Yahoo Finance Micron (MU) Secures $6.1B for Domestic Manufacturing Expansion
Micron Technology, Inc. MU has embarked on a transformative journey in semiconductor manufacturing, securing $6.1 billion in funding under the CHIPS and Science Act to support its ambitious expansion plans in the United States. This landmark agreement, signed in collaboration with the Biden-Harris Administration, represents a significant milestone in the revitalization of domestic memory chip production.
Reviving Domestic Semiconductor Manufacturing
Micron's commitment to invest approximately $50 billion in gross capex for leading-edge memory manufacturing over the next decade aligns with the broader national agenda to bolster America's semiconductor capabilities. The $6.1 billion in grants will facilitate the construction of cutting-edge memory fabs in Idaho and New York, paving the way for a resurgence of semiconductor production on American soil.
This significant development comes on the heels of Micron's earlier announcement of multi-billion-dollar investments aimed at setting up chip factories in the country. In September 2022, the company unveiled plans to invest approximately $15 billion through the end of the decade in building a new fabrication factory for manufacturing memory chips in Idaho. This initiative marked a significant milestone as it represented the United States' first memory chip manufacturing facility in two decades.
Micron Technology, Inc. Price and Consensus
Micron Technology, Inc. price-consensus-chart | Micron Technology, Inc. Quote
Moreover, in October 2022, Micron announced plans to invest up to $100 billion over the next 20-plus years to build a factory in upstate New York. This ambitious undertaking is set to be the largest semiconductor fabrication facility in the history of the United States, further solidifying Micron's commitment to expanding its domestic manufacturing capabilities.
Micron’s investment plans will help the company raise its memory chip output in the United States. The company has a long-term strategic target of bringing American-made DRAM chip production to 40% of its total global output over the next decade.
Micron's expansion plans not only strengthen the nation's semiconductor manufacturing capabilities but also foster innovation and supply chain resilience. By co-locating research and development (R&D) centers with manufacturing facilities, Micron aims to accelerate technology deployment and improve time to market for leading-edge products. Additionally, the establishment of leading-edge memory fabs in the United States will reduce reliance on foreign suppliers and enhance supply chain security.
The strategic partnership between Micron, federal agencies and state governments underscores a shared commitment to advancing U.S. technological leadership and enhancing economic and national security.
Impact on Economic Growth
By harnessing the power of federal grants and state incentives, Micron aims to establish state-of-the-art semiconductor manufacturing facilities that will create an estimated 75,000 domestic jobs over the next two decades. Micron's planned investments in Idaho and New York are poised to have a transformative impact on local economies, with the creation of thousands of direct and indirect jobs.
In Idaho, the project is expected to generate 2,000 Micron jobs, 4,500 construction jobs and 15,000 indirect jobs. Meanwhile, in New York, it will result in 9,000 Micron jobs, 4,500 construction jobs and 40,000 indirect jobs. These investments represent the single largest private investments ever made in Idaho and New York, signifying a significant boost to regional economic growth.
In addition to creating jobs, Micron's investments will support community development and workforce training initiatives in Idaho and New York. The company's commitment to K-12 education programs, university partnerships and community-based investments will help build a strong semiconductor talent pipeline and ensure long-term economic prosperity.
In conclusion, Micron's investment marks a significant milestone in the revitalization of U.S. semiconductor manufacturing. By harnessing federal grants and state incentives, Micron aims to establish state-of-the-art manufacturing facilities that will create thousands of jobs, foster innovation and enhance supply chain resilience. The company's long-term vision underscores its commitment to advancing American technology leadership and driving economic growth for years to come.
Other Chipmakers’ Domestic Expansion Plan
The semiconductor industry is witnessing a trend of companies like Intel Corporation INTC, Samsung and Taiwan Semiconductor Manufacturing Company TSM announcing plans to invest billions of dollars in setting up manufacturing facilities in the United States. Like Micron, these companies are also eligible for significant chip grants under the 2022 Chips and Science Act, further incentivizing their expansion into the U.S. market.
For instance, Intel has announced its intention to invest $20 billion to build two new chip factories in Arizona, while Samsung is planning to invest $17 billion to build a new chip factory in Texas. Additionally, Taiwan Semiconductor Manufacturing Company, the world's largest contract chipmaker, has revealed plans to construct a semiconductor fab in Arizona, with an investment of $12 billion.
These investments underscore the semiconductor industry's recognition of the strategic importance of the U.S. market and the favorable regulatory environment established by the 2022 Chips and Science Act. By establishing manufacturing plants in the United States, semiconductor companies not only gain access to chip grants but also benefit from proximity to key customers, research institutions and a skilled workforce.
Furthermore, the 2022 Chips and Science Act provides significant financial incentives, including grants, tax credits and funding for research and development, to semiconductor companies investing in domestic manufacturing. This legislation aims to accelerate innovation, strengthen national security and ensure a stable and resilient semiconductor supply chain.
Zacks Rank & Another Stock to Consider
Currently, Micron carries a Zacks Rank #2 (Buy), while Taiwan Semiconductor Manufacturing Company has a Zacks Rank #3 (Hold). Intel carries a Zacks Rank #4 (Sell) at present. Shares of MU and TSM have soared 30.8% and 31.4%, respectively, year to date (YTD). Meanwhile, INTC stock has plunged 30.1% YTD.
Another top-ranked stock worth considering in the semiconductor industry is NVIDIA Corporation NVDA. The stock currently carries a Zacks Rank #2. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for NVIDIA's fiscal 2025 earnings has been revised upward by 10 cents to $23.94 per share in the past seven days. NVIDIA’s earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 20.2%. Shares of NVDA have surged 70.2% YTD.
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