Micron Clinches Total of up to $13.6B in US Chip Grants, Loans

(Bloomberg) -- The US plans to award Micron Technology Inc. $6.1 billion in grants and as much as $7.5 billion in loans to help the memory-chip maker build new American factories, rounding out a slew of major federal awards for advanced semiconductor manufacturing. 

Micron has pledged to invest about $125 billion to build four factories in New York state and one in Idaho. The company — the largest US maker of memory chips — has separately applied for federal funding to support a project in Virginia, according to documents filed last week. President Joe Biden is traveling to Syracuse, New York, as part of the event and plans to discuss how his agenda is shoring up the economy. 

It will still be months before Micron actually receives any of the funding from the 2022 Chips and Science Act, which set aside $39 billion for grants and $75 billion worth of loans to boost American chipmaking and reduce reliance on Asia. Preliminary agreements like the one Micron announced Thursday trigger a due-diligence stage, after which the money will be handed out over time in tranches tied to construction and production benchmarks. 

“The $6.1 billion will supercharge Micron to bring back leading-edge memory manufacturing to the US,” Senate Majority Leader Chuck Schumer of New York told reporters ahead of the announcement. “We cannot have these chips made overseas and let them be made by competitors like China.”

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One plant that’s already under construction in Micron’s home base of Boise will receive funding and be poised for production in 2026. Two more in the Syracuse area of New York state will be built and ready for manufacturing in 2028 and 2029. Micron also is planning two other facilities in New York that aren’t covered by the scope of Thursday’s preliminary agreement. 

Computer memory is a vital part of everything from smartphones to supercomputers and works alongside processors made by companies such as Nvidia Corp. and Intel Corp. The funding award guarantees that Micron will proceed with its first cutting-edge manufacturing expansion in the US in more than 20 years. The company also has plants in Singapore, Japan and Taiwan. 

But the expansion comes with risks for Micron. Memory chips have volatile prices because the components are built to industry specifications. That means they’re interchangeable, resulting in a commodity-like market. Rapid swings between shortages and gluts have characterized Micron’s history and made sustained profitability difficult to achieve. It reported a net loss of more than $5 billion last year — just a year after posting a huge profit. 

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Commerce Secretary Gina Raimondo previously said that advanced chipmakers had requested more than double the amount of grant money set aside for them. The Commerce Department allocated roughly $28 billion of the $39 billion pool for top-of-the-line facilities.

The four main advanced manufacturers building in the US — Micron, Intel, Taiwan Semiconductor Manufacturing Co. and Samsung Electronics Co. — are set to receive a combined $27.6 billion in grants. The only other company that does such production, South Korea’s SK Hynix Inc., has committed to building an American packaging facility. That means the US will become the only country in the world with facilities run by all of the top manufacturers.

Micron’s projects are expected to generate 20,000 jobs spanning construction and manufacturing, according to the Commerce Department. The company has also signed labor agreements with construction unions for its New York and Idaho sites, and its Chips Act grant sets aside $40 million specifically for workforce training.