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(Image courtesy of Micron).

Micron Technology Lays Down $3 Billion to Expand American Factory

Micron Technology has been walking a tightrope over the last year. Demand for short-term memory and long-term storage used in personal computers, smartphones and data centers has outstripped supply, pushing up prices. Micron and other major manufacturers have ramped up production to take advantage of the prolonged boom. But falling prices are sparking concerns that they are flooding the market with DRAM and NAND

The Boise, Idaho-based Micron is playing a longer game with memory chips to be installed in automobiles and industrial equipment, which it contends are less vulnerable to supply-demand fluctuations. The company on Wednesday announced that it would invest $3 billion over the next decade into the Mannassas, Virginia factory where these chips are manufactured. The investment will create around 1,100 permanent new jobs by 2030.

The expansion is expected to be complete in the second half of the year, adding less than five percent to its available capacity worldwide. Micron, the largest American maker of memory chips, said it would focus on boosting DRAM and NAND production in the factory, which currently employs about 1,500 people. The company said that the new clean room would enter production in the first half of 2020.

Sanjay Mehrotra, Micron’s chief executive officer, said that the factory is focused on “long-lifecycle products that are built using our mature process technologies, and primarily sold into the automotive, networking and industrial markets. These products support a diverse set of applications such as industrial automation, drones, the Internet of Things and in-vehicle experience applications for automotive.”

Mehrotra has high hopes for the automotive market. The increasing use of cameras, radar and other sensors to enable collision avoidance systems means more information flowing through the vehicle, driving demand for memory chips with more storage, bandwidth, latency and throughput. The movement to connect cars to the internet and make dashboard displays more like smartphones could also goose sales of memory chips.

Wednesday’s announcement comes as other major manufacturers upgrade existing manufacturing lines and erect new factories around the world. This year, capital expenditures on memory chips are projected to be $54 billion, more than half of the semiconductor industry’s combined spending over the last year, according to researcher IC Insights. That has raised the question of whether memory manufacturers are ramping up production too impulsively.

That could soften memory prices, which typically fluctuate based on supply and demand, not unlike steel and other commodities. Prices have started to cool in recent months. DRAM prices are projected to increase 38 percent this year after rising 81 percent last year, according to IC Insights. On the other hand, NAND prices are expected to fall around 10 percent over the next two quarters, according to researcher DRAMeXchange.

Micron’s investments are also intensifying. The company reported property, manufacturing plant, and equipment assets in the third quarter of $22.7 billion, up from about $19.4 billion over the last year. Micron said that the latest investment is part of its long-term strategy to invest around 30 percent of revenue—which jumped 40 percent over the last year to $7.80 billion in the third quarter—in capital expenditures.

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