Onshoring semiconductor manufacturing a top priority for the USA

Overnight we saw a tweet from Gina Raimondo, the US commerce secretary, that links to a video in which she talks about the importance of onshoring semiconductor manufacturing in the USA.

Secretary Gina Raimondo highlights how 20 years ago the US accounted for 40% of global semiconductor manufacturing, leading to innovation across the US tech sector.

Today, the US accounts for just 12% of global chip production and purchases ~90% of its high tech semiconductors from Taiwan.

Clearly the US government recognises the importance of being a leader in the semiconductor manufacturing industry and how critical establishing domestic supply chains will be for the US economy.

This is why we invested in and made US-based helium explorer Grand Gulf Energy (ASX:GGE), our 2021 Catalyst Hunter Pick of the Year.

Helium is required for the production of all semiconductors. It cannot be replaced with any other gas due to its unique properties as an “inert gas”.

The US government is now treating this as a critical issue and intends to invest over US$50B of government funds into chip manufacturing in a bid to maintain its edge over China. We think the demand domestically for the raw materials required to produce semiconductors will mean more demand for helium.

With its first drilling program expected in less than two weeks and a helium offtake agreement signed BEFORE the drilling program, GGE is approaching a potentially transformational moment as a junior exploration company, where it could go from explorer to producer. Read more about the offtake agreement and the upcoming drilling program here.

Of course this is contingent on a successful drilling program which always carries the risk of failing to make a discovery.

What’s next: We are now waiting for GGE to sort out its permitting before the expected drilling date in the middle of this month.