Micron Will Receive $6.1 Billion to Build Semiconductor Plants

Micron Will Receive $6.1 Billion to Build Semiconductor Plants

By Oghale Apr20,2024

The Biden administration will give Micron up to $6.1 billion in grants to help build its semiconductor plants in New York and Idaho, the latest multibillion dollar award aimed at ramping up the nation’s production of vital semiconductors.

Senator Chuck Schumer, Democrat of New York and the majority leader, announced the grant on Thursday and said the “monumental” investment would help the company construct two new chip manufacturing plants in New York by the end of the decade, along with another plant under construction in Idaho.

More than a year ago, Micron announced plans to expand its manufacturing footprint in the United States. In September 2022, the company said it would build a $15 billion factory in its hometown, Boise, Idaho, the first new U.S. memory chip plant in 20 years. A month later, Micron said it would build a giant manufacturing complex near Syracuse, N.Y., pledging to start with a $20 billion project by the end of the decade and spending as much as $100 billion over the next two decades or more. The complex could eventually include up to four new manufacturing plants.

A senior Biden administration official confirmed the award and said it would help create thousands of jobs. Company officials have said the investment is expected to create roughly 50,000 jobs, including about 9,000 direct positions at its plants.

The announcement is the latest award from federal officials to chipmakers in recent weeks. The funding stems from the CHIPS Act, which a bipartisan group of lawmakers passed in 2022 to re-establish the United States as leader in the production of semiconductors, the foundational components that power everything from phones and supercomputers to cars and weapons systems. Equipped with $39 billion, the Commerce Department has distributed several grants to chip manufacturers as an incentive for them to build and expand facilities in the United States.

The initiative is intended to strengthen the domestic supply of semiconductors. Although semiconductors were invented in America, manufacturing has largely shifted overseas. Only about 10 percent of the world’s semiconductors are currently made in the United States.

Micron’s award brings the total announced grants to more than $29 billion. On Monday, U.S. officials awarded Samsung up to $6.4 billion in grants. Other big chipmakers — including Taiwan Semiconductor Manufacturing Company and Intel — have also received awards recently. GlobalFoundries, Microchip Technology and BAE Systems received the first three awards.

Mr. Schumer, who helped rally Congress to pass the CHIPS Act, said Micron’s award would help make sure that “America was no longer dependent on other countries for all kinds of vital chips.” He said he had long pushed for Micron to receive a share of the federal grants.

“I always lobby heavily for New York to gain advantage and talked to the administration on many occasions about how Micron was important to the country as a whole,” Mr. Schumer said in an interview. “But frankly, my advocacy for chips extends to the whole country.”

Mr. Schumer said the award would help bolster the nation’s production of critical memory chips, which the country is becoming “more and more dependent on.”

Micron declined to comment, citing confidentiality requirements associated with CHIPS Act grants.

Based in Boise, Micron is the last U.S. supplier of chips called dynamic random access memories, or DRAMs. The components play a vital role in computers and smartphones, acting like a scratchpad to temporarily store data that must be retrieved frequently. Micron also has a major sideline in flash memory, a newer variety of chips that store data more permanently.

The DRAM business was a major global battleground in the 1980s and the 1990s, as companies from Japan and later South Korea used manufacturing muscle to drive down prices and squeeze competitors. Much larger U.S. companies, like Intel and Texas Instruments, left the business.

Micron, a much smaller company, managed to hang on as the industry consolidated to just three major players. The South Korean companies Samsung and SK Hynix rank first and second place in memory revenues, respectively. The reduced competition has helped moderate the industry’s business cycles somewhat, though all three companies last year suffered from severe pricing pressure.

DRAM and flash memory are mainstays of the computers found in data centers, as new applications require greater amounts of data and faster access to it. In the newest wrinkle, makers of specialty chips for artificial intelligence like Nvidia rely on a technology called high-bandwidth memory, which bundles multiple stacks of DRAM chips in packages along with processors that carry out calculations.

Micron, though largely managed through offices in San Jose, Calif., conducts most of its manufacturing in Taiwan, Japan and Singapore. Sanjay Mehrotra, the chief executive, has spearheaded an effort to sharply boost its U.S. production footprint and win government subsidies for that expansion.

But Mr. Mehrotra has reiterated that the timing of such spending would closely track supply and demand conditions in the memory market, and also reflect the company’s success in winning U.S. grants.

Micron is also expected to claim federal tax credits that could cover 25 percent of the cost of building and outfitting factories with production equipment, Mr. Schumer said.

Source link

By Oghale

Related Post

Leave a Reply

Your email address will not be published. Required fields are marked *