Micron snaps up Taiwan chip fab for $1.8 billion to meet surging AI memory demand

Micron to boost DRAM output with $1.8bn chip fab buy

Taiwan's Powerchip sells legacy fab it opened just 19 months ago after spending $9.5 billion Micron has found a way to add new DRAM manufacturing capacity in a hurry by acquiring a chipmaking campus from Taiwanese outfit Powerchip Semiconductor Manufacturing Corporation (PSMC). The two companies announced the deal last weekend. Micron's version of events says it's signed a letter of intent to acquire Powerchip's entire P5 site in Tongluo, Taiwan, for total cash consideration of US$1.8 billion. "The acquisition includes an existing 300 mm fab cleanroom of 300,000 square feet and will further position Micron to address growing global demand for memory solutions," the company stated, adding that the company "expects this acquisition to contribute to meaningful DRAM wafer output beginning in the second half of calendar 2027." Powerchip's take on the deal includes news that it will establish a long-term foundry relationship with Micron "on DRAM advanced packaging wafer manufacturing." The deal means PSMC will leave the Tongluo site and move the production lines it operates there to another of its facilities in the city of Hsinchu. PSMC has assured its foundry customers it can do this without disrupting its operations, but also says it plans to "phase out low-margin products to reduce reliance on mature process foundry services" and build more products for AI applications. That's a remarkable decision given that PSMC opened the Tongluo site less than two years ago. In its May 2024 'Hooray, we're open!' announcement, PSMC said it invested more than NT$300 billion (US$9.5 billion) on the facility, and that it had capacity to produce 50,000 12-inch wafers per month under 55, 40 and 28 nanometer technology nodes. The company also scoped a second fab on the site to produce 2 nanometer chips. Nineteen months later, the company is walking away from Tongluo and the legacy chip business and has seemingly taken a financial hit along the way. Micron says the acquisition "complements ... ongoing global expansion plans as the company invests to meet long-term demand from its customers." The company is already building new memory fabs - it announced a new one in New York State just last Friday - and late last year told investors that new datacenter builds to house AI infrastructure have created a "sharp increase" in demand forecast for memory and storage that semiconductor companies won't be able to meet for the foreseeable future. That collision of supply and demand has sent memory prices soaring and created an environment in which Micron was able to pre-sell all the high-bandwidth memory it will produce in 2026. Manufacturers of PCs, servers, GPUs, and smartphones have warned the cost of their wares must rise along with the cost of memory. This deal may make matters worse for more buyers, because PSMC used the Tongluo site to make legacy DRAM products - the kind of memory used in less advanced products. With the company now exiting the legacy chip biz, that memory will also become more scarce, giving the laws of supply and demand another moment in which to work their way on markets. ®

Powerchip shares jump after Micron moves to buy Taiwan fab for $1.8 billion

TAIPEI, Jan 19 (Reuters) - Shares of Taiwan's Powerchip Semiconductor Manufacturing Corp rose nearly 10% on Monday, after U.S. memory chipmaker Micron Technology said it would buy a fabrication plant from the company. Micron Technology said on Saturday it had signed a letter of intent to acquire Powerchip's P5 fabrication site in Tongluo, Miaoli County, Taiwan, for $1.8 billion in cash. Powerchip is one of Taiwan's major semiconductor foundries and produces both legacy chips and memory chips. Micron said it expects the deal to help boost its output of dynamic random access memory (DRAM) wafers beginning in the second half of 2027. The purchase will add about 300,000 square feet of cleanroom space, a highly controlled environment needed for chip production, the company said. It will allow Micron to ramp up DRAM production in phases at a time when global demand for memory continues to outpace supply, the company added. Micron is one of only three major suppliers of high bandwidth memory (HBM) chips essential to AI technology, alongside South Korea's Samsung and SK Hynix <000660.KS >. Micron CEO Sanjay Mehrotra said last month he expects memory markets to remain tight beyond 2026. The company's shares gained a whopping 240% in 2025, far outpacing the benchmark chip index's 42% gain. Micron has been operating in Taiwan for more than 30 years and is the island's largest foreign direct investor, according to Micron Taiwan's website. Its facilities in Taichung, Taiwan, are a key production hub for DRAM and HBM products. Powerchip said in a statement on Saturday that Micron will establish a long-term foundry relationship with the company for DRAM advanced-packaging wafer manufacturing, and will assist Powerchip in enhancing its specialty DRAM process technologies. Micron said the transaction is expected to close by the second quarter of 2026, subject to regulatory approvals. (Reporting by Wen-Yee Lee; Editing by Himani Sarkar)