Stock of Micron Inc. Experiences Significant Decline Today
The potential conversion of CHIPS Act grants into equity stakes in semiconductor companies has caused a stir in the industry, with Micron Technology being one of the companies under scrutiny. However, recent clarifications from the White House and Commerce Department suggest that Micron Technology is exempt from such plans due to its increased domestic investments.
The CHIPS Act, designed to support the U.S. semiconductor industry, awarded Micron Technology $6.1 billion, the second-biggest semiconductor subsidy after Intel's. Yet, the rumours of the U.S. Commerce Department considering converting Micron's CHIPS Act grant into a stock investment have unsettled investors. Shares of Micron Technology (MU) dropped by 6.2% by 10:30 a.m. ET on Wednesday, reflecting investor concern about potential impacts on the company.
If the grant is converted, Micron Technology would lose $6.1 billion in "free money" from the grant. However, the White House and Commerce Department have clarified they will not request ownership stakes from Micron or TSMC because these companies have already ramped up their domestic investments beyond their initial commitments under the CHIPS Act.
The potential conversion could provide Micron Technology with additional investments from the government, but with strings attached. Such a move would alter Micron's financial framework and potentially affect its operational autonomy and competitiveness due to government involvement and oversight.
If the rumour is true, Micron would be competing with a state-backed rival, Intel. However, the government's more aggressive equity acquisition stance toward Intel reflects a calibrated strategy aimed at rewarding companies proactively investing in U.S. semiconductor manufacturing capacity.
While the threat of forced equity stakes via the CHIPS Act grants has unsettled investors and temporarily depressed Micron’s stock, official clearance from the White House suggests Micron will likely remain unaffected by forced equity conversions. Continued monitoring is warranted as policies evolve and as the government pursues similar strategies with other chipmakers like Intel.
References:
- White House and Commerce Department clarify no equity stake requests for Micron or TSMC
- Bloomberg: President Trump plans 10% equity stake in Intel
- CNN: Intel's grant from the CHIPS Act
- Reuters: U.S. government's equity acquisition stance toward Intel
- MarketWatch: Micron Technology's stock price drop amid CHIPS Act rumours
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