Micron to Spend Up to $100 Billion on Chip Factory in New York State

Micron’s spending plan underscores how the chip industry is trying to balance near-term belt tightening amid economic turmoil with a belief in the long-term demand for semiconductors. Micron recently has been slashing near-term capital spending to deal with slumping consumer appetite for personal computers and smartphones this year. That caused the company’s sales to drop in the most recent quarter, and it said capital spending for its current fiscal year would.be 30% lower than a year earlier to deal with oversupply.

Micron said a year ago that it would spend as much as $150 billion on additional production capacity, though didn’t say where the new money would go. The company had held off on committing to the spending until the U.S. government had approved billions of dollars in subsidies for domestic chip making. “We will need support from the federal government as well as appropriate support from state governments to bridge the 35% to 45% cost gap that exists in overseas production,” Micron Chief Executive

Sanjay Mehrotra

said earlier this year.

The company said Tuesday that the facility in Clay would require about $20 billion in spending by the end of this decade and be built out further thereafter. Construction in Clay, roughly 15 miles north of Syracuse, N.Y., is due to start in 2024. The company said last month that it would invest $15 billion in a new factory in Idaho, with construction beginning next year.

Micron’s stock was up 5.6% at midday Tuesday.

The factory plans come less than two months after the passage of the bipartisan Chips and Science Act, which aims to boost domestic innovation by subsidizing the construction or expansion of semiconductor-fabrication plants in the U.S.

Intel Corp.

and

Texas Instruments Inc.

also have unveiled chip-factory investments in the U.S. in recent months, among a host of companies evaluating plant-building in the U.S. to tap new federal and state incentives.

Micron said its spending would benefit from $5.5 billion in incentives from New York, along with the federal subsidies. Mr. Mehrotra praised the Biden administration and Congress on Tuesday for giving priority to the subsidy package.

Members of Congress and government officials see bringing new chip manufacturing to the U.S. as crucial to addressing concerns that the country is losing control over advanced technology critical to national security. While the chip industry was born in the U.S., today American factories have only about 12% of the world’s chip-making capacity.

Micron’s new New York and Idaho factories would raise the portion of the company’s production in the U.S. to 40% from 10% in about 10 years, Mr. Mehrotra said in an interview.

“We are bringing leading-edge memory manufacturing to the U.S., we are building diversified, resilient domestic supply chains in the U.S. and creating national economic security as well as addressing national security through these investments,” he said.

Other countries aren’t standing still. Europe has its own chip-industry funding in the pipeline and is aiming to double its share of the global market to 20% by 2030. Some of the world’s largest non-U.S. chip makers, including

Taiwan Semiconductor Manufacturing Co.

and South Korea’s

Samsung Electronics Co.

, have laid out plans for hundreds of billions of dollars of manufacturing growth in the coming years, with their sights set on a bigger share of a lucrative market where the cost of manufacturing is climbing sharply.

Samsung’s contract chip-making business said this week that it planned to increase its manufacturing capacity for the most advanced chips by 70% a year.

President Biden, who championed nearly $52 billion of funding for chip research and manufacturing that is expected to start rolling out next year, on Tuesday cheered Micron’s spending plan.

As the U.S. seeks to expand its own chip industry, the Biden administration is trying to limit the growth of chip making in China by attempting to cut the country off from advanced technologies that could fuel its military development and surveillance activities. The administration is preparing new export controls on chips and chip-making equipment that could affect Chinese access to artificial-intelligence chips and advanced-memory chips, among other hardware.

New York Gov.

Kathy Hochul

said Micron’s plan represented the largest private-sector investment in state history and would solidify New York as a global manufacturing hub. Sen.

Chuck Schumer

(D., N.Y.), who led legislative efforts to pass chip-plant incentives, called the project a win for the U.S. in a worldwide race to attract cutting-edge manufacturing. “Other countries are giving their companies huge help, not only China but Europe as well,” he said. “If our government didn’t step up, all of these new chip fabs—and there’s huge demand for chips—would have been built overseas.”

Write to Asa Fitch at [email protected] and Dean Seal at [email protected]