Micron set to get over $6 bn in chips' grants in announcement next week

By Mackenzie Hawkins and Jennifer Jacobs
 

Micron Technology Inc., the largest US maker of computer-memory chips, is poised to get $6.1 billion in grants from the Commerce Department to help pay for domestic factory projects, part of an effort to bring semiconductor production back to American soil. 
 

The award, which isn’t yet finalised, is slated to be revealed next week, according to people familiar with the matter. Micron, like Intel Corp. and Taiwan Semiconductor Manufacturing Co., will also accept loans as part of its award package, said two of the people, who asked not to identified because the deliberations are private. The total value of those loans remains unclear.

Micron shares gained as much as 2.6 per cent in late trading after Bloomberg reported on the planned award. The stock was already up 36 per cent this year through Wednesday’s close. 

President Joe Biden is scheduled to travel on April 25 to the Syracuse, New York, region as part of the announcement, the people said. Micron, based in Boise, Idaho, is building factories near Syracuse, as well as in its home state.

Representatives for Micron, the Commerce Department and the White House declined to comment.

The 2022 Chips and Science Act set aside $39 billion for direct grants, as well as loans and loan guarantees worth $75 billion, to revitalise American chipmaking after decades of production shifting to Asia. Officials have unveiled six preliminary awards so far: three to firms that produce older-generation semiconductors, plus multibillion-dollar packages for Intel, TSMC and South Korea’s Samsung Electronics Co. 

Commerce Secretary Gina Raimondo has said the agency plans to spend about $28 billion of the grant funding on leading-edge projects. 

After the preliminary agreement is announced, Micron would enter months of due diligence and then receive the money in tranches tied to project-specific benchmarks.

Micron has pledged to build as many as four factories in New York state, plus one in Idaho. But those plans “require Micron to receive the combination of sufficient Chips grants, investment tax credits and local incentives to address the cost difference compared to overseas expansion,” Chief Executive Officer Sanjay Mehrotra said last month. The company is proceeding with projects in China, India and Japan as well.

Raimondo has said that her agency will prioritise funding projects that begin production by the end of the decade. Two of Micron’s four New York sites are on track to meet that benchmark, while the other two won’t be operational until 2041, the company said in a recent federal filing. That means that Micron’s award is likely to support only the first two New York facilities, people familiar with the matter said earlier. 

Computer memory and storage chips are a vital part of everything from smartphones to the biggest data centers, where they store information and help advanced logic process information. Production is primarily done in Asia. Micron’s biggest two competitors, Samsung and SK Hynix Inc., account for the majority of that manufacturing.

Those firms also plan to build factories in the US — for logic chips and advanced packaging, respectively — as part of a groundswell of more than $200 billion in private semiconductor investment spurred by the Chips Act.