$4.6 billion for Texas Instruments?! Biden’s Chips Act just changed the semiconductor game! 💥

In a significant move to bolster American semiconductor manufacturing, Texas Instruments Inc. (TXN) has been awarded $1.6 billion in grants and $3 billion in loans under the Biden administration’s Chips Act. This latest announcement underscores the U.S. government’s commitment to revitalizing the domestic semiconductor industry, an essential component of the global economy that has been increasingly dominated by Asian manufacturers.

A Strategic Investment in American Manufacturing

The $4.6 billion in funding will support the development of three major semiconductor manufacturing facilities: one in Utah and two in Texas. These projects are expected to cost approximately $18 billion and will be completed by 2029. The construction and operation of these facilities will generate around 2,000 direct manufacturing jobs, along with thousands more in the construction sector, contributing to the local economies of the regions involved.

In addition to these three factories, Texas Instruments plans to invest a total of $40 billion across both Utah and Texas, which includes the construction of two additional factories in Sherman, Texas. While these factories are not expected to come online until after 2030, the Commerce Department has indicated that it will prioritize projects scheduled for completion by the end of the decade, ensuring that the Chips Act’s impact is felt sooner rather than later.

The Broader Impact of the Chips Act on the U.S. Semiconductor Industry

The Chips and Science Act of 2022 represents the U.S. government’s most ambitious industrial policy initiative in over a generation. With $39 billion allocated for direct grants and an additional $75 billion in tax credits, loans, and loan guarantees, the Act aims to persuade semiconductor companies to bring production back to American soil after decades of offshoring to Asia. The Biden administration has already allocated the majority of these funds through more than a dozen preliminary awards, with final announcements expected by the end of the year.

While much of the Chips Act funding has been directed toward the production of cutting-edge semiconductors by industry giants like Intel Corp. and Taiwan Semiconductor Manufacturing Co. (TSMC), a portion of the funding has been reserved for the production of less advanced, or “legacy,” chips. These legacy semiconductors are critical to the functioning of everyday devices such as smartphones, refrigerators, and even military weapons systems. The Commerce Department has set aside at least $2 billion for the production of these essential chips, with Texas Instruments and GlobalFoundries Inc. being the primary beneficiaries.

Texas Instruments’ Strategic Position in the Semiconductor Market

Texas Instruments is a key player in the global semiconductor market, with a diverse portfolio of products and the largest customer base in the industry. The company’s chips are used in a wide range of applications, from consumer electronics to industrial equipment. With the support of the Chips Act, Texas Instruments is well-positioned to maintain and expand its leadership in the production of legacy semiconductors, an area that has become increasingly important as global supply chains face disruptions and geopolitical tensions rise.

In addition to the grants and loans provided under the Chips Act, Texas Instruments is expected to benefit from 25% tax credits, which could amount to an additional $6 billion to $8 billion. These financial incentives will enable the company to accelerate its investment in domestic manufacturing, ensuring a steady supply of semiconductors for the U.S. market and reducing dependence on foreign suppliers.

Addressing Geopolitical Challenges and Securing U.S. Supply Chains

The U.S. government’s decision to invest in domestic semiconductor production is driven by both economic and geopolitical considerations. China’s increasing ambitions in the semiconductor industry, particularly in the production of legacy chips, have raised concerns in both the U.S. and the European Union. In response, the Biden administration has taken steps to protect the U.S. semiconductor supply chain, including doubling tariffs on Chinese-made components to 50% as announced in May.

The award to Texas Instruments is part of a broader strategy to ensure a secure and reliable supply of semiconductors, which are the building blocks of nearly every aspect of modern life. Under Secretary of Commerce Laurie E. Locascio emphasized the importance of this initiative, stating that the funding will help ensure “a secure domestic supply of the foundational semiconductors that are the building blocks for nearly every aspect of modern life.”

TXN Technical Analysis (daily)

This daily chart for Texas Instruments (TXN) shows several key indicators and patterns.

Price Movement and Trends: The stock recently experienced a dip after reaching a peak near 210, pulling back to the 190 region before showing signs of recovery. The current price is around 200.53, below the 50-day moving average (199.49) but above the 200-day moving average (177.29). The price action suggests a potential consolidation phase after a strong upward trend, with some choppiness indicating indecision among investors.

Support and Resistance Levels:

• Support: There is strong support around the 177-180 range, which is near the 200-day moving average. This level has been tested before and could act as a floor if the stock declines further.
• Resistance: The immediate resistance is near the 205-210 range, where the stock recently peaked. If the price breaks above this level, it could signal a continuation of the previous uptrend.

Volume: The volume is relatively stable, with no significant spikes, indicating a lack of strong buying or selling pressure at the moment. The steady volume during price recovery suggests moderate confidence among traders.

Relative Strength IndexIn the world of technical analysis, the Relative Strength Index (RSI) stands as a cornerstone tool for traders seeking insights into market momentum. Developed by J. Welles Wilder ... More (RSI): The RSI is at 54.88, indicating a neutral position, neither overbought nor oversold. This suggests that the stock may have room to move in either direction depending on upcoming market catalysts.

On-Balance VolumeThe On Balance Volume indicator (OBV) is a technical analysis tool used to measure the flow of money into and out of a security over a specified period of time. It is a cumulative ... More (OBV): The OBV shows a slight decline, indicating that volume on down days has been higher than on up days. This could suggest a weakening bullish momentum.

Stochastic RSIIn the realm of technical analysis, the Stochastic RSI (StochRSI) emerges as a powerful tool for traders seeking to navigate market dynamics with precision. Developed by Tushar S. ... More: The Stochastic RSI is at 0.824, which is approaching overbought territory. This could indicate a short-term pullback if the indicator crosses above 0.8 and begins to decline.

Chaikin OscillatorNamed after its creator Marc Chaikin, the Chaikin Oscillator stands as a formidable tool in the arsenal of technical analysts. This oscillator is designed to measure the accumulati... More: The Chaikin Oscillator is slightly positive at 1.08M, which suggests mild buying pressure. However, the reading is not strong enough to confirm a robust bullish trend.

MACDThe MACD indicator is essentially a momentum indicator that shows the relationship between two different moving averages of price. The MACD is the difference between the 12-period ... More Oscillator: The MACD is slightly negative at -0.87, with the MACD line (-5.29) below the signal line (-4.42). This crossover is a bearish signal, indicating that the stock might face downward pressure in the near term.

Future Trends: The chart suggests that the stock is in a consolidation phase with a slight bearish bias in the short term. The MACD and Stochastic RSI indicate potential downward pressure, but the strong support around 177-180 could prevent a significant decline. The stock might trade sideways with possible short-term dips unless it breaks above the resistance at 205-210, which could signal a resumption of the uptrend.

Time-Frame Signals:

12 Months: Buy – The long-term trend remains positive, and the stock is likely to benefit from strong support around the 200-day moving average, potentially resuming its upward trajectory.

3 Months: Hold – The stock is in a consolidation phase with mixed signals. It is advisable to wait for a clearer direction before making significant moves.

6 Months: Hold – The stock has strong support and may continue to consolidate or gradually trend upwards if market conditions improve.

TXN Technical Analysis (weekly)

This weekly chart for Texas Instruments (TXN) indicates several key points about the stock’s behavior over a longer time frame.

Price Movement and Trends: The stock has been in a strong uptrend since its low near 140 in early 2023, reaching a high around 210. After this peak, it pulled back to around 180 before recovering to its current level of 200.53. The price is well above the Anchored VWAP from August 2023, which is at 172.24, suggesting that the stock is still in a bullish phase overall, despite the recent pullback.

Support and Resistance Levels:

• Support: The 172-175 range, near the Anchored VWAP, acts as a strong support level. If the stock declines, this level may serve as a cushion and prevent further losses.
• Resistance: The immediate resistance is around 210, where the stock recently peaked. Breaking this level could lead to a continuation of the uptrend.

Volume: The weekly volume has been consistent, with no extreme spikes. The recent green bars indicate buying interest as the stock rebounded from its pullback. However, the volume isn’t particularly high, suggesting that the buying pressure is moderate.

On-Balance Volume (OBV): The OBV has been steadily climbing, indicating that volume on up weeks has been stronger than on down weeks. This is a positive sign, reflecting a healthy accumulation phase in the market.

Future Trends: The chart suggests a bullish long-term trend, supported by the rising OBV and the stock’s position above the Anchored VWAP. While there is resistance at 210, the overall trend appears strong, and a break above this level could signal further gains. If the stock falls, the 172-175 support zone should be closely watched.

Time-Frame Signals:

• 1 Year: Buy – The stock is in a bullish trend and could continue to rise, especially if it breaks above the 210 resistance level.
• 2 Years: Buy – The long-term trend is positive, with support from the rising OBV and the Anchored VWAP. The stock has potential for continued gains.
• 3 Years: Buy – The stock’s overall trend is upward, and the consistent accumulation suggests that it could perform well over a multi-year horizon.

Past performance is not an indication of future results. This article should not be considered as investment advice. Always conduct your own research and consider consulting with a financial advisor before making any investment decisions. 🧡

The Future of Semiconductor Manufacturing in the U.S.

As Texas Instruments embarks on its ambitious expansion plans, the broader U.S. semiconductor industry stands to benefit from the Chips Act’s significant financial support. The successful implementation of these projects will not only create thousands of jobs but also strengthen the U.S. position in the global semiconductor market, reducing dependence on foreign suppliers and enhancing national security.

The Chips Act represents a turning point in U.S. industrial policy, marking a renewed commitment to domestic manufacturing and technological innovation. As the Biden administration continues to roll out funding and support for the semiconductor industry, companies like Texas Instruments will play a crucial role in shaping the future of American technology and ensuring that the U.S. remains a leader in the global economy.