Is Taoyuan factory expansion gone? Micron is rumored to have halted its 148 billion investment plan due to labor disputes

Bloomberg disclosed on the 5th that Micron has suspended its plan to invest US$4.5 billion in building a new memory chip factory in Taoyuan due to ongoing labor disputes.

[Financial Channel/Comprehensive Report] "Bloomberg" disclosed on the 5th that people familiar with the matter pointed out that due to ongoing labor disputes, Micron has suspended its plan to invest US$4.5 billion (approximately NT$148 billion) in building a new memory chip factory in Taoyuan.

According to people familiar with the matter, Micron has almost stopped construction of its factory in Taoyuan. Because the discussions are an internal matter, executives worry about growing uncertainty, including the possibility that agreements with local unions could be overturned. People familiar with the matter also said that Micron has notified Taiwanese officials and a supplier that it will suspend work on the Taoyuan plant.

The report said that tensions between Micron Technology and its employees have escalated this year as employees demanded higher wages and hoped to gain more from the record profits brought by the development of artificial intelligence business. Micron's business plans in Taiwan, which produces three-fifths of the company's traditional chips, could be disrupted, potentially further exacerbating a market already facing a memory shortage.

Micron Technology has invested nearly US$50 billion (approximately NT$1.6 trillion) in Taiwan over the past 30 years and originally planned to use ASML Holding NV's high-end equipment to produce high-bandwidth memory and DRAM at its new factory in Taoyuan. While the factory is not huge by modern standards, the components, which are integral to the boom in Huida accelerators and artificial intelligence data centers around the world, are in extreme short supply, causing prices to skyrocket.

Micron reached an agreement with the larger of the two unions in October, but the company may need to renegotiate as some employees are unhappy with the terms of the deal, according to people familiar with the matter.

The suspension raises the possibility that Micron will reconsider its plan to expand its manufacturing center in Taiwan. People familiar with the matter revealed that Micron has budgeted between US$3 billion and US$4.5 billion for the Taoyuan plant project, which includes the purchase of ASML equipment. The person also said that some safety and security work is still being carried out at the factory site, but construction will be suspended thereafter. The project, called Fab 11E, was originally scheduled to go into production in 2028.

Micron said in a statement: "Taiwan plays an important role in Micron's global layout, and our current operations are business as usual." However, the statement did not respond to questions about the Taoyuan factory, only emphasizing that "we are confident in ensuring the business continuity of our customers."

In this regard, the Ministry of Economic Affairs did not comment on Micron's move to suspend some of its factory expansion plans, but said that the government is helping the company advance its investment plans.

The report emphasized that Micron is Taiwan's largest foreign investor. If the company reduces the scale of its investment in Taiwan, it will be a major blow to Taiwan.