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.
China’s ban also has geopolitical implications, as Washington has reportedly asked Seoul to dissuade South Korean chip makers from filling any market gaps in China.
Meanwhile, Micron’s US$600 million spending in Xian pales in comparison with its plans in Japan, where the company said it would invest US$3.6 billion over the next few years in next-generation memory chip fabs.
A Micron SSD is displayed at Computex Taipei, Taiwan May 30, 2023. Photo: Reuters
However, packaging and testing are relatively low-end and low-margin operations compared with wafer fabrication. In 2014, Micron reached an outsourcing deal with Powertech for chip packaging and testing at the Xian plant, under which Micron owns the land and buildings while the Taiwan firm owned the equipment and provided the workers.
The outsourcing deal ended in April 2022, but both sides agreed to renew it on a quarterly basis, according to Powertech last year. Micron’s acquisition will allow Powertech to cash out from the Xian operations.
Powertech chairman DK Tsai was quoted by Taiwanese media earlier this year as saying Taiwanese semiconductor companies are considering pulling out of mainland China due to geopolitical tensions.
