Micron Technology Inc., (MU stock) a memory manufacturer, based in the United States, will receive financial assistance from Japan to support its efforts to create its new advanced chips in Hiroshima. The technology industry braces itself for a steep drop in consumer demand.
Micron (MU stock) Future Plans
Micron Technology Inc (NASDAQ:MU) has announced plans to mass produce cutting-edge memory chips at its facilities in Hiroshima, located in western Japan. The Japanese Ministry of Economy, Trade, and Industry has stated that it will provide as much as 46.5 billion yen, equivalent to approximately $320 million. Micron (MU stock) had previously stated that the local government’s support would play a role in determining the company’s investment decisions.
The chipmaker with headquarters in Boise, Idaho, announced that it would begin production of the new chips — which will have a memory capacity twice as high as its existing chips — in the following year.
Yasutoshi Nishimura, the head of METI, stated during a regularly scheduled news meeting on Friday when he unveiled the plan: “We believe this would further improve the US-Japan partnership in semiconductors.”
The announcement was made not long after US Vice President Kamala Harris returned from a trip to Japan, during which she said that Japan plays a “vital role” in constructing resilient supply chains for chips. The United States of America is mobilizing its allies in Asia to help it develop redundancy and impede China’s rise in technological prowess.
The “Critical Role” That Japan Plays in the Chips Supply Chain, According to Harris
Although Japan is no longer the leader in producing semiconductors (it gave up that title decades ago), it is nevertheless home to some of the largest manufacturers of chip tools and chip materials in the world, such as silicon wafers and photomasks.
Micron purchased Elpida Memory in 2013, and with that came the Japanese facilities. Elpida Memory had been the third largest manufacturer of DRAM at the time. Still, its creditors had refused to fund the company’s attempts to continue expanding when the economy was in a downturn. The American semiconductor manufacturer is now among the world’s top three makers of memory, with Samsung Electronics Co. of South Korea and SK Hynix Inc.
Chip manufacturers, including Micron (MU stock), are lowering output or spending less money on machinery to find a better equilibrium between supply and demand in response to the steep drop in demand. Kioxia Holdings Corp. of Japan has announced that it will reduce the production of new memory chips by thirty percent beginning next month. In the past several weeks, Samsung and SK Hynix have also signaled a slowdown in production.
Beginning in October, Kioxia will implement a 30% reduction in the production of new memory chips.
Micron is preparing for a significant drop in demand by reducing its production.
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