Graduation Year

2025

Document Type

Campus Only Senior Thesis

Degree Name

Bachelor of Arts

Department

Economics

Reader 1

Patrick Van Horn

Reader 2

Roberto Pedace

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2025 Katherine Tan

Abstract

The CHIPS Act of 2022 provided $52.7 billion in federal funding for the U.S. semiconductor industry. Their goals were to change supply chains to make the U.S. self-sufficient in the manufacturing of semiconductors, and they also invested in school programs and promised more manufacturing jobs. In my study, I aim to find the effects of the CHIPS Act policy on the profitability of public U.S. semiconductor firms through OLS and GLS regressions, and an event horizon analysis. Since the literature on tariffs and subsidies show a mixed effect on firm profits, the CHIPS Act has the potential to affect profits either way. I found that the CHIPS Act had decreased the profits as measured by operating profit margin by 18.06% due to commodity import prices, though commodity import prices still had a net positive effect on firm profits. I also found that firm profits were impacted by a 117.34% decrease due to increased debts in firms, which could simply be from increased borrowing to finance building the manufacturing centers in the U.S.

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