What happened

Shares of Nvidia (NVDA -1.38%) surged higher Tuesday, jumping as much as 5.1%. As of 1:38 p.m. ET today, the stock was still up 4.9%.

While there wasn't any company-specific news involving the chipmaker, a new bill being considered by Congress could boost much of the U.S. semiconductor industry.

So what

A draft bill in the Senate aims to increase semiconductor manufacturing in the U.S., putting the country on a more even footing with China. The bill would provide roughly $52 billion in grants and subsidies in the midst of a global semiconductor shortage and ongoing supply chain disruptions.

The chip shortage caused slowdowns across a wide range of consumer products, including electronics, smartphones, automobiles, and gaming consoles. The legislation is intended to help the U.S. better compete with China in advanced manufacturing and technology.

The draft bill being considered includes a variety of incentives, including tax credits for companies that manufacture chips in the U.S., high-tech worker training programs, and supply chain innovation and improvements, according to Bloomberg.

The legislation could also include provisions that would block companies from receiving funds if they build or expand manufacturing plants in China.

Now what

The Senate could take a procedural vote as early as Tuesday, as proponents hash out the final language of the bill. A final vote could come as early as next week.

It's important to note that even as the market bids up the stock, it doesn't appear that the legislation will benefit Nvidia, at least not directly. Nvidia farms out the manufacturing of its semiconductors, with the bulk of that outsourcing going to Taiwan Semiconductor Manufacturing.

But Nvidia is exploring other options. Earlier this year, CEO Jensen Huang suggested the company was in discussions with Intel (INTC -1.28%) to take over some of the company's semiconductor manufacturing, though no specific timeline for a collaboration has been suggested. Intel could be a direct beneficiary of the legislation.

This potential legislation aside, there are plenty of reasons to invest in Nvidia, as evidenced by its recent results. In its fiscal 2023 first quarter (ended May 1), the company generated record quarterly revenue of $8.29 billion, up 46% year over year, fueled by record gaming and data center revenue. Profits were also robust, as adjusted earnings per share of $1.36 climbed 49%.