Micron Looks to a Robust Future in U.S. with Nation’s Largest Chip Fab

Despite a major threat to current revenue from the Chinese ban on advanced semiconductor technology, Micron is going forward with multiple multi-billion-dollar fab investments in Idaho and New York.

How does a $75 billion chipmaker celebrate its anniversary? By pouring the first cement for a new $15 billion chip fab in Boise, Idaho. At least, that was how Micron Technology celebrated its 45th anniversary last month. The new facility is located next to the chipmaker’s existing R&D operation at its Boise headquarters. With construction underway, Micron expects cleanroom space to come online as early as 2025.  

As impressive as the new Idaho plant sounds, it’s not even the biggest wave in Micron’s ocean of expansion plans. The company is committed to investing a whopping $100 billion to build four 600,000-square-foot manufacturing plants in upstate New York over the next 20 years, thanks in part to assistance from the federal government’s CHIPS and Science Act.  

It is also receiving up to $5.5 billion from the state of New York for the Syracuse project through its Green CHIPS Act of 2022. In exchange, the state expects to gain 50,000 new, high-paying jobs. Construction of Micron’s new fabs is planned to begin by the end of 2024, and chip production will start in 2027.

Micron currently makes its most advanced chips in Japan and Taiwan, but with the new fabs, the company plans to repatriate that work to the U.S. The chipmaker’s goal is to dramatically increase America’s share of worldwide DRAM production from the current level of 2% to about 15% within the next two decades. Moreover, the firm claims that once its new fabs are online, it will increase its share of chips made in the U.S. to 60% over the next two decades.  

China Bars Micron Products

Notably, about 25% of Micron’s revenue comes from China. Due to sweeping bans on advanced chips and chipmaking equipment, CEO Sanjay Mehrotra estimated in a recent CNBC interview that about half of that revenue is at risk.  

Beijing announced in May earlier this year that Micron had failed its network security review and said the chipmaker posed a “major security risk.” Critical information infrastructure operators in China were thus indefinitely banned from buying Micron products.

Micron is one of three companies (joined by South Korea’s Samsung and SK Hynix) that produce more than 90% of the world’s DRAM chip supply. Needed to support powerful CPUs and GPUs from chipmakers like Intel and Nvidia, DRAM chips remain a crucial part of the global tech supply chain as technologies like AI increase demand.  

However, as Patrick Moorhead, CEO of Moor Insights and Strategy, noted in a recent interview, compared to a CPU or GPU, “it’s pretty hard to embed something nefarious into something like storage or memory.” He said that such subterfuge would include “technology that I have never heard of” and called China’s security accusation “a front.”

Even so, China’s stance against Micron has been a major factor behind its decision to expand into regions other than Asia—even at a time when revenue is anything but certain. Aside from its new projects in the U.S., Micron also broke ground on a $2.75 billion assembly and test facility in India that will take over some of the back-end manufacturing currently handled in China.

Reversing Three Decades of Decline

Although semiconductors were invented in the U.S., the country’s share of global chip manufacturing has fallen to 12% over the past 30 years from a high of 37%. The reason? Primarily high manufacturing costs. Building and operating a new manufacturing facility in the U.S. costs about 20% more in America than in Asia. Additionally, Asian government incentives are often greater, labor costs are lower, and the supply chain is more accessible.

The CHIPS and Science Act passed in 2022 is central to U.S. semiconductor ambitions and serves as a major incentive to lure chipmakers back to America. Micron is one of 450 companies that have applied for assistance under the CHIPS Act, which provides nearly $53 billion for American semiconductor manufacturing, research, and workforce development. The act also created a 25% tax credit for capital investments in chip fabrication, incentivizing chipmakers to bet on the U.S. industry.  

In its first year, the CHIPS Act has helped spark over $231 billion in commitments from numerous chip firms. The National Science Foundation and U.S. Departments of Energy, Commerce, and Defense have also announced progress toward establishing a National Semiconductor Technology Center to advance U.S. leadership in chip research and development.

Micron’s investment in Idaho and New York is the latest example of U.S. chip strategy paying off in a big way as the industry enters a new period of globalization.

Author of article
Sourceability Team
The Sourceability Team is a group of writers, engineers, and industry experts with decades of experience within the electronic component industry from design to distribution.
linkedin logox logofacebook logoinstagram logo