Micron Technology (MU 1.63%) is a leading manufacturer of memory chips, and is gearing up for expansion in the next few years to keep up with surging demand. But these things take time. Fool.com contributors Jose Najarro, Nicholas Rossolillo, and Billy Duberstein discuss what Micron is planning in this Motley Fool Live segment from "Semiconductor Revolution" recorded on Jan. 6.
Jose Najarro: Micron eyes a new manufacturing location. This is a trend I think we're seeing pretty often or a lot recently. Micron Technology, many might know as the manufacturer of memory. They currently have two manufacturing plants here in the United States, one in Boise, Idaho, and one in Manassas, Virginia. Right now, they have about $150 billion that they're going to spend globally to build new manufacturing plants.
There are reports that they are eyeing maybe somewhere in Texas or Arizona. Nothing has been confirmed. But in the past two years, right. We've seen Taiwan [Semiconductor Manufacturing (TSM 0.57%)], I believe, go a little bit heavier in Arizona. We saw Samsung entered Texas recently, and then we have also Intel (INTC +2.13%) that's also focusing in Arizona. Do you guys think this trend is going to continue for a few more years, or is this something that's going to stay?
Billy Duberstein: Go ahead, Nick
Nicholas Rossolillo: Yeah, I think it's going to last awhile, especially with Micron because on their last earnings call, they're actually not planning on building this factory within the next couple of years. They're actually earmarking the spending for a few years down the road on this chip capacity increase. This really is a long-term trend. We're looking at the chip industry in a microcosm right now because of the chip shortage. But this is really a long-term trend that will play out over at least the next decade because so many chips are needed.
Billy Duberstein: Yeah, I'd also say that this is probably contingent on them getting subsidies from the government. The chips act is making its way through Congress. It might have been tied to the defense authorization bill at the end of last year. At least double-check that. But anyway, it's likely the subsidies are coming because the U.S. wants capacity on its own shores.
Most of Micron's capacity is in Taiwan and Japan and East Asia. Their headquarters and research and development is in Idaho. And their Virginia plant, I believe, is for auto and mature-process chips. Not the most leading-edge, but one where there's still a lot of growth. Most of their manufacturing is still in East Asia. They're likely earmarking this probably with the caveat that they would need to get some subsidies to make it cost-effective.
Jose Najarro: I think Nick made a great point there about the long term of these factories, right, where it's under the microscope. We're just looking at the semiconductor industry right now.And we think, hey, they're building a factory plant, next year, they're going to start producing. But most of these plants, it takes about five to six years before they go to full capacity of production. Even though we might be talking about the semiconductor shortage here, Nick made a great point that this is a long-term thing, that these are companies focusing five years from now that there's still going to need these plants. That's great, great news.
