A little more than three weeks after China's cyberspace regulator announced that Micron Technology, America's biggest maker of memory chips, possesses "serious network security risks" and will be banned from critical infrastructure projects in the world's second-largest economy, the chipmaker said on Friday it was committed to investing hundreds of millions of dollars in its high-tech manufacturing facility in the Chinese city of Xian.
Micron made the announcement on the WeChat social media app earlier this morning. It said it would invest 4.3 billion yuan ($603 million) over the next few years in upgrading its chip packaging and testing equipment at the Xi'an factory.
The investment adheres to Micron's concept of global packaging and testing, and will enhance the company's flexibility in manufacturing a variety of product portfolios in Xi'an, enabling Micron to directly operate its packaging and testing business in the Xi'an factory.
The new plant announced this time will introduce a new production line for the manufacture of mobile DRAM , NAND and SSD products to strengthen the existing packaging and testing capabilities of the Xi'an plant . Micron has been preparing for the project for some time and has already started the qualification work for the production of mobile DRAM in Xi'an.
Micron President and CEO Sanjay Mehrotra stated Micron has been "rooted in China" for decades and has "established a deep relationship with customers." He said this "investment project demonstrates Micron's commitment to China's business and Chinese team members. An unwavering commitment."
Micron decided to invest in its Chinese factory weeks after the country's cyberspace regulator said it would bar its chips from "critical infrastructure" over cybersecurity concerns.
At the same time, Micron also warned that about half of its sales tied to China-headquartered clients may be affected by the probe being carried out by the Chinese government, representing a “low-double-digit percentage” of its global revenu, Bloomberg reported.
“Micron is working to mitigate this impact over time and expects increased quarter-to-quarter revenue variability,” the company said in the filing. Micron’s shares fell 1.6% on the news.
Tech has become a battlefield over national security for Washington and Beijing. The US has blacklisted Chinese tech firms and limited advanced semiconductor manufacturing equipment to flow to the country to stall Chinese chip development as the Biden administration ramps up domestic chip factories.
Even though there's a lot of uncertainty between China and the US, Morgan Stanley recently told clients, "The reality is that a complete decoupling of the US economy from China is neither possible nor desirable."
Why is that? One look at the supply chain map below will explain why.
