Taiwan Semiconductor Will Receive a Huge U.S. Subsidy. Does That Make the Stock a Buy?
The Biden administration announced this past Monday that Taiwan Semiconductor Manufacturing Company (NYSE: TSM) will receive a subsidy of up to $6.6 billion from the federal government to support the company's planned $65 billion investment in building three cutting-edge chip fabrication plants in Arizona. While that sounds like a lot of money, the market's reaction was tepid. The stock rose by just 1% in that day's trading session.
That reaction may leave investors wondering whether this agreement makes TSMC stock a buy or whether it does little to change the stock's value proposition. Let's dive in and see.
The subsidy is a product of the U.S. CHIPS and Science Act, which among other things allocated $53 billion in federal funds to promote the construction of semiconductor fabs on U.S. soil.
Source Fool.com