There is a little-known conflict in the world today that is escalating and could quickly get out of hand. While governments and nations used to fight over commodities or trade routes, today's fights are all about who holds access to the world's latest chip and semiconductor technologies. Now that the United States government is getting involved, it could be time to prepare for a big price swing.

After slapping China with some curbs on the type of semiconductor technology that could be shipped to the nation, the United States now recognizes the escalating risk that Taiwan could be invaded, putting one of the biggest names in the industry at risk. Taiwan Semiconductor Manufacturing (NYSE: TSM) is a crucial supplier of most products the United States needs.

This is why the U.S. is looking to onshore chip production domestically. By March of this year, the government could announce several grants to allow a boost in production for companies like Intel (NASDAQ: INTC) and even Samsung Electronics (OTCMKTS: SSNLF). Here, you will devise a sensible strategy to align your portfolio to this new development.

Off to the races

In 2022, the U.S. government rolled out the "Chips Act" initiative, which granted up to $39 billion for crucial semiconductor stocks to build fabs domestically. This decision was made after the whole world suffered from a chip shortage during the peak months of the COVID-19 pandemic, never again, they said.

Now that the pressure is back on, the world's largest economies are in a chips race. Not only are geopolitical risks involved, but the well-being of entire nations, since without chips, you can't do much nowadays. Without getting into the weeds of what this might mean, there's an easier way to tackle the situation.

There is no set timeline for the announcement. However, according to Bloomberg Intelligence, it could come as soon as March 7, right before President Biden's State of the Union address. Considering that all the prominent semiconductor names have pledged to invest as much as $230 billion combined into onshoring production, the government seems more likely to step up.

If these developments weren't 'big picture' enough for you, check this out. Analysts at The Goldman Sachs Group (NYSE: GS) mentioned they expect a breakout of the manufacturing sector in the United States economy, sponsored by the potential interest rate cuts proposed by the FED this year. You can read all about that 2024 outlook report here.

Intel is leading the pack in this race to onshore production and boosting manufacturing jobs, among plenty of other benefits to the macroeconomy. Criticized by its initial stance on deploying billions to build fabs in Arizona and Ohio state, that stock attracted bears left and right during 2023.

 As markets realized the importance of this key player in the big picture, it outperformed the broader S&P 500 by as much as 33.0% in the last twelve months.

As some market participants don't understand the long-run effects of the massive investment the company is making, they sold off the stock after disappointing free cash flow figures, where a lot of capital was deployed into building these fabs.

The Buffett way

As Warren Buffett said before, the market transfers money from the impatient to the patient. After selling off by as much as 20.8% in the past week, Intel stock suddenly looks like a clear dip-buying opportunity today.

Any story can sound good by itself; however, stories without numbers are fairytales, and you're not here to invest in fairytales, are you? So, here is more concrete evidence as to why this could be the case.

Taking the semiconductor industry as a group, you will notice that – on average – analyst projections see earnings per share growing by 22.2% in the next twelve months. Intel and others like Samsung and Taiwan Semiconductor stand out because they are the cheapest large-capitalization names expecting the most growth.

Analysts have rewarded Intel stock with up to 29.5% EPS growth, more than 7.0% above the industry average. Yet, this stock trades at a 22.1% discount to the average price-to-earnings ratio. Valued at 23.2x, it stands well below the 29.8x average for the rest. But wait, there's more.

Taiwan Semiconductor also expects 22.2% growth, in line with the average. Yet, this stock is also discounted by 36.9% in its 18.8x P/E versus the industry average of 29.8x. Shouldn't it at least be fairly valued, considering it is growing at par? Maybe its 18.0% rally after earnings can serve as an awakening to this fact.

Last but not least, you get Samsung, shooting for a 34.4% EPS jump this year. Being the least covered of the three, markets may overlook a tremendous rally candidate in this name, which will receive a few billion in grants upon the announcement.

Trading at an 11.8x P/E today puts Samsung stock at a steep 60.3% discount to the rest of the group; talk about value!