Micron spends $1.8 billion on PSMC Fab to boost DRAM production
Micron accelerates its memory expansion plans with PSMC P5 fab purchase
Micron has signed an “exclusive Letter of Intent (LOI)” that will see it purchase the Powerchip Semiconductor Manufacturing Company’s (PSMC) P5 fabrication site for $1.8 billion. This site is located in Tongluo, Miaoli County, Taiwan, and will give Micron access to “an existing 300mm fab cleanroom of 300,000 square feet”.
This transaction is expected to close in Q2 2026 and gives Micron access to a large fab space in an incredibly fast timeframe. Buying existing fab space is much faster than building it. With this deal, Micron will accelerate its plan to expand its DRAM production, alleviating the global DRAM shortage.
Once this deal closes, Micron will take ownership of PSMC’s P5 site and use the site to ramp up its DRAM production. Micron expects this site to “contribute to meaningful DRAM wafer output” in the second half of 2027. Note that Micron’s new ID1 fab in Idaho (which is under construction) isn’t due to have significant DRAM output until 2028.
Micron Technology, Inc. (Nasdaq: MU) today announced it has signed an exclusive Letter of Intent (LOI) to acquire Powerchip Semiconductor Manufacturing Corporation’s (PSMC) P5 fabrication site in Tongluo, Miaoli County, Taiwan, for total cash consideration of US$1.8 billion. The acquisition includes an existing 300mm fab cleanroom of 300,000 square feet and will further position Micron to address growing global demand for memory solutions. The LOI also aims to establish a long-term relationship between Micron and PSMC for Micron’s post-wafer assembly processing and to support PSMC in its legacy DRAM portfolio.
“This strategic acquisition of an existing cleanroom complements our current Taiwan operations and will enable Micron to increase production and better serve our customers in a market where demand continues to outpace supply,” said Manish Bhatia, executive vice president of global operations at Micron Technology. “The Tongluo fab’s close proximity to Micron’s Taichung site will enable synergies across our Taiwan operations.”
The transaction is anticipated to close by calendar Q2 2026, following the closure of deal agreements and the required regulatory approvals. Upon closing the transaction, Micron will assume ownership and control of the P5 site to equip and ramp up DRAM production in phases, with PSMC relocating its Tongluo operations over a specific time. Micron expects this acquisition to contribute to meaningful DRAM wafer output beginning in the second half of calendar 2027.
This acquisition complements Micron’s ongoing global expansion plans as the company invests to meet long-term demand from its customers.
– Micron
As part of this deal, Micron has established a “long-term relationship” with PSMC. PSMC is a fab that focuses on older DRAM products. Micron’s deal with PSMC will reportedly lead to PSMC obtaining a 1Y nm process license from Micron. This would enable PSMC to develop newer DRAM types (denser DDR4 modules). This deal would help PSMC compete in the DRAM market without directly competing with Micron. If this is true, PSMC’s upgraded tech should be worth the cost of its lost fab space. Furthermore, Micron may be able to boost its DRAM production ahead of its competition. This will gain Micron market share in DRAM while pricing remains high.
Overall, this is a good deal for Micron. While it will take a while for this deal to boost DRAM production, it will hasten the end of today’s DRAM shortages. That’s good news for everyone.
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