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Micron (MU) Begins New Fab Construction to Expand US Chip Output
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Micron Technology (MU - Free Report) announced on Thursday that it has officially started the construction of a new memory chip factory in Boise, Idaho. This will mark the United States’ first memory chip manufacturing facility in the last 20 years.
During Thursday’s announcement, Micron revealed that it would indirectly infuse approximately $15.3 billion into the Idaho economy and directly spend about $13 billion on Idaho businesses throughout the lifespan of the project. This will make it the largest-ever private investment in Idaho history.
Micron currently has only design and research & development centers in Boise. With the new fab factory, the company will be able to assemble memory chips domestically. The project is anticipated to bring more than 17,000 jobs to the state, of which at least 2,000 of the staff will be directly employed at Micron.
The construction initiation is in line with the company’s September 2022 commitment of investing approximately $15 billion through the end of this decade for building a new fabrication factory for manufacturing memory chips in Idaho. In October 2022, MU announced that it plans to invest up to $100 billion over the next 20-plus years to build a factory in upstate New York, which will be the largest semiconductor fabrication facility in the history of the United States.
Why Is Micron Expanding Domestic Chip Manufacturing?
With its multi-decade investment commitment of $100 billion, Micron is likely to take advantage of the CHIPS and Science Act 2022, under which the U.S. government is providing $52 billion to boost domestic semiconductor research and development. MU projects to gain $5.5 billion in incentives from the state of New York over the course of the project apart from anticipated federal grants and tax credits from the CHIPS and Science Act.
Moreover, Micron’s latest investment plans will help the company raise its memory chip output in the United States. The company has a long-term strategic target of bringing American-made DRAM chip production to 40% of its total global output over the next decade.
Increased domestic production output will facilitate a more resilient and secure supply chain of Micron’s leading-edge memory chips to the United States and global customers. The majority of the world’s semiconductor need is fulfilled by fabrication facilities in Taiwan. However, China’s hostile actions toward Taiwan have made the United States and other countries concerned about a smooth supply of semiconductors in the future.
Memory chips have become one of the most important components of the current-day technology-driven economy. Digitization across industries, the adoption of cloud computing as well as the integration of AI and machine learning are fueling the demand for memory chips.
The accelerated deployment of 5G technology — the next-generation wireless revolution — is likely to propel further growth. Apart from this, the Internet of Things, autonomous vehicles, augmented reality/virtual reality and wearables are other growth prospects.
Therefore, Micron’s latest move will reduce the company’s as well as the United States’ dependency on foreign-made chips and ensure a more resilient and secured supply of crucial semiconductors.
Zacks Rank & Stocks to Consider
Currently, Micron carries a Zacks Rank #3 (Hold). Shares of MU have increased 38.2% year to date (YTD).
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Micron (MU) Begins New Fab Construction to Expand US Chip Output
Micron Technology (MU - Free Report) announced on Thursday that it has officially started the construction of a new memory chip factory in Boise, Idaho. This will mark the United States’ first memory chip manufacturing facility in the last 20 years.
During Thursday’s announcement, Micron revealed that it would indirectly infuse approximately $15.3 billion into the Idaho economy and directly spend about $13 billion on Idaho businesses throughout the lifespan of the project. This will make it the largest-ever private investment in Idaho history.
Micron currently has only design and research & development centers in Boise. With the new fab factory, the company will be able to assemble memory chips domestically. The project is anticipated to bring more than 17,000 jobs to the state, of which at least 2,000 of the staff will be directly employed at Micron.
Micron Technology, Inc. Price and Consensus
Micron Technology, Inc. price-consensus-chart | Micron Technology, Inc. Quote
The construction initiation is in line with the company’s September 2022 commitment of investing approximately $15 billion through the end of this decade for building a new fabrication factory for manufacturing memory chips in Idaho. In October 2022, MU announced that it plans to invest up to $100 billion over the next 20-plus years to build a factory in upstate New York, which will be the largest semiconductor fabrication facility in the history of the United States.
Why Is Micron Expanding Domestic Chip Manufacturing?
With its multi-decade investment commitment of $100 billion, Micron is likely to take advantage of the CHIPS and Science Act 2022, under which the U.S. government is providing $52 billion to boost domestic semiconductor research and development. MU projects to gain $5.5 billion in incentives from the state of New York over the course of the project apart from anticipated federal grants and tax credits from the CHIPS and Science Act.
Moreover, Micron’s latest investment plans will help the company raise its memory chip output in the United States. The company has a long-term strategic target of bringing American-made DRAM chip production to 40% of its total global output over the next decade.
Increased domestic production output will facilitate a more resilient and secure supply chain of Micron’s leading-edge memory chips to the United States and global customers. The majority of the world’s semiconductor need is fulfilled by fabrication facilities in Taiwan. However, China’s hostile actions toward Taiwan have made the United States and other countries concerned about a smooth supply of semiconductors in the future.
Memory chips have become one of the most important components of the current-day technology-driven economy. Digitization across industries, the adoption of cloud computing as well as the integration of AI and machine learning are fueling the demand for memory chips.
The accelerated deployment of 5G technology — the next-generation wireless revolution — is likely to propel further growth. Apart from this, the Internet of Things, autonomous vehicles, augmented reality/virtual reality and wearables are other growth prospects.
Therefore, Micron’s latest move will reduce the company’s as well as the United States’ dependency on foreign-made chips and ensure a more resilient and secured supply of crucial semiconductors.
Zacks Rank & Stocks to Consider
Currently, Micron carries a Zacks Rank #3 (Hold). Shares of MU have increased 38.2% year to date (YTD).
Some better-ranked stocks from the broader technology sector are NVIDIA (NVDA - Free Report) , Paylocity Holding (PCTY - Free Report) and Palo Alto Networks (PANW - Free Report) . NVIDIA sports a Zacks Rank #1 (Strong Buy), while Paylocity and Palo Alto Networks each carry a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for NVIDIA's third-quarter fiscal 2024 earnings has been revised upward by 2 cents to $3.34 per share in the past seven days. For fiscal 2024, earnings estimates have increased by 21 cents to $10.67 per share in the past 30 days.
NVIDIA’s earnings beat the Zacks Consensus Estimate thrice in the preceding four quarters while missing on one occasion, the average surprise being 9.8%. Shares of NVDA have surged 205.4% YTD.
The Zacks Consensus Estimate for Paylocity’s first-quarter fiscal 2024 earnings has remained unchanged at $1.07 per share in the past 60 days. For fiscal 2024, earnings estimates have moved 10 cents upward to $5.58 per share in the past 60 days.
Paylocity’s earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 39.7%. Shares of PCTY have declined 0.4% YTD.
The Zacks Consensus Estimate for Palo Alto Networks' first-quarter fiscal 2024 earnings has been revised upward by 6 cents to $1.16 per share in the past 60 days. For fiscal 2024, earnings estimates have increased by 38 cents to $5.34 per share in the past 60 days.
Palo Alto Networks’ earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 22.2%. Shares of PANW have surged 69.7% YTD.