Micron Promises $150 Billion of Spending on Plants, R&D
(Bloomberg) -- Micron Technology Inc., the only remaining major U.S. maker of memory semiconductors, said it will spend $150 billion over the next decade and wants government help to make sure the investment is made at home.
The budget for research and development and capital spending represents an increase from Micron’s historic levels and is needed to meet demand for chips that help process and store data in phones and computers, the Boise, Idaho-based company said Wednesday. Micron hasn’t yet decided where it will build future plants, said Chief Business Officer Sumit Sadana.
“We’re investigating different sites in the U.S. and also obviously looking at existing locations,” he said in an interview. Most of Micron’s production is done in Japan, Singapore and Taiwan.
Micron wants political leaders to step up and provide it with grants and tax breaks that will reduce the 45% higher cost of setting up a chip plant in the U.S., Sadana said. In the 1970s, the U.S. was home to the majority of memory chip production but it’s now responsible for just 2%, he said. In recent years, memory chips sales have surged, accounting for 30% of the $460 billion semiconductor industry, up from around 10% a decade ago, Sadana said.
Like Intel Corp., Micron is suggesting that U.S. politicians who have complained that overseas manufacturing of chips pose a security risk provide incentives to keep that production at home. U.S. companies still dominate the industry, but have outsourced most of the actual manufacturing to companies in Asia.
Micron makes chips that help processors in computers crunch data and also flash memory that acts as storage in devices. As goods from cars to household appliances take on more computing capabilities and generate more information, the need for memory chips is expanding faster, Micron has said. Demand in the famously boom-and-bust industry also is seen as more reliable now.
Micron competes with South Korea’s Samsung Electronics Co. and SK Hynix Inc. Samsung dominates the market for both types of memory chips and also has vastly more resources as the world’s largest mobile phone manufacturer. It builds the biggest plants in the industry and is on course to overtake Intel in overall chip revenue this year.
While Micron’s current spending on new plants, equipment and research and design is double what it was about 10 years ago, the amount is still a fraction of Samsung’s outlay. The Korean company typically spends as much on capex alone as Micron generates in annual sales.
The U.S. company is looking for a site that will be home to multiple possible production lines, Sadana said. That’s common practice in the industry as it reduces some of the massive costs of building facilities and allows companies to concentrate engineers in one place.
The U.S. Senate in June passed the CHIPS for America Act aimed at providing $52 billion of support to help bring back manufacturing of the critical electronic components. The legislation is currently stalled in partisan disputes about a broader stimulus bill. Congress is also considering the FABS Act, which would offer a semiconductor investment tax credit.
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