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.

Another Round of Stopgap Funding to Avoid Government Shutdown

The House of Representative on March 15, 2011 passed a measure by 271-158 votes (54 Republicans opposed the bill as they complained that there was not enough spending cuts) that would fund the government for three more weeks (until April 8, 2011) as hectic negotiation would be rolling out in the Capitol and White House to come up with a final spending plan for the Fiscal 2011 that ends September 30. The House measure cuts spending $6 billion over the next three weeks.

The Senate voted on the measure on March 16. The vote was 87-13, with 9 Republicans joining 4 Democrats in voting down the measure.

Mexico Agrees to Lift Tariff

Visiting Mexican President Felipe Calderon and his U.S. counterpart, Barack Obama, on March 3, 2011 reached at an agreement that would pave the way for Mexico to lift $2.4 billion in punitive tariff in exchange for Mexican rigs rolling on American highways. The tariff has hit pork, cosmetics, Christmas trees, chemicals, pet food and hundreds of other products. Mexico would withdraw half the tariff, probably, by April and the remaining half after one of its truck carriers gets approval to enter U.S.A.

Interim Funding of Government to Evade Shutdown

The House of Representative by 335 to 91 (231 Republicans and 104 Democrats voted for the measure, while six Republicans and 85 Democrats voted against it) vote extended the federal government funding for two weeks. The March 1, 2011, House vote was followed by March 2, 2011, Senate vote (91-9, five Republicans and four Democrats voted against the measure) to avert a government shutdown. This gives a two-week lease for the Republican and Democratic negotiators to hammer out an agreement to keep the federal government running beyond the new expiry date of March 18, 2011. The U.S. Senate voted on the measure on March 2, 2011 that would keep running the federal government for two weeks beyond March4, 2011. The measure cuts $4 billion in spending for two weeks.

House Republicans Chopping Fiscal 2011 Budget

As part of their election pledge to chopp off $100b of government spending, House Republicans on February 19, 2011 approved a measure, by 235-189 votes (oppossing votes have been cast by all 186 Democrats and three Republican members), aimed at cutting the spending for the remainder of Fiscal 2011 by $61b. Most of the 87 freshman Republicans, helped elected by the Tea Party movement, wanted to cut more, but Republican leaders in concert with the Democratic lawmakers scuttled a measure championed by the conservative Republican Study Committee to ax government by an additional $22 billion. The four-day of gruelling debate was centered around the scope and scale of governance, ideological posturings and possible impact of the extreme measures inserted in some of more than 400 amendments submitted. Initially the Republican leadership was intent on a modest cut of $35 billion, but the move was torpedoed by the rebellious freshmen Republicans few weeks ago. Now the battle line (as blogged by Prabir based on reports as of February 20, 2011) is drawn as the current funding of government will expire March 4, 2011.