Tech war: US chip maker Micron to invest US$600 million on China plant despite Beijing’s partial ban on its products

Upon completion of the deal, Micron’s total payroll in the country will increase to 4,500, by adding 1,200 workers from Powertech Technology

China’s cybersecurity watchdog launched a probe into Micron’s products in late March, a move seen as a reprisal against US sanctions on China’s tech firms

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Published: 1:30pm, 16 Jun 2023

US memory chip giant Micron Technology said it plans to invest 4.3 billion yuan (US$602 million) to upgrade its chip packaging plant in Xian, a decision that comes just four weeks after Beijing imposed a partial ban on its products being sold in China.

In a statement published on its official WeChat account on Friday, Micron said it would acquire the operations of its outsourcing partner Powertech Technology, and add new buildings to the site to “better meet Chinese customers’ demand”.

Micron CEO Sanjay Mehrotra said in the statement, which was only in Chinese, that the plan shows the firm’s commitment to its China operations and the local team. Betty Wu Mingxia, the recently appointed general manager of Micron China, said the deal would allow the US company to directly manage all chip packaging and testing operations.

Upon completion of the deal, which is expected to take a year and is subject to regulatory approval in China, Micron’s total payroll in the country will increase to 4,500, by adding 1,200 workers from Powertech, Micron said.

Taiwan-listed Powertech said the acquisition price would be based upon the book value of its operations, which ranges from US$50 million to US$60 million.

Micron’s plan to expand its Xian plant comes after the China Administration of Cybersecurity (CAC) barred critical information infrastructure providers from buying Micron’s products, citing national security risks. The CAC launched a probe into Micron’s products in late March, a move seen as China’s reprisal against US sanctions on its technology firms.

Beijing’s ban could see a hit to Micron’s revenue in the single digits, the company’s management has said, as China contributes about 11 per cent of Micron’s global sales. After Beijing’s ruling, China’s top server makers, including Inspur Group and Lenovo Group, asked their suppliers to suspend shipments of modules containing chips made by the US company, the South China Morning Post reported earlier.