Defying China's ban? Micron to invest in Xi'an plant, open new production lines
US memory maker Micron Technology, Inc. has just announced that it will continue to invest in its Xi'an plant, despite a ban on the sale of its products in China to critical information infrastructure operators.
Reuters reported that Micron announced via its official Weibo account on 16 June that it will invest RMB4.3 billion (US$603 million) in its existing chip packaging facility in Xi'an over the next few years. Micron CEO Sanjay Mehrotra said the investment plan demonstrates Micron's unwavering commitment to its China operations and team.
Micron noted that the investment includes the purchase of packaging equipment from the Xi'an-based subsidiary of Taiwan-based Lixin Technology. Micron has been using equipment from the Xi'an plant since 2016.
In addition, Micron intends to open a new production line at the Xi'an facility for the manufacture of mobile DRAM, NAND-based flash memory and solid state drives (SSDs), thereby strengthening the facility's packaging and testing capabilities.
Notably, Micron's statement did not mention the Beijing authorities' ban on the company's sales to Chinese critical information infrastructure operators.
Speaking at the J.P. Morgan Global Technology, Media & Communications Conference on May 22, Micron CFO Mark Murphy said the impact of the China sales ban on revenue would range from 1 to 9 percent, depending on which customers, products and end-use applications were covered by the Chinese definition of "critical information infrastructure operators".
Bernstein analyst Mark Li estimates that in the worst case (but least likely) scenario, Micron's revenue would be impacted by the China ban by 11%. A more reasonable impact would be in the range of 1-4% and "only in the short term".
Analysts believe that the impact on Micron is manageable in the long term, as most memory chips have become readily available (commoditised) and new customers will eventually fill Micron's lost China market. Memory is a raw material and the supply chain can be adjusted in a few quarters.
