Micron Stock Rises After Report Company to Receive $6.1B in Federal Chips Grants

Monitor These Key Chart Levels

Key Takeaways

• Micron shares moved higher Thursday after Bloomberg reported that the chipmaker will receive $6.1 billion in federal chips grants to help build factories in New York and Idaho.
• People familiar with the matter said the company was also expected to receive access to loans similar to those recently awarded to Intel and Taiwan Semiconductor Manufacturing Co.
• President Biden is expected to make the announcement Syracuse, New York on April 25, the region where Micron plans to build several of its factories.
• Micron shares may find support around $97 from the top trendline of an ascending channel and the twin peaks of a prior double top pattern, while encountering resistance near the stock’s record close near $130.

Micron Technology (MU) shares moved higher in premarket trading Thursday after Bloomberg reported late on Wednesday that the chipmaker is poised to receive $6.1 billion in federal grants to help build its domestic facilities as part of the Biden Administration’s CHIPS and Science Act of 2022.

According to people familiar with the matter, the award isn’t yet finalized, but could be revealed as soon as next week, with the package also expected to include loans similar to those offered recently to Intel (INTC) and Taiwan Semiconductor Manufacturing Co. (TSM).

President Biden plans to make the announcement in Syracuse, New York on April 25, the region where Micron is building several chip manufacturing plants, the sources said.

The Boise, Idaho-based chipmaker has plans to build four factories in New York as well as one in its home state, though the construction remains contingent on the company receiving a combination of government incentives to counter the cost differences of international expansion, Micron CEO Sanjay Mehrotra said in March.

The CHIPS Act provides $114 billion in government incentives aimed at boosting domestic chip production to reduce reliance on China and Taiwan, with $23.2 billion in grant awards and up to $17.6 billion in loans having already been awarded to chipmakers including South Korea’s Samsung Electronics, Taiwan Semiconductor Manufacturing Co., Intel, BAE Systems (BAESY), Microchip Technology (MCHP), and GlobalFoundries (GFS).

New York Governor Kathy Hochul promoted the announcement on Wednesday, saying funding from the CHIPS Act will benefit the state by securing a $100 billion investment and millions of dollars in community benefits.

Taking a look at the weekly chart, the Micron share price broke above a 20-month ascending channel and prior double top pattern in early March to register a new record close, but has recently retreated as investors take some profits of the table following the stock’s stellar rally.

During periods of weakness, investors should monitor the $97 level, an area where the price finds support from both the channel’s top trendline and the double top’s twin peaks. If the stock continues to move higher, keep an eye on the record close, which may provide resistance around $130.

Micron shares were up 2.1% at $118.75 at around 7:05 a.m. ET. The stock has gained nearly 90% over the past 12 months.

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