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Micron (NASDAQ:MU) just took a major step to significantly elevate its US-based chip fabrication footprint by announcing a mammoth-sized investment in the New York state over the next two decades in what is increasingly mothballing into a production onshoring trend across the wider chip manufacturing sphere.
As per the reporting by New York Times, Micron has now pledged to spend up to $100 billion over the next 20 years or so to establish a gigantic memory chip fabrication unit in upstate New York. During the first phase, which is expected to last through the end of this decade, Micron is planning to spend around $20 billion on this facility. Site preparation for the gigantic fab unit – located just 15 miles north of Syracuse in Clay, NY – is expected to commence next year, with initial phase construction slated for completion by 2024 and volume production expected to commence after 2025. The project is expected to generate 50,000 jobs, with about 9,000 core jobs at Micron. The company will also spend around $500 million on community building and workforce training initiatives.
In order to secure this commitment, the state of NY has provided $5.5 billion in incentives to Micron, constituting the largest such package in the state’s history. Of course, the memory chip manufacturer is also slated to attract significant federal funding as part of the CHIPS Act, which unlocked $280 billion in incentives and grants, including $52 billion in federal investments and tax breaks for the domestic semiconductor research, design, and manufacturing provisions as laid out in the US Innovation and Competition Act (USICA).
Micron is also building another memory chip fabrication unit in Boise, Idaho, at the cost of $15 billion. Construction at the new Boise fab is expected to commence in 2024. The unit is expected to feature the largest cleanroom ever built in the US.
Bear in mind that Micron is a major manufacturer of DRAM and 3D NAND flash memory. While the ongoing macroeconomic climate has weakened the demand for Micron’s products, the long-term outlook remains brighter than ever. While announcing its earnings for Q2 2022, the company declared that it would cut total capital expenditures by 30 percent on an annual basis and reduce spending on wafer fabrication equipment by up to 50 percent next year. Moreover, in a testament to the weakening near-term demand for its products, the memory chip manufacturer said that it expects to generate Q4 2022 revenue of between $4 billion and $4.5 billion, significantly below analyst expectations of $6.02 billion for the company’s top-line metric.
Micron's announcement today is part of a growing push toward onshoring production in the US across the wider chip manufacturing sphere amid growing tensions between the US, China, and Taiwan, leading to fears that TSMC’s all-important fabs might be rendered useless in case of a wider conflagration.
Note:
This post has been updated to reflect correct production timelines for Micron's upcoming fab facilities.
