Given the importance of chips, the U.S. is spending billions of dollars to strengthen its supply-chain resilience, create jobs, and reduce its dependence on Asia, primarily China. Chips form the foundation of almost all tech (automobiles, consumer electronics, healthcare devices, and defense systems, to name a few) in the modern world.
The most visible step in the U.S.’s devotion to upping its chip production was the signing of the CHIPS and Science Act into law by President Biden. The CHIPS and Science act includes $39 billion in manufacturing incentives and overall $52.7 billion for semiconductors research, development, and manufacturing. This will likely give a significant boost to America’s market share of memory chip production.
The enactment of the CHIPS act has sparked multi-billion dollars investments in the U.S. for semiconductor production. For example, Micron Technology (NASDAQ:MU) has announced plans to build the largest semiconductor fabrication facility in Central New York. The company intends to invest up to $100 billion in the next 20 years to build a new Megafab. Micron’s Megafab will enhance the domestic supply of leading-edge memory and create 50,000 jobs.
Besides for MU, Intel (NASDAQ:INTC) intends to invest over $20 billion for the construction of two new leading-edge chip factories in Ohio.
These investments, coupled with federal grants and incentives, will likely ensure a stable domestic supply of semiconductor chips in the long run, which is critical to economic and technological advancement. However, these investments will take years to build. Meanwhile, in the near-term, weak consumer demand amidst fear of recession will likely hurt the semiconductor industry.
Against this backdrop, let’s examine what analysts say about MU and INTC stocks.
What’s the Prediction for MU Stock?
Micron (MU) stock fell approximately 40% in one year. Meanwhile, it has a Moderate Buy consensus rating on TipRanks based on 15 Buys, six Hold, and two Sell. Furthermore, analysts’ average price target of $63.38 implies 11.35% upside potential.
Is Intel a Buy, Sell, or Hold?
Intel stock is a Hold on TipRanks, based on three Buy, 20 Hold, and eight Sell recommendations. INTC stock declined by about 44% in the past year and underperformed the S&P 500 Index (SPX). Even with this decline in price, analysts’ price target of $29.76 implies a downside of 1.06%.