BofA analyst Vivek Arya could see the United States offering over $50 billion in subsidies to stimulate domestic semiconductor manufacturing and R&D.

These estimates are made in the light today’s appearance before the US Senate Committee of Micron (NASDAQ) and Lam Research(NASDAQ:).

The hearing is expected to focus on the domestic semiconductor supply chain, R&D, competitiveness, etc.

Arya says that while government funding might be helpful, it isn’t a panacea.

It is unlikely that increased subsidies will address these issues anytime soon. Neither Intel nor Micron are technologically/strategically equipped to address these issues. The immediate shortages in the automotive/industrial market are not related to PC/server processors or memory (Intel), but rather in trailing edge chip technology. Building a credible alternative to Taiwan (TSMC) requires a dedicated foundry with tech/scale/experience/business strategy which we dont believe any US foundry is equipped for, the analyst said in a client note.

Arya also lists the stocks most likely to benefit from direct subsidies. Intel is expected to be the largest beneficiary. However, Arya states that some funding may already have been integrated into the company’s outlook.

Semi stocks are better for investors.

1) GlobalFoundries, (GFS),: US-based focused foundry. New US funding increments to street FCF estimates will help address supply shortages in automotive markets. We note the recent relationship with Ford, BMW, etc. To secure capacity; 2) Texas Instruments (NASDAQ): Increased capex for US-based trailing edge analogue/embedded fabrications. Any subsidy could boost FCF. 3) Semicap Equipment Vendors (KLAC and AMAT) that benefit from new manufacturing capacity.

Analysts also suggest that the US might need to contact Taiwan Semiconductor, (TSM), to change its west manufacturing plans.

By Senad Karaahmetovic