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June 16, 2023updated 16 Aug 2023 9:55am

Micron invests $600m in China amid chip sanctions, eyes $1bn India factory

The US memory chip maker is putting money into its packaging facility weeks after it was banned from selling products in China on security grounds.

By Matthew Gooding

US memory chipmaker Micron Technology is investing more than $600m in a packaging plant in China. The move could be seen as an attempt to curry favour with Beijing, coming weeks after the country’s cybersecurity regulator banned infrastructure providers from buying Micron products on security grounds. Semiconductors have become a key battleground in the trade war between the US and China, with many companies banned by Washington from doing business with customers in the Far East.

Micron Technology is investing in China and India. (Photo by Remus Rigo/Shutterstock)

Separately, Micron is reportedly ready to announce a new $1bn packaging factory in India, indicating it may be looking to a future where China plays a smaller role in its product manufacturing.

Micron is the third biggest company in the DRAM memory market, behind South Korean products Samsung and SK Hynix.

Micron’s China semiconductor investment will create jobs

Micron revealed its investment plans through a post on Chinese app WeChat. “This investment project demonstrates Micron’s unwavering commitment to its China business and team,” CEO Sanjay Mahotra said.

It will see the company expand and improve its semiconductor packaging facility in Xian, in China’s Shaanxi Province. It plans to buy packaging equipment from a Xian-based subsidiary of Taiwan-based Powertech Technology, and will set up a new production line to manufacture mobile DRAM, NAND and SSD. The investment will strengthen the site’s packaging and testing capabilities, the statement said, and create 500 new jobs. Micron will also offer contracts to 1,200 Powertech employees, taking its total workforce in China to 4,500.

The statement makes no mention of the sanctions imposed on Micron last month by the Chinese government. Following a security review, it said the company had failed a "network security review", and that as a result Chinese infrastructure providers were banned from buying Micron chips. No details were provided on what these risks are, or whether Micron would be given the opportunity to mitigate them. The company said the decision was likely to have a single-digit impact on its revenue, as most of its Chinese customers are consumer electronics companies which fall outside the remit of the ban.

China's decision to sanction Micron was widely seen as retaliation for the US's continued efforts to strangle Chinese industries by cutting off supply of cutting-edge electronics. Companies such as Nvidia and AMD have been banned from selling their most advanced AI chips to customers in China, while ASML, the world's only supplier of advanced chipmaking equipment, is also restricted in what it can ship to Beijing because of Washington's export controls.

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Is Micron ready to invest $1bn in India?

Separately, Micron is reported to be ready to invest $1bn in a new packaging plant in India.

The news could be announced next week when India's prime minister Narendra Modi visits the US, according to a report from Bloomberg. It cites people with knowledge of the discussions, and says the amount being invested by Micron in India could be as high as $2bn, though no agreement has been finalised.

If confirmed, the new facility would help Micron reduce its reliance on Chinese manufacturing, and also be a boost to India's semiconductor ambitions. As reported by Tech Monitor, Modi's government is keen to grab a larger slice of the chip manufacturing market, and Micron is not the only company taking an interest. Foxconn, a supplier of parts for Apple's iPhone, is already moving some of its manufacturing from China to India, and in March revealed that it plans to build a 300-acre manufacturing facility in Bengaluru.

Tech Monitor has approached Micron for comment.

Read more: How to sell a chip to China

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