Recently, as you may have heard, the U.S. Senate and Congress voted in favor of passing the CHIPS and Science Act. The package includes a whopping $280 billion in funds and subsidies for the ultimate goal of restoring U.S. tech leadership, and not just for commercial reasons. This bill aims to accomplish wider-reaching strategic reasons like decreasing dependence on Asian countries for crucial technological components. 

With how vital microchips are in almost every industry imaginable, semiconductor dominance is being looked at as an arms race. Not only are chips found in consumer technologies, but in military tech as well. Military tech is likely to be the focus of the U.S. government's mind with this bill: Things like drones, missiles, communications and strategic intelligence are all dependent on bleeding-edge chipmaking tech. Obviously, our competitors want to keep their tech secrets in-house, but as things stand now, the U.S. has the edge over China with chipmaking technology. 

This new bill aims to keep it that way and further push the U.S. ahead of the competition. 

A decent portion of the funds in the bill are reserved for companies to build chip making factories in the U.S., around $77 billion in subsidies and tax credits. Currently, just 12% of global chip production takes place in the U.S., compared with 37% in 1990. 

And we’re not alone in our push to invest in chip research, development and manufacturing. China is preparing chip investments of around $150 billion into 2030 according to estimates. 

South Korea also has an aggressive incentive plan, aiming to pursue about $260 billion in chip investments over the next few years. In Europe, the EU is pushing over $40 billion in semiconductor developments. 

Given that some of these countries are friendly, the U.S. will likely be coordinating with its allies to prevent subsidy competition that could create production overruns or overlapping government investments. 

Ultimately this bill will give a nice boost to the semiconductor names that can take advantage of the added funding and subsidies. 

Even in the face of less-than-ideal earnings outlooks (looking at you, Nvidia), the CHIPS act provides a path forward that many companies in the field can benefit from. 

And while this bill specifically aims to benefit chipmakers in the U.S., ETFs like the VanEck Semiconductor ETF (SMH) look like great ways to play the global push for semiconductor dominance.