Micron has signed a letter of intent to purchase Powerchip Semiconductor Manufacturing Corp’s P5 fabrication site in Tongluo, Taiwan, for $1.8 billion. This acquisition is intended to increase DRAM production as the global memory supply remains constrained.
The agreement outlines a phased production ramp-up following the ownership transfer, which is anticipated in the second quarter of 2026. The actual impact on wafer output is expected later.
The P5 site's production will not be immediate. Output will gradually increase, with significant DRAM wafer production projected to begin in the second half of 2027.
In conjunction with the acquisition, Micron and Powerchip have agreed to collaborate on post-wafer assembly processing and to provide support for Powerchip’s existing DRAM portfolio. This arrangement will keep Powerchip involved while Micron assumes control of the primary manufacturing facilities.
Micron Expands Capacity Amidst Rising AI Memory Demand
This deal in Taiwan is part of Micron's broader strategy to expand its manufacturing capacity as the demand for memory continues to grow. While a significant portion of Micron's chips are produced in Asian facilities, the company is also investing in new production capabilities in the United States.
Micron recently held a groundbreaking ceremony near Syracuse, New York, for a planned investment of up to $200 billion across the United States. This investment includes two fabrication plants in Idaho and a 600,000-square-foot facility in Clay, New York.
The New York facility alone is slated for a $100 billion investment. Construction of the site is expected to take several years due to the specialized requirements for clean rooms and complex production equipment.
The stock market responded positively to these developments. Micron shares saw a nearly 8% increase on Friday, following strong earnings reports from Taiwan Semiconductor Manufacturing Co. the previous day, which boosted investor confidence in AI supply chain stocks.
Over the past year, Micron's stock performance has been remarkable, with an increase of over 250%. This growth is attributed to the global memory shortage and a surge in demand. Memory is a critical component in AI systems, enabling large datasets to be accessed quickly by GPUs, which is essential for the efficient operation of complex AI models.
Micron CEO Sanjay Mehrotra stated on CNBC that "AI driven-demand is accelerating. It is real. It is here, and we need more and more memory to address that demand." He further noted that Micron is investing $200 billion to increase U.S. production and is also optimizing the output of its existing plants in the short term.
Micron's initial forecast for server memory growth at the beginning of 2025 was 10%. However, by the end of the year, this figure had risen to the high teens. Mehrotra also indicated that demand for PC memory and storage exceeded earlier projections.
"We see that tightness continuing into 2027," he commented, emphasizing that the underlying market fundamentals remain strong due to the sustained demand from AI applications.
The intense competition among chip manufacturers to supply companies such as Nvidia, Advanced Micro Devices, and Google has led to the current shortages. Memory prices are projected to increase by approximately 55% in the first quarter.