Chip stocks rallied Wednesday after the Senate moved closer to greenlighting more than $50 billion in funds for U.S.-based chip manufacturing, even as one chip-equipment maker gave an ominous forecast.
Late Tuesday, senators passed a procedural vote of 64 to 34 to advance the $52 billion U.S. Innovation and Competition Act, even as details are still being worked out, a positive sign because that many votes would be able to overcome a filibuster. Funding appeared to be in danger in late June when Senate Republican leader Mitch McConnell threatened to derail the bill if Democrats revived their stalled climate and social policy package. Uncertainty over the funding had grown so much that Intel Corp.
in late June, had delayed groundbreaking on its new plant in Ohio.
The PHLX Semiconductor Index
outpaced broader market gains Wednesday, rising as much as 2.5%, while the S&P 500 index
rose as much as 1%. For the year, the SOX index is still down 28%, compared with a 17% decline in the S&P 500.
The advance in chip stocks comes despite a reduced forecast from ASML Holding NV
early Wednesday. The Netherlands-based chip-equipment maker said it expects about 10% revenue growth for the year, down from a forecast of 20% growth in its previous earnings report. In 2021, the company brought in 18.6 billion euros in sales.
“Some customers are indicating signs of slowing demand in certain consumer-driven market segments, yet we still see strong demand for our systems, driven by global megatrends in automotive, high-performance computing, and green energy transition,” ASML Chief Executive Peter Wennink said in a statement.
Yellow flags have been flying in the chip sector for months, with analysts warning that the record sales of recent years could lead to a supply glut after the pandemic-influenced shortage of semiconductors eased. Concerns have increased…