Micron’s Strategic Acquisition Accelerates AI Chip Production

In a move that significantly accelerates its manufacturing capabilities, Micron Technology has finalized a $1.8 billion deal to acquire an advanced semiconductor facility in Taiwan. The transaction, involving Powerchip Semiconductor Manufacturing Corp's (PSMC) P5 plant in Tongluo, provides the U.S. memory chip leader with immediate, production-ready infrastructure—bypassing the multi-year construction timeline typically faced by the industry.

The strategic acquisition was met with strong investor approval. On Friday, Micron's share price surged by nearly 8 percent as the market digested the news. The company's substantial liquidity, reported at $12 billion, means the $1.8 billion purchase price represents a manageable 15 percent of available funds. This investment secures a critical advantage in the race to meet exploding demand for high-performance memory, particularly from the artificial intelligence sector.

The acquired facility is designed for 300-millimeter wafer production and contains approximately 28,000 square meters of cleanroom space. Its existing infrastructure requires only retooling for Micron's DRAM production processes. The company aims to complete the deal by the second quarter of 2026, with high-volume manufacturing scheduled to commence in the latter half of 2027. This timeline aligns with the anticipated rollout of next-generation AI data centers and autonomous vehicles. Notably, Tesla CEO Elon Musk has concurrently indicated plans for mass production of a new "AI5" chip to begin in the same year, 2027.

Navigating Geopolitical and Market Dynamics

This expansion occurs amidst escalating trade tensions and shifting global supply chains. Coinciding with Micron's announcement, the U.S. government imposed 25 percent tariffs on advanced AI chips exported to China via third countries. Analysts at Bernstein Research estimate this could cause Nvidia's market share in China to plummet from 66 percent to just 8 percent.

Should investors sell immediately? Or is it worth buying Micron?

For Micron, the Taiwan facility offers dual benefits. It strengthens the company's ability to serve growing demand from U.S. and allied markets while simultaneously reducing reliance on the Chinese market, where domestic suppliers like Huawei are gaining ground. The location provides geographical flexibility for supplying diverse end markets.

Partnership and Future Catalysts

Beyond a simple capacity purchase, the agreement establishes a long-term partnership between Micron and PSMC. Micron will handle post-wafer processing, while PSMC continues to serve its existing DRAM portfolio customers.

Investors are advised to monitor several upcoming milestones. The formal transaction closure in Q2 2026 is a key date. More immediately, the company's quarterly earnings report on April 1 is anticipated, with analysts forecasting earnings per share of approximately $8.25. Following the deal announcement, KeyBanc Capital Markets reaffirmed its buy rating on Micron stock and increased its price target.