Onshoring has begun to take shape. Over the past few years, deglobalization has become one of the driving factors in geopolitics as China has aligned itself with the BRICS (Brazil, Russia, India, China and South Africa) nations while the United States continues to build trading and manufacturing relationships with its current allies. Most importantly, we are seeing evidence of a rise in manufacturing domestically, signaling that attempts by the United State to bring manufacturing back home has indeed begun. From the chart below, you can see that since the passing of the CHIPS Act, Real Total Manufacturing Construction Spending has approached $200 billion.
According to Investopedia, “The CHIPS and Science Act of 2022 invests $250 billion in semiconductor and scientific research and development (R&D).” We have even seen the influence of the CHIPS Act right here in New York with Micron’s $100 billion investment in a new “megafab” factory in Clay. Global Foundries also has plans to purchase 800 acres adjacent to their Malta factory with plans for further expansion. The semiconductor industry is projected to be a $1 Trillion per year industry by the year 2030, according to GlobeNewswire. Although it could be inflationary over the short term as domestic wages are substantially higher than those in emerging economies, we believe that over the intermediate- to long-term, gains in productivity will offset some of that. In addition, it will help rebuild the middle class, improve National Security and reduce our reliance on the non-aligned countries for manufacturing.
“This presentation is not an offer or solicitation to buy or sell securities. The information contained in this presentation has been compiled from third party sources and is believed to be reliable, but its accuracy is not guaranteed and should not be relied upon in any way, whatsoever. Fagan portfolio characteristics and holdings are subject to change at any time and are based on a representative portfolio. Holdings and portfolio characteristics of individual client portfolios may differ, sometimes significantly, from those shown. This information does not constitute, and should not be construed as, investment advice or recommendations with respect to the securities listed.
Additional information including management fees and expenses is provided on our Form ADV Part 2. The actual return and value of an account fluctuate and, at any time, the account may be worth more or less than the amount invested. Bond Investments are affected by interest rate changes and the credit-worthiness of the issues held in the portfolio. A rise in interest rates will cause a decrease in the value of fixed income positions. Past performance results are not indicative of future results.”
