SEMICONDUCTOR INDUSTRY

TI To Acquire National Semiconductor

The Dallas-based Texas Instruments Inc. on April 4, 2011 announced that it would acquire National Semiconductor Corp. for $6.5 billion. The all-cash deal will pay a hefty premium of $25-a-share to National Semi compared to its closing price on April 4 ($14.07). The acquisition announcement marks TI's aggressive effort to expand in the analog business that had generated worldwide revenue of $42 billion in 2010, with TI getting about $6 billion, or 14%, and National Semi grabbing $1.6 billion, or 3%, of the market. Source: The Dallas Morning News (April 2, 2011)

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Far-Left, Far-Right Unite to Oppose CHIPS Act

The Dallas Morning News in its July 25, 2022, print edition published how far-Left Senator Bernie Sanders had found common cause with far-Right Republican Senators such as Mike Lee in opposing the Creating Helpful Initiatives to Produce Semiconductors, or CHIPS, Act. The measure will add $79 billion over a decade to the deficit as there will be tax abatement and financial incentives to produce semiconductors in the USA. 

Senate Approves CHIPS and Science Act

U.S. Senate on July 27, 2022 passed Creating Helpful Initiatives to Produce Semiconductors, or CHIPS, and Science Act by 66-33 vote. The $280 billion CHIPS and Science Act envisions, among others:

* $52 billion in subsidies to domestic semiconductor companies

* A five-year, $100 billion  investment in technology funding, including (1) authorization to expand National Science Foundation's domain of work, (2) reauthorization of NASA and (3) creating technology hubs in regions which are tech "investment desert"

House Passes CHIPS and Science Act

The U.S. House of Representatives on July 28, 2022 voted 243-187 to approve the $280 billion measure that would boost domestic chips production by giving $52.7 billion in subsidies to wafer and semiconductor manufacturers. Out of $52.7 billion, $39 billion is allocated for grant to competing manufacturers, $13.2 billion for research and workforce development, and $500 million for bolstering global supply chains. 

Biden Signs $280 billion CHIPS Act

On August 9, 2022, President Joe Biden signed $280 billion CHIPS and Science Act.

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Nasdaq Acquisition Bid for NYSE

On April 1, 2011, Nasdaq OMG Group Inc. and Atlanta-based IntercontinentalExchange offered to buy NYSE Euronext for $11.3 billion (based on $14.24 cash for each share of NYSE and a swap of 0.4069 share of Nasdaq and 0.1436 ICE shares for each share of NYSE as well as the closing prices of the trio on the day of announcement on April 1). The bid is better than a rival bid of $35-a-share offered by Deutsche Borse. The acqusition bid will help Nasdaq expand its stock and option trading platform, and make ICE into world's fourth-largest derivatives exchange by volume compared to its current rank of fourteenth.

Information Based on May 17, 2011
Nasdaq OMG Group and ICE on May 16 dropped the $11b bid to acquire the NYSE as US DOJ's anti-trust division had threatened to block the merger of two powerful US bourse. This clears the way for Deutsche Borse to acquire the NYSE. However, the traditional stock exchanges such as NYSE and NASDAQ are facing increasing competition from high tech exchanges such as BATS Exchange and Direct Edge as they provide better values to investors as transactions can be completed based on the best possible trade prices updated in milliseconds. Moreover, stocks are no more the most preferred vehicle for traders to make money. Instead, derivatives and options trading have become the most lucrative instruments for most of the traders.

House Republicans' Long-Term Spending Cuts Plan

House Budget Chair Rep. Paul Ryan, R-Wis., on April 5, 2011 unveiled the most expansive and elaborate spending plan, aiming to cut $5.8 trillion over the next decade (through Fiscal 2021). Under the Ryan Plan, Medicaid would be trimmed by $800 billion, or 22%, during 2012-21 by transforming Medicaid into a block grant to states. The Ryan Plan will basically privatize the Medicare (no net savings) for young workers and repeal Obama's signature health care law (savings of $1.4 trillion). Under the Ryan Plan, the people who are currently below 55-year-old will get, as part of Medicare, a specified amount of money from the federal government toward private insurance premium. The Medicare will become more like a voucher program.

The Defense component of the Ryan Plan calls for:

* Increasing Military spending by $200 billion (3%)

* Decreasing costs related to wars in Iraq and Afghanistan by $1 trillion (62%)

* Cutting Domestic Discretionary spending by $1.6 trillion (28%)

The Ryan Plan is, however, silent on Social Security reform, and calls for other mandatory spending cuts by $700 billion (19%). Under his plan, the net interest would go down by $400 billion (8%).

Total Spending Cuts: (0.8 + 1.4 - 0.2 + 1 + 1.6 + 0.7 + 0.4) : Approximately $5.8 trillion.

The Ryan Plan will also lower top personal and corporate tax rate to 25% from 35%. As a result of that, revenue will go down by $4.2 trillion, or 11%, during 2012-21.

Net Savings = $5.8 trillion - $4.2 trillion = $1.6 trillion (2012-21)

Ryan Plan will reduce federal budget defecit by $4.4 trillion over the next decade.

Ryan Plan could be viewed in budget.house.gov/fy2012budget/


Source: The Dallas Morning News (April 6, 2011)

Information Based on May 11, 2011, Edition of The Dallas Morning News

The Ryan Plan that was adopted as part of House-approved Fiscal 2012 Budget would leave 36 to 44 million people uninsured under Medicaid because of the Plan's proposal to convert Medicaid into a block grant to the states and repeal Obamacare. The study was done by Kaiser Family Foundation and the Urban Institute. Under the Ryan Plan, the Medicaid would be transformed from its current open-ended program in which federal government pays 60% of the cost of services into block grants to the state. Currently more than 60 million low-income children and parents, seniors, including most nursing home residents, and disabled people of any age are covered by Medicaid.