SOXX ETF in Focus as Billions in US Subsidies Expected For Chipmakers—Key Levels to Watch
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Key Takeaways
The iShares Semiconductor ETF remains in focus after the WSJ reported that the Biden Administration plans to award billions in subsidies to boost U.S. chip manufacturing.
Leading chip companies, including Intel, and Taiwan Semiconductor Manufacturing Co., are likely recipients of the subsidies, according to the report.
The ETF’s price trades just below its all-time high, with a key three-month trendline in play.
iShares Semiconductor ETF
Source: TradingView.com.
The iShares Semiconductor ETF (
SOXX
) returns to the spotlight Monday after the
Wall Street Journal
reported over the weekend that the Biden Administration plans to award billions of dollars in subsidies to leading
semiconductor companies
for building new U.S.-based factories.
According to industry executives cited by the Journal, the forthcoming initiative—expected to be announced before President Biden’s State of the Union address on March 7—aims to bolster domestic manufacturing of advanced chips used to power smart devices,
artificial intelligence
(AI), and military systems.
Likely recipients of the subsidies include Intel Corporation (
INTC
), which has outlaid more than $43.5 billion to construct new facilities in multiple states, and Taiwan Semiconductor Manufacturing Co (
TSM
), which has invested $40 billion to build two new plants in Arizona. Other leading contenders in the mix to receive funding include South Korea’s, Samsung Electronics Co., Ltd. (
SSNLF
), Micron Technology, Inc. (
MU
), Texas Instruments Incorporated (
TXN
), and GlobalFoundries Inc. (
GFS
).
Within the SOXX fund, Intel and Taiwan Semiconductor carry respective
portfolio
weightings of 5.88% and 3.59%, while Micron and Texas Instruments each command allocations of over 3%.
The Journal’s report comes a little over a month after U.S. Commerce Secretary Gina Raimondo said she expects to announce a dozen semiconductor funding awards, including several multi-billion dollar announcements, within the next year that could drastically reshape U.S. chip production.
After a retest of key
support
at $535, the SOXX share price has continued to trend upwards on increasing volume, suggesting institutional participation behind the rally. If the fund moves higher, monitor how the price responds to last week’s
all-time high (ATH)
. A close above this closely watched level would indicate bullish momentum remains intact and potentially lead to further upside. However, if a
retracement
takes place around the ATH, it’s worth monitoring if an uptrend line stretching back to the October
swing low
provides support near $575.
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As of the date this article was written, the author does not own any of the above securities.
