Compass Money: Tech Companies Race to Dominate Semiconductor Production

Micron Technology announced $150 billion in memory manufacturing and R&D investment over the coming decade (InsideNoVa).

Micron Technology, a U.S. semiconductor manufacturer that holds a market share of 23.1 percent in the DRAM industry, announced on October 20 that it plans to invest more than $150 billion in memory-chip manufacturing and R&D over the next decade. The expansion plan follows the Biden administration’s proposal to subsidize chip manufacturing and research.

An increasing demand for electronic products contributed to the recent global storage of memory chips. Consumer products that rely on memory and storage chips, such as automotives and electronics, are experiencing hindrances in production due to the global tech supply chain disruption following COVID-19 and increased demand. Moreover, the growing reliance on online services in the wake of the COVID-19 pandemic has prompted data-center operators to expand cloud storage, further boosting demand for memory chips. 

Micron aims to meet the increased demand with new memory chip factories, but the site is still under consideration. Chief Business Officer Sumit Sadana said the company wants to assess manufacturing in the U.S. for national security, but he stressed the importance of government funding and refundable investment tax credit in expanding domestic fabrication plants. The company pointed out that chip manufacturing costs in the U.S. are 35-45 percent higher than in the lower-cost markets such as Japan, Singapore, and Taiwan, where most production currently takes place. Although the U.S. Senate passed legislation in June approving $52 billion in funding for the semiconductor industry, the bill awaits House approval. Financial support will play a key role in the company’s decision on which country to invest in. 

“We will be engaging with the governments around the globe, including in the U.S., to address our needs for growing our supply in line with our demand expectations for the 2030 era,” said Micron President and CEO Sanjay Mehrotra.

The race to dominate chip production is a global one. Taiwan Semiconductor Manufacturing Co., the biggest contract chipmaker in the world, plans to spend $100 billion through 2023 to boost its chip-making capacity. Intel sold a memory chip unit to South Korea’s SK Hynix for $9 billion in 2020 but pledged to invest $20 billion for domestic production this year. GlobalFoundries, an Abu Dhabi sovereign-wealth-fund-owned company, raised $2.6 billion in an initial public offering in the U.S. to restore chip production. 

Samsung Electronics, one of the world’s leading producers of semiconductors, is also part of the race. An anonymous source reported that the construction of a $17 billion semiconductor plant in Texas is being finalized. The company announced its plan to invest $151 billion in non-memory chip production earlier in May. This production spearheads the Moon administration’s vision of dominating the global supply of non-memory semiconductors.

With international corporations consecutively announcing investment plans to alleviate chip shortages, the chip manufacturing industry is expected to become increasingly competitive.