With August’s signing of the bipartisan CHIPS and Science Act of 2022, investors ought to consider semiconductor stocks to buy on the dip. Primarily, this groundbreaking legislation will make historic investments to bolster competitiveness among U.S. workers and businesses. More importantly, the bill represents a key component of economic stability and national security.

Earlier, I mentioned that the CHIPS Act could potentially address supply chain vulnerabilities. One of the lessons of 2022 is that the U.S. competes with international rivals who may lack a full deck. For instance, Russia’s invasion of Ukraine forced the recognition that inflows of critical commodities risk disruption at a moment’s notice. However, bolstering domestic production could mitigate such impacts, thereby drawing interest for semiconductor stocks to buy on the dip.

Moreover, stability in the chip-manufacturing space represents a tailwind for every technology player. True, the CHIPS Act seemingly supports certain semiconductor stocks to buy on the dip more so than others. However, in a tacky Hallmark sort of way, we’re all in this together. What’s good for the U.S. chip sector should invigorate domestic and western-friendly markets.

Semiconductor Stocks to Buy on the Dip: Intel (INTC)

Tech icon Intel (NASDAQ:INTC) represents one of the riskier plays among semiconductor stocks to buy on the dip. However, it may also be the most compelling.

Recently, Reuters reported that Intel inked an agreement with Canada’s Brookfield Asset Management (NYSE:BAM) to “jointly fund up to $30 billion for the U.S. chipmaker’s leading-edge chip factories in Arizona.” This contract fuels “Intel’s ambition to bring more chip production onshore without weighing on its balance sheet.”

Reuters added that through the deal, “Intel could preserve debt capacity for other priorities with financing commitment for a multi-year project, while maintaining operational control.” David Zinsner, Intel’s finance chief, stated that the arrangement “builds on the momentum from the recent passage of the CHIPS Act in the U.S.”

Here’s the deal with INTC stock. On a year-to-date basis through the close of the Aug. 24 session, shares hemorrhaged more than 36% of market value. However, Gurufocus considers Intel to be “significantly undervalued.” In particular, the company’s forward price-earnings ratio is 13.6 times, below the industry median of 17.

Micron Technology (MU)

Another intriguing name among semiconductor stocks to buy on the dip, Micron Technology (NASDAQ:MU) represents a clear beneficiary of the CHIPS Act. According to the White House announcement on the matter, Micron announced a $40 billion investment in memory chip manufacturing.

Per the statement, the initiative will create up to 40,000 new jobs in construction and manufacturing. “This investment alone will bring the U.S. market share of memory chip production from less than 2 percent to up to 10 percent over the next decade.”

To be sure, this latest development represents a substantial tailwind for the broader U.S. tech industry. However, Micron is especially eager to bolster stability in domestic supply chains. A few years ago, the New York Times highlighted how the company suffered from a sophisticated Chinese corporate espionage incident.

Looking at the equities market, MU clearly has seen better days, suffering a 39% YTD loss. Still, Gurufocus rates shares as “modestly undervalued.” Therefore, MU should be on your radar of semiconductor stocks to buy on the dip.

Semiconductor Stocks to Buy: Skyworks Solutions (SWKS)

To be clear, the CHIPS Act’s main focus centers on invigorating U.S. production, thus directly challenging China’s hegemony. At the same time, the bill may benefit neighboring countries, particularly Mexico as an alternative to Asian chip production. Therefore, Skyworks Solutions (NASDAQ:SWKS) may deserve some attention from investors bargain-hunting semiconductor stocks.

According to Nikkei Asia, “Mexico stands to benefit from U.S. incentives for chipmakers, an Economy Secretariat official said, arguing that her country offers a lower-cost production base for companies like Intel.”

Mexico, with its proximity and trade links to the U.S., sees America’s bid to decouple its chip supply chain from Asia as an opportunity to attract nearshoring investment.

“It does not make sense to do everything in the United States because it is much more expensive,” Monica Duhem Delgado, head of the secretariat’s global economic intelligence unit, said in an interview. With Skyworks already having operations in Mexico, SWKS may be built for the long run.

Additionally, the integrated device maker features a significantly undervalued profile, likely attracting attention among speculators.

ASML (ASML)

As a Dutch company, ASML (NASDAQ:ASML) doesn’t immediately stand out as one of the semiconductor stocks to buy. At least, it doesn’t stand out in terms of CHIPS Act beneficiaries. However, investors should consider two factors. First, ASML calls a friendly nation home. Second, it’s the only company capable of assembling extreme ultraviolet (EUV) lithography machines, per CNBC.

“ASML has a monopoly on the fabrication of EUV lithography machines, the most advanced type of lithography equipment that’s needed to make every single advanced processor chip that we use today,” said Chris Miller, assistant professor at the Fletcher School at Tufts University. “The machines that they produce, each one of them is among the most complicated devices ever made.”

Put another way, CHIPS Act or not, ASML drives indelible relevance to the chip-manufacturing segment. With the U.S. securing its own supply chain, this may be a matter of a rising tide lifting all boats.

As a bonus, Gurufocus considers ASML stock to be “modestly undervalued.” Not surprisingly because of its relevance, the issuing company features excellent profitability metrics.

Semiconductor Stocks to Buy: Microchip Technology (MCHP)

Billed as a leading provider of smart, connected and secure embedded control solutions, Microchip Technology (NASDAQ:MCHP) offers an intriguing take on semiconductor stocks to buy on the dip. While shares have enjoyed some recent momentum, gaining about 6% in the trailing month, MCHP currently is down 22% for the year. Given the broader implications of the CHIPS Act, the stock potentially has much room to run higher.

In part, Microchip released this statement regarding the legislation:

It provides critical investments to even the global playing field for U.S. semiconductor companies and is strategically important for our economic and national security. As the largest U.S.-headquartered supplier of microcontrollers and the global leader in semiconductors in , we will benefit from the Act’s investment tax credits and potential additional grants.

Because of rising tensions in the geopolitical sphere, Microchip will likely see greater fundamental demand. As well, MCHP delivers a nice bonus, with Gurufocus rating the company as modestly undervalued. In particular, its forward PE of 12 times is more favorable than the 17-times median for the semiconductor industry.

Nvidia (NVDA)

While the CHIPS Act represented a key achievement for the Biden administration, it didn’t receive universal support. True, the bill was bipartisan in nature. However, drilling into the granularity, some critics pointed out that the federal government will end up picking winners and losers. In other words, the CHIPS Act directly benefits chip manufacturers, not designers who outsource the manufacturing component to other companies.

Therefore, on the face of it, Nvidia (NASDAQ:NVDA) doesn’t appear to be one of the best semiconductor stocks to buy here. Its specialty focuses on innovative chip designs, not physically building them. To the critics’ point, Nvidia’s rivals that do feature a manufacturing arm (i.e. Intel) get an unfair advantage.

Nevertheless, the bigger point to remember is that the CHIPS Act should shore up domestic tech supply chains. When the coronavirus pandemic hit us, it devastated everyone involved in the semiconductor ecosystem. With greater stability forecasted, Nvidia should improve, meaning NVDA belongs on your radar.

Semiconductor Stocks to Buy: GlobalFoundries (GFS)

When one of the starkest lessons of the Covid-19 crisis focused on dependencies. As multiple news outlets discussed, Taiwan dominates the foundry (or outsourced semiconductor manufacturing) business. However, the country also finds itself routinely embroiled in geopolitical controversy. Plus, the region itself represents a hotspot waiting to spill over militarily.

So, many people asked themselves why the U.S. couldn’t drive its own foundry industry? Well, the Malta, New York-headquartered GlobalFoundries (NASDAQ:GFS) offers a viable solution. Combined with the CHIPS Act, it now has the support it needs to drive its expansion efforts.

According to the aforementioned White House press release, Qualcomm (NASDAQ:QCOM) and GlobalFoundries have announced a new partnership. In part, this agreement involves $4.2 billion to “manufacture chips in an expansion of GlobalFoundries’ upstate New York facility. Qualcomm, the leading fabless semiconductor company in the world, announced plans to increase semiconductor production in the U.S. by up to 50 percent over the next five years.”

Now, GFS shares are up 30% over the trailing month so they might not have the greatest upside potential. Still, down almost 10% for the year, GFS is one of the semiconductor stocks to buy on the dip.

On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.