Despite Nvidia Selloff, Biden's Law and Taiwan Semi's Advantage Offer Growth Potential

Semiconductor chip stocks led by Nvidia Corp (NASDAQ:NVDA) noted investor selloff since Friday after gaining from Micron Technology, Inc’s (NASDAQ:MU) upbeat quarterly print and U.S. Fed rate cut to boost demand.

Broadcom Inc (NASDAQ:AVGO), Advanced Micro Devices, Inc (NASDAQ:AMD), Qualcom Inc (NASDAQ:QCOM), Texas Instruments Inc (NASDAQ:TXN), Arm Holdings plc (NASDAQ:ARM), Micron, Analog Devices, Inc (NASDAQ:ADI), Intel Corp (NASDAQ:INTC), Marvell Technology, Inc (NASDAQ:MRVL) are trading lower Tuesday. Semiconductor ETFs VanEck Semiconductor ETF (NASDAQ:SMH) and iShares Semiconductor ETF (NASDAQ:SOXX) are down over 3%.

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The street remains jittery over artificial intelligence prospects as analysts flagged Nvidia’s dependence on four customers, which are also developing in-house chips, and its delays in product releases.

Though China urges its companies to adopt domestic AI chipmakers, National Science and Technology Council (NSTC) Minister Wu Cheng-wen said China lags behind Taiwan Semiconductor Manufacturing Co’s (NYSE:TSM) advanced technology semiconductor manufacturing by at least a decade. Taiwan Semiconductor is a crucial supplier for Nvidia and Apple Inc (NASDAQ:AAPL).

The U.S. Chips Act played a crucial role in helping America develop its semiconductor base by offering subsidies to chipmakers to boost artificial intelligence chip production in the country.

The semiconductor sector could see another tailwind if the Biden administration inks a bill to fastrack the specific semiconductor manufacturing projects that receive subsidies through the Chips Act by diluting the federal environmental scrutinies.

The legislation would exempt qualifying chip projects from reviews under the National Environmental Policy Act, the New York Times reports.

Struggling chipmaker Intel recently got a boost from $3 billion in direct funding under the Chips Act in addition to the $8.5 billion in grants and $11 billion in loans that the company previously won under the act.

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