Investment plan

Micron announces $40 billion investment plan despite gloomy revenue forecast

Micron Technology announced on August 9 that it would invest US$40 billion to build state-of-the-art memory manufacturing in the United States. The investment, according to Micron, will take place in several phases until the end of the decade.

The announcement came the same day that US President Joe Biden signed the US$52 billion Chip Act into law. However, the investment, hailed by the company as “the biggest investment ever in U.S. memory manufacturing,” was partially overshadowed by Micron’s pessimistic revenue forecasts released the same day.

In a regulatory filing, the U.S. memory chipmaker warned of negative free cash flow over the next three months as demand for PCs and smartphones fades, and accordingly cut its revenue forecast for the fourth quarter. There will be “significant sequential declines in revenue and margins,” according to Micron.

In fact, the weakening in demand was not limited to consumer electronics, as Micron CEO Sanjay Mehrotra said. Bloomberg in an interview. Inventory adjustments also occur in data centers, industrial and automotive sectors. As a result, Micron plans to reduce capital spending in the near term.

Micron’s US$40 billion investment is part of a larger US$150 billion global investment program announced in October last year to boost US competitiveness in the semiconductor industry.

According to IDC, 175 zettabytes of data will be generated worldwide in 2025. This growing demand, according to a report published by Micron, has driven memory and storage chips from 10% of global semiconductor revenue to 2000 at around 30%. industry revenue today. Meanwhile, DRAM and NAND chips account for about two-thirds of the world’s production of 300mm semiconductor wafers.

When it comes to memory manufacturing, according to Micron, costs in the United States are 35 to 45 percent higher than in lower-cost markets, making government funding necessary. The latest announced investment will therefore receive the support of Chips Act. The company ultimately aims to grow domestic memory production from less than 2% to 10% of the global market over the next decade.

As the world’s third-largest memory vendor, Micron accounted for 23.8% of the global DRAM market and 10.9% of the NAND market, according to Q1 2022 data from trend strength. Together with Western Digital (WD), he also proposed a Memory Coalition of Excellence (MCOE) on August 4 to align with the National Semiconductor Technology Center (NSTC) created under the Chips Act, seeking to improve US funding of R&D for the development of next generation memory technologies.