Micron’s Taiwan deal looks routine until you zoom out | Official Website of Louis Velazquez, entrepreneur, finance guy and tech innovator

Micron Technology is making a very “tell me you think demand stays hot without telling me” kind of move.

The U.S. memory chip producer signed a letter of intent to buy Powerchip Semiconductor Manufacturing’s P5 production plant in Tongluo, Taiwan, for $1.8 billion in cash, Reuters reported, causing Powerchip’s stock price to rise dramatically.

This isn’t Micron “adding a little capacity.” Micron is spending $1.8 billion to get ready for a memory market that it thinks will continue to be structurally tight. It’s doing this in Taiwan, where the company already has a lot of manufacturing facilities and where its next DRAM ramp is coming up.

Micron is positioning for the next phase of growth.

Photo by ANDREW CABALLERO-REYNOLDS on Getty Images

Micron’s Taiwan fab purchase puts DRAM back in the spotlight

Micron’s LOI focuses on Powerchip’s P5 location in Tongluo, Miaoli County, expanding Micron’s existing strong presence in Taiwan, where it has been doing business for decades and runs big DRAM and high-bandwidth memory production operations.

The Nvidia supplier picked up a 300,000-square-foot cleanroom to progressively enhance memory output.

Micron isn’t calling this a “nice-to-have” capacity add, which is important for investors. It’s portraying it as a direct response to a market where supply can’t keep up with demand, especially AI-related demand.

Micron said it believes the deal will assist in increasing the production of DRAM wafers starting in the second half of 2027.

Why Micron’s Taiwan deal matters for MU stock

Memory goes in cycles, but AI is changing the texture of the cycle.

Micron is one of the few major suppliers of HBM, along with Samsung and SK Hynix. HBM is now one of the most important parts of the AI supply chain. Because there aren’t many suppliers, each reasonable initiative to increase capacity gets a lot of attention.

TrendForce’s read-through was clear. The Tongluo fab’s first-phase contribution in the second half of 2027 might account for more than 10% of Micron’s global advanced-process DRAM capacity, as of the fourth quarter of 2026.

To put it another way, the move isn’t simply a small change. If the timings are correct, it will have a big effect on supply in 2027.

Markets liked the signal. Micron stock edged higher on the acquisition news, even as broader equities were volatile.

Powerchip gets cash now and a longer runway later

Powerchip sees the purchase as a boost in money and clarity.

Powerchip said Micron will produce advanced-packaging DRAM wafers and assist it in enhancing its specialized DRAM process technology over the long haul.

That aspect is important, since it shows the relationship doesn’t end with the purchase agreement. It becomes a long-term cooperation in manufacturing and technology, which can help both sides stabilize usage and planning in an industry known for its boom-and-bust cycles.

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For Powerchip shareholders, the swift response was significant, as the stock surged by more than 10% following the announcement.

Micron said the deal will close by the second quarter of 2026, but the bigger investor’s “watch date” is later. It expects to start making many wafers in the second half of 2027.

Long-term Powerchip-Micron relationship sets the stage

Micron is basically telling the market that it thinks circumstances will stay tight for a long time, so spending $1.8 billion today for 2027 capacity is still a favorable deal. This is especially true since AI workloads are still pushing memory demand forward.

If you’re closely monitoring MU stock, the next concerns are straightforward.

The primary concern is the speed at which Micron can establish the site.
Another question is the extent to which equipment timing limits the ramp.
An additional worry is whether the supply in 2027 will be sufficient to reduce prices, or simply meet the increasing demand.