On March 27th, storage manufacturer Micron officially started construction on its new packaging and testing factory in Xi'an, which is expected to be put into production in the second half of 2025 and will gradually increase production according to market demand. Moreover, Micron will also invest in multiple engineering laboratories at its Xi'an factory. In addition, Micron also signed a strategic cooperation agreement with Schneider Electric on the same day, focusing on cooperation in areas such as sustainable development and "dual carbon" management.
Looking back at the timeline, as early as June 2023, Micron announced an additional investment of RMB 4.3 billion in Xi'an, including the construction of this new factory and the introduction of a new production line, covering product solutions such as mobile DRAM, NAND, and SSD. Meanwhile, Micron has decided to acquire packaging equipment from Licheng Semiconductor (Xi'an) Co., Ltd. (Licheng Xi'an).
Meiguang stated that it is currently advancing the acquisition of assets from Licheng Xi'an and will provide new employment contracts to all 1200 employees of Licheng Xi'an. The new factory project will also add an additional 500 job opportunities, bringing the total number of employees of Micron in China to over 4800.
Sanjay Mehrotra, President and CEO of Micron, stated in his speech that Micron's previous investment in Xi'an had reached RMB 11 billion. Sangjie stated that Xi'an will cooperate with customer laboratories in Shanghai, Beijing, and Shenzhen to customize products and solutions according to the needs of the Chinese market.
Manish Bhatia, Executive Vice President of Global Operations at Micron, said in an interview with 21st Century Business Herald and other media outlets, "The decision to increase investment is based on our relationship with our customers. For our customers, providing high capacity, high reliability, and low-power DRAM requires more engineering capabilities, and the Xi'an factory has performed very well in terms of quality and engineering. At the same time, we have many Chinese customers, including in the automotive, smartphone, and personal computer fields, and distance is also a factor."
On the one hand, from the layout of Micron in Xi'an, it can be seen that Micron has already built a DRAM particle packaging and testing as well as module manufacturing factory in Xi'an, and the new factory will expand its existing DRAM packaging and testing capabilities. And Xi'an, a historic city, has a significant layout in the semiconductor industry chain, attracting investment from large domestic and foreign factories.
For example, in the field of wafer manufacturing, Xi'an has gathered companies such as Samsung, Xiyue Electronics, Weiguang, and Perry; In terms of packaging testing, there are Samsung, Huatian, Micron, Huayi, Xigu Micro, etc. The Xi'an Integrated Circuit Industry Cluster has been selected as one of the first batch of national strategic emerging industry cluster development projects, becoming one of the core areas for the development of integrated circuits in the country.
In the interview, Meiguang executives also stated that they will work with local suppliers to create a new ecosystem. "Firstly, we will establish more engineering laboratories, which will help our customers enter the market faster and be a better way for us to integrate with customers and suppliers. Secondly, we will work more closely with local suppliers to make the semiconductor ecosystem play a more critical role," said Manish Bhatia.
On the other hand, the storage market has rebounded this year, and Micron has returned to profitability. Micron's second quarter financial report for the fiscal year 2024 (as of February 2, 2023) showed a revenue of 5.82 billion US dollars, a year-on-year increase of 57.7%; The net profit was approximately 793 million US dollars, turning losses into profits year-on-year.
Meanwhile, Micron stated that the booming development of AI has driven demand for HBM products in the market, and it is expected that the pricing of DRAM memory and NAND flash memory will further increase this year. Therefore, it is estimated that revenue in the 2025 fiscal year can reach a new high.
Among them, HBM (High Bandwidth Memory) mentioned by Micron is currently the focus of the storage industry. Due to the higher requirements of generative AI for storage performance, HBM has become a popular DRAM product.
Due to the high price and profitability of HBM, both Micron, Samsung, and SK Hynix are increasing their capital expenditures and increasing HBM production.
According to Wu Yating, Senior Vice President of Research at TrendForce Consulting, as of the end of 2024, the overall DRAM industry's planned production capacity for HBM TSV is approximately 250K/m, accounting for about 14% of the total DRAM capacity and an estimated annual growth of about 260%. In addition, the proportion of HBM output value to the overall DRAM industry in 2023 is about 8.4%, and it will expand to 20.1% by the end of 2024.
Overall, storage is undergoing a cycle reversal. Last year, the storage market was mainly affected by weak demand in the PC, server, and smartphone segments, resulting in oversupply and inventory in the market. This year, storage has become one of the growth drivers of the semiconductor market.