Micron Technology has signed a $1.8 billion letter of intent to acquire Powerchip Semiconductor Manufacturing Corp's (PSMC) P5 fabrication site in Tongluo, Taiwan. The deal, expected to close in the second quarter of 2026, is a strategic move to increase DRAM production capacity as global memory supply remains critically tight, driven by surging demand from artificial intelligence systems.
The acquisition includes a 300,000-square-foot 300mm fab cleanroom located near Micron's existing facility in Taichung, which is expected to create operational synergies. Micron plans a phased production ramp-up, with meaningful DRAM wafer output from the P5 site anticipated to begin in the second half of 2027. The agreement also establishes a long-term partnership for post-wafer assembly processing and support for Powerchip's legacy DRAM portfolio, keeping the Taiwanese firm involved while Micron takes over core manufacturing.
This expansion is part of Micron's broader, multi-billion dollar capacity push. On the same day as the Taiwan deal announcement, the company held a groundbreaking ceremony for a new $100 billion, 600,000-square-foot facility in Clay, New York. This site is part of a larger plan to invest up to $200 billion in U.S. production capacity, which includes two additional fabs in Idaho. U.S. Commerce Secretary Howard Lutnick attended the New York event.
The market reacted swiftly and positively to the news. Micron's stock surged nearly 8% on Friday, reaching an all-time high of $353.08. This rally was further fueled by strong earnings from Taiwan Semiconductor Manufacturing Co. (TSMC), which signaled robust ongoing investment in AI infrastructure. Over the past year, Micron's stock has skyrocketed more than 250% due to the global memory shortage.
CEO Sanjay Mehrotra emphasized the accelerating, tangible demand for memory from AI applications. "AI driven-demand is accelerating. It is real. It is here, and we need more and more memory to address that demand," he stated on CNBC. Memory is crucial for AI systems as it keeps large datasets close to GPUs, allowing complex models to run efficiently.
The scramble to supply tech giants like Nvidia, Advanced Micro Devices, and Google has exacerbated shortages. Memory prices are projected to rise approximately 55% in the first quarter alone. Micron's own forecasts have been consistently exceeded; while the company anticipated 10% growth in server memory at the start of 2025, it ended the year with growth in the high teens, alongside stronger-than-expected demand for PC memory and storage. Mehrotra expects these tight market conditions to persist into 2027.
