White House Announces First Grant for Semiconductor Manufacturing Under CHIPS Act, Boosting Chipmakers\n\nThe White House has announced the first grant for the manufacture of semiconductors in the U.S. Under the CHIPS and Science Act of 2022. This news has helped boost shares of chipmakers, with the PHLX Semiconductor index advancing more than 2% on Monday morning. The year’s top-performer, Nvidia Corporation, has been downgraded to neutral from buy at Rosenblatt Securities.\n\nAccording to analysts, Nvidia controls roughly 80% of the AI chip market, including custom processors built by companies such as Google and Microsoft. While Nvidia reported impressive financial results in its latest quarter, its rivals are stepping up their efforts to catch up. Advanced Micro Devices Inc (AMD) recently unveiled new AI chips that promise to challenge Nvidia’s dominance, while also raising its market value forecast for AI chips to $400 billion by 2027.\n\nAMD is aiming high with its two new chips, the MI300 lineup, designed for generative AI applications and supercomputers. The company estimates a $45 billion addressable market for its data center AI processors this year, up from its previous estimate of $30 billion. This puts AMD in a strong position to challenge Nvidia’s flagship AI processors.\n\nMeanwhile, Amazon.com Inc (AMZN) is also making moves in the AI chip market. The e-commerce and cloud giant recently announced its new Trainium2 artificial intelligence chip and the general-purpose Graviton4 processors. These chips consume less energy and promise a 30% performance improvement from its existing Graviton3. Amazon is also deepening its partnership with Nvidia, offering access to its next-generation H200 Tensor Core GPUs.\n\nAmazon’s dual approach, selling both its own branded products and those from others, puts it in direct competition with Microsoft. The tech giant also recently unveiled its inaugural AI chip, the Maia 100, and announced that it will offer access to Nvidia’s H200 GPUs through its Azure cloud. This new GPU is an upgrade from the H100, which was used by Open AI to train its most advanced large language model, GPT-4.\n\nIt seems that AMD has finally come up with a strategy to catch up to Nvidia, and Amazon’s new cloud chip could be the answer to its intense rivalry with Microsoft.

Asian Shares Poised to Gain Ahead of Key US Data and Central Bank Meetings\n\nAsian shares are expected to see gains following a quiet day on Wall Street, as investors await key US economic data and meetings from major central banks. These events will provide insight into the likelihood of rate cuts in the coming year. Futures for Japan and Hong Kong point to a strong opening, while Australian stocks are also set to edge higher.\n\nThe S&P 500 index remained above 4,600, with the Nasdaq 100 outperforming thanks to a rally in chipmakers. After the closing bell, Oracle Corp. Reported disappointing sales, citing slowing cloud momentum. Treasury 10-year yields and the dollar saw little change.\n\nTuesday's consumer price index (CPI) will give Wall Street a sense of whether the trend of disinflation is continuing. This report comes a day before the Federal Reserve's last scheduled decision of 2023, where officials are expected to hold rates and announce their Summary of Economic Projections. The question is whether the Fed will try to temper expectations for policy easing after investors aggressively priced in a dovish stance.\n\nAccording to Craig Erlam at Oanda, there is a lot to come in the next few days that could determine how markets end the year and start 2024. He believes the Fed decision on Wednesday is unlikely to be controversial, but the accompanying forecasts, dot plot, and press conference may be.\n\nIn Asia, all eyes will be on a key meeting of Chinese economic policymakers at an annual year-end conference. This meeting will set the future agenda after a lackluster 2023, where the post-Covid recovery sputtered, developers faced financial strain, and money flowed out of the country. Meanwhile, Bank of Japan officials see little need to rush into scrapping the world's last negative interest rate this month, according to sources.\n\nBack in the US, a survey conducted by 22V Research shows that 46% of investors polled believe the market reaction to CPI will be mixed or negligible. 28% are betting on a risk-off event, while only 26% see a risk-on response. According to Greg Marcus at UBS Private Wealth Management, the recent strength in stocks is based on expectations of a soft landing and lower rates in 2024. Marcus adds that if the Fed cuts rates next year, it may be due to a slowing economy, which would have a different impact on the markets.\n\nMegan Horneman at Verdence Capital Advisors believes that investors are too optimistic about the economy's strength, despite signs of easing inflation. She notes that the resiliency of the labor market makes it difficult for the Fed to cut rates as the economy weakens.\n\nA Fed Bank of New York survey shows that US consumers' near-term inflation expectations dropped in November to the lowest level since April 2021. According to Matthew Weller at Forex.com and City Index, some investors may expect volatility around the CPI data. With the Fed committed to keeping rates higher for longer, there may not be as much movement as in past reports. Weller adds that regardless of the CPI report's outcome, Jerome Powell and the Fed will want to see sustained evidence of rising prices before considering any changes to monetary policy.\n\n Asian shares are expected to see gains ahead of key US data and central bank meetings.