Micron Technology, the U.S.-based semiconductor manufacturer with a heavy focus on memory processors, announced that it plans to invest more than $150 billion worldwide over the next decade “in leading-edge memory manufacturing and research and development, including potential U.S. fab expansion,” according to a company statement.
The announcement comes amid an ongoing global chip shortage and other supply chain disruptions, but also as the dynamic random access memory (DRAM) market segment appears to be fluctuating and heading toward over-supply and potential chip price declines, several published reports have stated.
Micron generated more than 70% of its revenue from DRAM chips in its most recent fiscal year, and about 25% of its revenue from NAND memory chips, all of which it manufactures itself. NAND price also are believed to be headed downward in the short term, according to published reports. Micron’s stock price has fallen more than 5% in the last month and almost 20% in the last six months amid these reports.
Still, Micron said in its announcement Wednesday that its coming investment is a response to “increasing demand for memory that is essential to all computing.” The company pointed out that memory and storage now represent about 30% of the semiconductor market, and that broad technology evolutions driven by 5G, AI and other technologies will only continue to expand usage of memory and storage across the data center and the intelligent edge to serve the growing needs of industries such as automotive, data centers and mobile devices.
Meanwhile, Jack Gold, principal analyst at J. Gold Associates, questioned whether or not over-supply really will be a concern. "It’s unlikely that memory will be at an oversupply in the near future (particularly non volatile memory) and virtually everything made these days has chips and needs memory (phones, cars, TVs, toasters….)," Gold said via email. "So I don’t think there will be a major correction in needed supplies. Bottom line is that Micron believes the need for memory won’t be taking a nosedive anytime soon, so investing, and particularly in advanced manufacturing capability for newer generation memory, is a good bet. I think they are probably correct, and most of their competitors in this space (e.g., Samsung) are doing the same thing," he said via email.
“Memory is at the leading edge of semiconductor manufacturing and fuels everything from feature-rich 5G smartphones to the AI-enabled cloud,” said Micron President and CEO Sanjay Mehrotra in a statement. “Micron’s leadership in both DRAM and NAND technologies and the strength of our roadmap enable us to invest more than $150 billion with confidence to extend our industry-leading memory innovation into the next decade, and deliver differentiated products to our customers.”
He suggested that U.S. government activity to support investments in domestic chip fabs will “open the door to new industry investments, as we consider sites to support future expansion,” and that Micron would seek to work closely with governments around the world as it progresses with decisions about where to invest.
Micron Executive Vice President of Global Operations Manish Bhatia added, “Leading-edge memory manufacturing at scale requires production of advanced semiconductor technology that is pushing the laws of physics, and our markets demand cost-competitive operations. Sustained government support is essential for Micron to ensure a resilient supply chain and reinforce technology leadership for the long term.”
The Boise, Idaho-based company said U.S. memory manufacturing costs run 35% to 45% higher than in lower-cost markets with established semiconductor ecosystems, making funding to support new semiconductor manufacturing capacity and a refundable investment tax credit “critical to potential expansion of U.S manufacturing as part of Micron’s targeted investment.” The result could be large-scale fabs that provide for thousands of new jobs, the company indicated.
Gold said Micron's attempt to jump on the 'let's get government funding" bandwagon is not any different that what Micron's peers have been dong in recent months. He also said it's not clear how much of the $150 billion across 10 years or so will be above and beyond what the company already invests in its facilities.
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