New York is teaming up with some of the foremost names in chipmaking to pour nearly $10 billion into a research facility at the University of Albany, according to the Wall Street Journal.
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The facility is to be set up at the Albany NanoTech complex. Once the necessary chip production equipment is sourced from ASML Holding (NASDAQ:ASML), project partners, including IBM (NYSE:IBM), Micron (NASDAQ:MU), and Applied Materials (NASDAQ:AMAT), will commence work on next-generation chip production.
The project will also tap state funds and could cement New York as a semiconductor research hub. The $53 billion Chips Act continues to drive significant public and private investments into the domestic chips space as the U.S. grows ever more wary of China’s technological advancements. Along with incentivizing domestic chip manufacturing, it is also moving swiftly to restrict China’s access to advanced technology via stringent export controls.
The AI boom has led to a major rally in multiple chip names. IBM is hovering around highs last seen before the pandemic. The tech giant recently teamed up with Meta (NASDAQ:META) and 50 other organizations to set up an industry group called AI Alliance. At the same time, the company continues to advance in quantum computing, new processors, and APIs (Application Programming Interface).
Furthermore, Micron is currently witnessing improving supply/demand dynamics. It could also benefit from a cyclical recovery in the memory market. Notably, the company is setting up a $100 billion mega chipmaking unit in New York.
In addition, ASML shares have jumped nearly 9% over the past month as investors cast aside any concerns about the Far-Right election victory in the Netherlands. The country’s Freedom Party is seeking a referendum on the Netherlands’ participation in the EU and is opposed to certain immigration policies. Further, a glut of lithography equipment in China and production constraints at chipmakers could be a challenge for the company.
Meanwhile, Applied Materials, which derives nearly half of its revenue from China, is facing a criminal investigation over equipment exports to the country without the necessary export licenses. However, the company is expected to perform strongly in wafer fab equipment in 2024.
New York is already home to multiple chip production facilities. The new research facility in Albany, combined with mega investments such as Micron’s, could help it become a significant driver in the country’s quest for dominance in advanced technologies.
Which are the Best Chip Stocks to Buy?
While shares of these chip majors have delivered double-digit returns over the past year, analysts see the highest potential upside of 11.6% in AMAT. This upside is based on a Strong Buy consensus rating and a $164.89 average price target. In contrast, the TipRanks Comparison Tool indicates that IBM could be hovering a tad above its fair valuation after a 14% price gain over the past year.
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