Micron Technology Receives $6.1B Grant for US Chip Plants Expansion

(CTN News) – The United States proposes to award Micron Technology Inc. $6.1 billion in grants and up to $7.5 billion in loans to help the memory chip maker establish new American plants, adding to a series of significant federal awards for advanced semiconductor production.

Micron has planned to invest over $125 billion to construct four plants in New York and one in Idaho. According to records filed last week, the business, the largest memory chip manufacturer in the United States, has asked separately for federal financing to support a project in Virginia.

“We’re bringing advanced chip manufacturing back to America after 40 years,” President Joe Biden declared during a ceremony in Syracuse, New York.

“It’s going to transform our semiconductor industry, a pillar of a modern economy, and it’s going to create an entirely new ecosystem in research, design and manufacturing of advanced chips here in America.”

Biden praised Micron CEO Sanjay Mehrotra for the company’s investments, saying that “we tried to entice you a little bit with a couple of hundred—billions of dollars, but you came.” “It appeared to work.” He also chastised Republican senators for opposing the federal legislation that gave cash to boost domestic chip production.

“I guess they’re not going to be here today to celebrate,” remarked Vice President Joe Biden.

Earlier: Micron to Receive $6.1 Billion in Chips Act Funding Next Week

It will be months before Micron receives any of the funds allocated by the 2022 Chips and Science Act, which includes $39 billion in grants and $75 billion in loans to increase American chipmaking and lessen dependency on Asia. Preliminary agreements, such as the one announced Thursday, initiate a due diligence stage, following which the funds will be distributed over time in tranches based on construction and production benchmarks.

One plant currently under development in Micron’s hometown of Boise will be funded and ready for production in 2026. Two more will be developed in the Syracuse area of New York state and ready for production in 2028 and 2029. Micron also plans two other sites in New York that are not included by Thursday’s preliminary agreement.

Computer memory is an essential component of everything from smartphones to supercomputers, and it works with processors manufactured by businesses such as Nvidia Corp. and Intel Corp.

The financial award ensures that Micron will move forward with its first cutting-edge manufacturing expansion in the United States in over 20 years. The corporation also operates plants in Singapore, Japan, and Taiwan.

However, the expansion poses concerns for Micron. Memory chips have unpredictable costs since they are manufactured to industry standards. This means they’re interchangeable, creating a commodity-like market. Rapid swings between shortages and gluts have defined Micron’s history, making long-term profitability difficult to attain. It posted a net loss of more than $5 billion last year, only one year after making a massive profit.

Commerce Secretary Gina Raimondo earlier stated that advanced chipmakers had requested more than twice the amount of grant money set out for them. The Commerce Department set aside around $28 billion of the $39 billion pool for top-tier facilities.

The four biggest advanced manufacturers building in the United States — Micron, Intel, Taiwan Semiconductor Manufacturing Co., and Samsung Electronics Co. — would get a total of $27.6 billion in incentives.

The only other business that handles such manufacture, South Korea’s SK Hynix Inc., has committed to establishing an American packaging factory. That implies the United States will be the only country in the world with facilities run by all of the major manufacturers.