Micron’s Manufacturing Base in the US and Overseas

So far in this series, we’ve looked at how Micron Technology (MU) leverages its partnership agreements and new process technologies in order to lower manufacturing costs. Another way Micron controls costs is by developing a manufacturing base in countries where manufacturing costs are low. The company manufactures most of its chips in the US, but it has grown its manufacturing base across the world through acquisitions and joint ventures.

Micron is the last remaining DRAM manufacturer in the US. All other semiconductor companies have either been acquired or have outsourced their production to Asian countries. As DRAM is used in many defense and security-related applications, Micron is of strategic relevance to the US Department of Defense because it retains DRAM manufacturing capacity within the country.

Singapore (EWS) is Micron’s largest manufacturing center. The company has three major plants, a test and assembly facility, and a research and development center in the city. It employs ~7,000 people in the country.

Micron is further expanding in Singapore by building a new $4 billion wafer fabrication facility, or fab, to produce 3D NAND flash and other emerging memory technologies in collaboration with Intel Corporation (INTC). The plant is expected to begin production in 2017.

Singapore is a particularly favorable location for Micron, as the country allows the company to compute tax provision at rates below the local statutory rates. Such tax benefits have attracted top chip designers in the world, including MediaTek (MDTKF), to build facilities in Singapore.

Micron’s manufacturing assets in Japan and Taiwan almost doubled in fiscal 2014 with the acquisition of Japan’s Elpida. The acquisition included a fab in Taiwan and a test and assembly facility and a fab in Japan.

Japan’s semiconductor industry is witnessing a downfall due to the slow adoption of emerging trends, such as mobile semiconductors. Toshiba Corporation (TOSBF) is the only Japanese company listed on the IC Insights’ Top 10 Semiconductor Leaders list.

Micron has a minimal manufacturing presence in China, despite the fact that the country is its biggest consumer, accounting for 41% of the company’s total sales in fiscal 2014.

In the next part of this series, we’ll look at Micron’s biggest clients.