US to grant $6B to Micron for semiconductor chip production
What's the story
Micron Technology Inc., a prominent US computer chip manufacturer, is poised to secure over $6 billion in grants from the US Commerce Department.
The funds are designated for domestic factory projects aimed at reviving semiconductor production on American soil.
The grant, which is still awaiting final approval, could be announced as early as next week.
Factory construction
Micron's expansion plans in New York and Idaho
Micron, headquartered in Boise, Idaho, is currently constructing factories in New York and Idaho.
Following the announcement of the initial agreement, the company will undergo a due diligence period.
The funds from the grant will be received in installments linked to specific project milestones.
It remains undecided whether Micron will also utilize loans offered by the 2022 Chips and Science Act along with direct grant funding.
Factory plans
Micron's commitment to domestic chip production
Micron has committed to building up to four factories in New York and one in Idaho.
However, these plans are contingent on securing enough chips grants, investment tax credits, and local incentives "to offset the cost difference compared to overseas expansion," according to CEO Sanjay Mehrotra.
Despite this commitment, Micron continues with projects in China, India, and Japan.
Funding priorities
Commerce Department prioritizes early production projects
Commerce Secretary Gina Raimondo has indicated that her department will prioritize funding projects that begin production by the end of this decade.
Two of Micron's four New York facilities are expected to meet this criterion, while the remaining two won't be operational until 2041.
Consequently, it's likely that Micron's grant will only support the first two New York facilities.
Semiconductor industry
The impact of Chips Act on US domestic production
Memory and storage chips, predominantly manufactured in Asia, are crucial components in devices ranging from smartphones to large data centers.
Micron's main competitors, Samsung and SK Hynix Inc., dominate this sector.
These companies also plan to establish factories in the US, spurred by over $200 billion in private semiconductor investment from the Chips Act.
According to Governor Kathy Hochul of New York, this act will secure 50,000 jobs and a $100 billion investment.