Chips and Dip
The global semiconductor shortage has impacted industries the world over from satellites to cars to refrigerators to sex toys. As the repercussions continue to emanate through American society, lawmakers have reignited discussions to invest in domestic chip manufacturing capacity. Over the past couple months, there have been rumours of a bipartisan Senate bill that would provide~$52 billion to the semiconductor industry.
As reported in the past (House / Senate), sometimes lawmakers like to dip into the industries they get non-public information on or create legislation for. So today, let’s see who’s double dipping into semiconductor chips.
A Brief History on Semiconductor Bills Proposed, but Never Passed in Congress
Bills get introduced and workshopped through the House and Senate all the time. Some of them never become law, but their ideas may resurface at a more opportune time. This is what’s happening for Made In America semiconductor chips.
Here’s how we got here and who the players are:
June 11, 2020
Republican Rep. Michael McCaul introduced H.R.7178 in the House. The Creating Helpful Incentives to Produce Semiconductors for America Act or the CHIPS for America Act was a bipartisan proposal that aimed to establish investments and incentives to support U.S. semiconductor manufacturing, research and development, and supply chain security.
This bill had 29 co-sponsors consisting of both House Democrat and Republicans. One of them being Republican Rep. Susan Brooks. She purchased up to $15,000 in Qualcomm and Apple stocks in early April 2020 during the market crash. She didn’t sell either before co-sponsoring this bill and has been holding since.
September 17, 2020
Democratic Senators Bob Menendez, Richard Durbin and then-Minority Leader Schumer introduced S.4629 in the Senate. The America Labor, Economic competitiveness, Alliances, Democracy and Security Act or the America LEADS Act addressed science and technology development, global infrastructure, U.S. manufacturing, foreign relations, and other topics. Specifically, there were incentives proposed to secure and develop semiconductor chip manufacturing in America.
This bill did not have bipartisan support and had 13 Dem co-sponsors. One of them being Senator Ron Wyden, whose family disclosed 26 trades in the semiconductor industry prior to signing onto this bill and many more following. But more on Senator Wyden later.
December 8, 2020
Recent rumours of chips funding originated from a Senate bill introduced back in December. The Creating Helpful Incentives for Producing Semiconductors (CHIPS) for America and Foundries Act was a bipartisan effort in the Senate to incentivize semiconductor and microelectronics manufacturing. It was introduced by Republican Senator John Cornyn with 3 other co-sponsors: then Senate Minority Leader Chuck Schumer, Democrat Mark Warner and Republican Tom Cotton. None of these Senators have disclosed any investments in the semiconductor industry in the last year.
2021
In late February, President Joe Biden signed an executive order to review supply chains, with a focus on semiconductor chips. On March 8, 2021, the semiconductor industry endorsed the CHIP Act via a letter addressed to Biden. And by the end of the month,Biden announced his massive infrastructure plan that included funding for chips manufacturing.
The pressure has only increased since March 2021, as tech giants (Microsoft, Apple, Amazon and Google) have pressured the feds to fund domestic chip manufacturing ASAP.
With momentum from industry and support from all three executive branches, funding for domestic semiconductor manufacturing is all but guaranteed. Of all Congressional players currently negotiating the details of this bill, let’s see who may be doubly incentivized to ensure the CHIPS Act becomes law.
Congressional Trading in the Semiconductor Industry since 2020
The following charts show the maximum disclosed amounts in chip stocks by House Reps and Senators.
The whale first compiled a list of semiconductor and adjacent companies that would stand to gain from an influx of government funding and then looked at all trades placed since 2020.
We see a number of House Members trading in this sector. We know that previous iterations of the CHIPS Act were referred to the House Committee on Science, Space, and Technology and Senate Committee on Commerce, Science, and Transportation for review.
The whale had to separate Speak Pelosi and Rep. Kim Schrier’s huge AAPL sell offs, as they make their House colleagues’ trades look like peanuts.
In general, we see that the majority of House Members who’ve disclosed chip stocks only invested in one or two. However, Reps Josh Gottheimer, John Curtis, Gilbert Cisneros and Dean Phillips had their hands in a range of semiconductor players.
We can explore when members bought or sold chip stocks around legislative events by plotting each ticker’s adjusted closing price with trades as events in time. You can click, zoom and hover for more information in the dropdown.
Who’s still got their hands in the cookie jar? Well, this can be somewhat challenging to determine, but let’s use the net amount between first stances of buys and subsequent sales to calculate a very rough estimate on which House Members still hold individual chip stocks.
The below chart shows who and approximately how much members still have invested in the semiconductor sector.
Many of these investments have made significant gains since first purchasing. The following House members had either co-sponsored or had been asked to review the original House CHIPS Act (June 2020) as per their Committee duties.
- Rep. Dean Phillips sat on the Committee on Foreign Affairs during this time and this committee was asked to review the CHIPS Act. He bought AMD and AAPL during the crash, and later started picking up more chip stocks following the introduction of the America LEADS Act to the Senate. Different executive branches, but interesting timing. Here’s how those trades are doing now based off of adjusted closing prices:
- AMD is at the same price as of May 14, 2021
- AAPL is now +20%
- XLNX is now +22%
- MU is now +67%
- Rep. Susan Brooks co-sponsored the House’s CHIPS Act. At the time, she was holding and is still holding the following stocks:
- AAPL, now up 96%
- QCOM, now up 88%
- Rep. James Langevin sat on the Committee on Armed Services in 2020 and this committee was asked to review the House’s CHIP Act. He has been buying up tons of Apple since Biden assumed office with up to $310k.
- From his first October 2020 buy, AAPL is up +18%
- Rep. Michael Conaway also sat on the Committee on Armed Services at the time. Since the 2020 crash, he has invested a significant amount in Apple (up to $250k).
- From his first April 2020 buys, AAPL is up +81%
- Although, Rep. Kevin Hern does not sit on any of the aforementioned committees asked to review the original CHIPS Act, it seems he just really loves Texas Instruments. He’s been buying the stock since the crash in 2020 and through to this year. He’s invested a maximum amount of $325k in TXN. From the first instance of buying, he’s now up +76%.
Meanwhile, these members sat on or still sit on the House Committee on Science, Space, and Technology, which would be the first committee privy to non-public information on the semiconductor sector. Arguably, they should steer clear of investing in the sector out of an abundance of caution to avoid perceived conflicts of interest, but here we are:
- Rep. Donald Sternoff Beyer bought and sold AAPL, NVDA and ASML throughout 2020 and 2021. He’s still holding ASML which he bought back in November 2020. He’s up 55%.
- Rep. Ed Perlmutter is still holding AAPL and NVDA with purchases dating back to after the CHIPS Act was introduced in the House.
- AAPL is up +39%
- NVDA is up +10%
- Rep. Zoe Lofgren’s spouse bought QCOM one week after the CHIPS Act was introduced in the House. Her family’s been holding it since and it’s up +47%.
- Rep. Roger W. Marshall disclosed that he bought AMD and INTC in 2020.
- AMD is up 42%
- INTC is up 8%
- Rep. Mikie Sherrill also sat on this Committee but it’s notable that she sold off all of her stocks on February 20, 2020 following the news of Senators selling off tons of stocks before the crash. The next day she and her husband invested in broad-based index funds.
The Senate
Meanwhile in the Senate, we see Senator Ron Wyden’s wife - Nancy Wyden, owner of the Strand Bookstore - buying up tons of chip stocks. To this day, his family has the most diversified semiconductor stocks portfolio in the Senate. Remember that in fall 2020, Senator Wyden co-sponsored the America LEADS Act that would have provided funding to this sector. He’s also been a vocal supporter of the CHIPS Act first introduced in June 2020 by his House colleague Michael McCaul.
Here’s a quote from Senator Wyden on Rep. McCaul’s website:
Lol.
In case you’re wondering, here are Senate trades charted per ticker.
We can see that Nancy Wyden bought AAPL, AMAT, AVGO, KLAC and NVDA when the CHIPS Act was first introduced in the House. As someone who later co-sponsored a bill with similar provisions, and who vocally supports the latest version of the CHIPS bill, Senator Ron Wyden may have known about this bill at the time...
Regardless, here are their gains from the closest purchase dates to the 2020 CHIPS bill and his later disclosed sell dates (all sold after Biden’s infrastructure announcement in 2021):
- AMAT sold at 134%
- KLAC sold at 88%
- AVGO sold at 62%
When we calculate a rough estimate of who’s still invested in the sector, here’s what we find:
Here are the estimated gains for Senators who are still holding these chip stocks (as of May 14, 2021):
- Carper’s wife + INTC = -11%
- Carper’s wife + QCOM = -10%
- Wyden’s wife + NVDA = +64%
- Wyden’s wife + AAPL = +40%
- Toomey’s child + AAPL = +2%
- Roberts’ wife + AAPL (estimated from her earliest purchase date) = +78%
- Moran + INTC = +17%
None of these Senators currently sit on the Committee on Commerce, Science and Transportation which would receive non-public information on the semiconductor sector and was asked in December 2020 to review the Senate’s initial version of the CHIPS Act. Still, Senator Wyden’s involvement in legislation for the semiconductor sector begs that question of whether his family should divest from companies that stand to gain.
Conclusion
Just taking semiconductor chips as an example, it’s clear Congressional members can’t help but dip into the sectors they create legislation for. A version of the CHIPS Act will hit the House and Senate floors in the very near future. These individuals will be asked to vote and pass this bill into law, all the while holding significant financial investments in the sector. Why isn’t this a conflict of interest? It appears we can’t rely on our elected officials to see how messed up this is. Nor can we rely on the 2012 STOCK Act to ensure this doesn’t happen (it doesn’t say any of these activities are illegal…).
The whale applauds Rep. Mikie Sherrill and her family for divesting entirely from individual stocks and instead picking up broad-based index funds.
Until then, the whale will continue pointing out how the system is stacked against retail investors and how if we band together, we can be whales too.
In the meantime, the whale will be posting Congressional trades here. and unusual trades at the alert page.