Micron is acquiring an existing 27,900 square meter cleanroom from Taiwanese PSMC. The acquisition should ensure that Micron can produce extra DRAM as early as the end of next year.
Micron has signed a letter of intent to acquire a chip factory in the short term. This concerns the P5 factory site of Powerchip Semiconductor Manufacturing Corporation (PSMC) in Tongluo, Taiwan. The site includes a 27,900 square meter cleanroom. Micron is paying $1.8 billion for the acquisition and plans to start DRAM production there from the end of 2027.
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Hopefully, Santa brought RAM.
By expanding its production capacity in an existing factory tailored to chip production, Micron aims to expand its production capacity for DRAM in the short term.
AI skews demand
Like other memory manufacturers, the company cannot produce enough memory to meet demand. That demand has been skewed by a few major players who have snapped up most of the available production capacity in the name of AI. As a result, there is insufficient classic DRAM left for PCs, which is driving up prices. Like Samsung and SK-Hynix, Micron is choosing to focus on more lucrative High Bandwith Memory (HBM) production.
Micron is building new factories itself, but setting up and commissioning a site takes years and costs billions. By incorporating an existing factory, Micron saves several years.
In addition to the acquisition of the factory site, the two companies also want to enter into a long-term collaboration. PSMC will support Micron in the assembly of memory chips after wafer production. In addition, Micron will assist PSMC in managing its existing (legacy) DRAM portfolio.
Strange for PSMC
From PSMC’s point of view, this is a strange deal. PSMC only put the acquired factory into use in 2024 and invested the equivalent of approximately $9.5 billion in the site. Less than two years after opening, PSMC is already selling the factory, and at a price that suggests a significant loss.
PSMC insists that it can transfer production from Tongluo to other factories without any noticeable impact for customers. That really raises the question of why the company invested billions in the new factory.
The acquisition is scheduled to be completed in the second quarter of 2026. Afterwards, Micron will gradually equip the site for DRAM production. PSMC will gradually relocate its activities at the Tongluo site. Micron expects the factory to deliver significant production volumes in the second half of 2027.