which includes $1,409,893 in salary, $3,435,275 in bonuses, $23,499,965 in stock, and $495,676 in other compensation. Mehrotra owns approximately 1.3 million shares of his Micron stock, representing his 0.11% of the company's outstanding shares.
NVDIA– Jensen Huang, appointed in April 1993, total annual compensation consists of $21.36 million, 4.7% salary and 95.3% bonus, with an estimated value of $62 billion including stocks and options.
Advanced Micro Devices -Laggy Lisa Su (poor me) only had an estimated net worth of over $1 billion. This consists of approximately 4 million AMD shares and options granted, valued at approximately $700 million. Mr. Su owns 0.2% of AMD stock.
Now consider that these numbers are before the stock price increases mentioned above.
Now, I'm no expert on things like reasonable salaries for executives, but if the board of a for-profit public company wants to pay senior executives that kind of money, they have the right to do so. After all, the board controls such things.
But is it just me, or is Washington supposed to be giving away billions of dollars to for-profit companies using taxpayer dollars when their executives are on the Fortune 500 list of richest Americans? Shall we?
Considering the amount of stock appreciation and tax breaks for each, it would be more logical to require them to increase U.S. manufacturing capacity with their own funds (and us taxpayers) rather than giving them billions of dollars. ). It's part of our hard-earned tax dollars.
