On July 27, local time, the U.S. House and Senate passed the CHIPS and Science Act amendment with an overwhelming majority, further expanding financial support for domestic semiconductor manufacturing and advanced process R&D. Following the announcement, the U.S. stock semiconductor sector rallied broadly. The Philadelphia Semiconductor Index (SOX) closed up 4.2% on the day, its largest single-day gain since March 2025, driving the NASDAQ Composite Index up 1.8% to hit the 21,000-point mark for the first time. The S&P 500 Index and the Dow Jones Industrial Average also rose 0.9% and 0.5% respectively, with a significant rebound in market risk appetite.
Core of New Act: Increased Subsidies and Manufacturing Reshoring
According to a White House briefing, this amendment adds approximately $52 billion in additional funding to the original act, raising the total chip subsidy program launched in 2022 to over $80 billion. The new funds are allocated to three main areas: first, supporting expansion of leading companies like TSMC, Samsung, and Intel that have already built factories in the U.S.; second, funding universities and research institutions for next-generation chip R&D (e.g., 2nm and below); third, establishing a 'Chip Manufacturing Worker Training Special Fund' to ease labor shortages. The act also requires subsidized companies to limit capacity expansion in specific countries (mainly China) over the next decade to strengthen supply chain security.
Industry analysts pointed out that the passage of the new act comes at a critical time for global semiconductor demand recovery. According to the latest data from SEMI, global semiconductor equipment shipments in the first half of 2026 grew 12% year-over-year, with the North American market growing 18%, indicating strong enthusiasm for capacity building. This increased funding is expected to further stimulate U.S. domestic wafer fab construction, driving over $120 billion in private investment over the next three years.
Market Reaction: Chip Giants Lead, Small Caps Follow
Stimulated by the news, the U.S. chip sector saw broad gains. Weighted stock NVIDIA (NVDA) closed up 5.1%, with its market cap returning above $3 trillion; TSMC (TSM) ADR rose 4.8%, with the company announcing its Arizona factory will mass-produce 3nm chips in 2027; Intel (INTC) rose 3.9%, accelerating equipment installation at its Ohio factory after receiving new subsidies. Additionally, equipment giant Applied Materials (AMAT) rose 4.5%, and lithography machine maker ASML (ASML) rose 3.2%. Small and mid-cap chip companies performed more aggressively, with silicon carbide material specialist Wolfspeed (WOLF) surging 7.3% and EDA software company Cadence Design (CDNS) rising 4.1%.
Fund flows showed semiconductor ETFs (e.g., SMH, SOXX) saw net inflows exceeding $1.5 billion on the day, setting a one-year record for single-day inflows. Among NASDAQ 100 components, chip-related companies contributed most of the gains. However, the market also noted profit-taking in some overextended AI concept stocks, such as AI chip design firm Cerebras Systems (CER) edging down 0.8%, as investors rotated within the sector.
Industry Analysis: Short-Term Boost, But Long-Term Earnings Delivery Key
Several Wall Street strategists held a moderately optimistic view of the act. A Goldman Sachs semiconductor analyst said the act's push for supply chain localization will reduce geopolitical risk premiums and raise the valuation center of U.S. chip companies. However, she also cautioned that capacity expansion from subsidies may take 2-3 years to translate into material revenue, and with the tech sector's overall P/E ratio already at the 90th percentile historically, investors should be wary of excessive short-term speculation.
Regarding the impact on assets like Bitcoin and gold, the semiconductor sector's rise boosted risk appetite, with Bitcoin also rebounding 2.3% on the day to above $68,000. However, traditional safe-haven gold edged down 0.2%, indicating some capital flow from precious metals to tech growth stocks. On Treasury yields, the 10-year yield rose 1 basis point to 3.89%, showing increased confidence in the economic outlook, but inflation expectations were not significantly disturbed.
Investment Strategy: Focus on Leaders with High Order Visibility
For investors looking to participate in the U.S. semiconductor rally, the author believes the following points should be noted: First, prioritize logic chip and memory chip giants with high order visibility, such as TSMC and Micron Technology (MU), which directly benefit from the explosion in advanced process demand; Second, equipment and materials segments have higher barriers, with leaders like Applied Materials and KLA Corporation (KLAC) likely to benefit from the fab construction cycle; Third, automotive chips and power semiconductors, such as ON Semiconductor (ON) and Texas Instruments (TXN), have strong growth certainty due to electric vehicles and industrial automation.
Additionally, investors need to be wary of two risks: first, policy uncertainty in the U.S. election year; if a new government adjusts the act's details, it could cause sector volatility; second, if downstream demand falls short of expectations, slowing global monthly semiconductor sales growth could weaken valuation recovery momentum. Overall, the long-term logic of the Chip Act is clear, but short-term chasing highs should be avoided; it is recommended to smooth costs through dollar-cost averaging into ETFs.
As of July 28, 2026, U.S. stock index futures edged higher, suggesting the rally may continue today. The market's focus will shift to the U.S. PCE data due later this week and earnings reports from tech giants Apple and Amazon. Investors should remain flexible and monitor capital rotation patterns.