Politician Buying

Semiconductor Stocks Are Sparkling With Congress Trading

A report by the Semiconductor Industry Association (SIA) divulged that as of January 10, 2022, China’s sales in the Semiconductor Market surpassed not only Taiwan but also Europe and Japan. As of yet, there are still two countries in the race, standing in front with the most stake: USA and South Korea. Of course, Americans have never been far behind to keep on racing. The introduction of Chips Bills and bulls riding in Semiconductor Stocks are proof of that.

What are CHIPS?

Used in everything from computers, cars to appliances and medical devices, it is an understatement to say that computer chips are the most important component in our lives today. Companies producing chips and semiconductors are worth billions of dollars, but are lacking in production while their demand continues to rise.

The Creating Helpful Incentives to Produce Semiconductors for America Act, or better known as the CHIPS Act was approved in January 2021. The Act was drawn up as an answer to the Chip shortage that has been viral along with COVID-19 since 2020. However, the bill’s progress has halted with Congress. Both the White House and Executives from the Semiconductor Industry have been urging Congress to pass the Act and provide national Chip manufacturers with emergency funding worth $52 billion.

Lawmakers Enjoying Chips and Dips

The commotion surrounding the Semiconductor Industry is of course only a small wave before the big tide. Even though the bill is yet to be passed, CapitolTrades found another clue explaining the future of the Chips market: Stock trading by Congress members.

The list of 432 trades commenced from June 3, 2020 and went on till December 30, 2021. The first purchase of semiconductor stock was made on June 4, 2020 by Sen. Ronald Wyden (D-OR) who bought shares of KLA Corp. (KLAC:US) and Broadcom Inc. (AVGO:US) at closing values of $186.29 and $308.89 respectively. Presently, $KLAC is worth $389.27, while $AVGO has soared further with a price of $585.88.

Price chart of KLA Corp. (KLAC:US) with buying and selling activity

Price chart of Broadcom Inc. (AVGO:US) with buying and selling activity

A vast majority of transactions were valued in the range of $1,001 to $15,000. But there were some Lawmakers who traded with far heftier amounts. On August 25, 2021, Rep. Kevin Hern (R-OK) bought around $250,001 to $500,000 worth of stock from Texas Instruments Inc. (TXN:US). Hern is a frequent investor in $TXN and is still holding on to his past purchases.

In addition to this, Rep. Gregory Gianforte (R-MT) partially sold his shares of Taiwan Semiconductor Mfg. Co. (TSM:US) in a range of $100,001 - $250,000 with a closing price of $76.92 on July 28, 2020. With a total of 114 trades from July 28, 2020 to December 30, 2021, Rep. Rohit Khanna (D-CA) was the most frequent trader. His disclosures revealed transactions worth around $7.7 million in stocks including $TSM which is the largest manufacturer of Chips with an M.Cap. of $593.94 billion.

Bill Is Not Far Along

With rising competition from China as well as the semiconductor shortage, the US Congress is under constant pressure to pass the legislation. On January 25, 2022, the House of Representatives introduced a bill to boost Semiconductor manufacturing in America, very cleverly named the ‘America COMPETES Act of 2022’ as an answer to every Chip query and issue of the past two years. Speaker Nancy Pelosi (D-CA), said of the bill, “The House legislation will supercharge our investment in CHIPS, advance manufacturing at home, strengthen our supply chain, transform our research capacity and advance our competitiveness and leadership abroad.”

The bill is expected to pass before the third month of the year arrives. Considering the hoards of politicians trading in semiconductor companies, there are bullish and dollar signs sparking everywhere for the coming time.

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