US Micron Opens First Factory in India, a 'Semiconductor Barren Land'

Micron, the largest memory semiconductor company in the United States, is set to build its first semiconductor factory in India. As it accelerates the restructuring of its supply chain following direct sanctions from Chinese authorities, attention is focused on whether India, previously a semiconductor desert, will emerge as an alternative location.

According to major foreign media on the 28th (local time), Micron signed a memorandum of understanding (MOU) with the Indian state government to establish a semiconductor packaging plant worth $2.75 billion (approximately 3.62 trillion KRW).

Micron plans to invest up to $825 million in this production facility, with the remainder supported by the Indian federal and state governments. The factory will be located in Gujarat, in northwest India, which is the hometown of Prime Minister Narendra Modi and where he served as state chief minister from 2001 to 2014.

Foreign media reported that regarding the factory construction, the Indian federal government will provide financial support amounting to 50% of the total project cost, and the Gujarat state government will offer incentives equivalent to 20% of the project cost.

Ashwini Vaishnaw, India’s Minister of Electronics and Information Technology, said, "The Micron factory will be the first semiconductor manufacturing facility in India," adding, "There have been attempts to attract semiconductor manufacturing facilities to India since 1980, but only now has this attempt become a reality."

The MOU signing was finalized on the 22nd during Prime Minister Modi’s state visit to the United States, and the Gujarat state government allocated the factory site and signed the MOU within six days thereafter. Minister Vaishnaw stated, "Typically, it takes 36 to 48 months for a semiconductor factory to start manufacturing," but added, "(However) in India, the first semiconductor is expected to be produced within 18 months."

[Image source=Reuters Yonhap News]

Meanwhile, on the same day, Micron announced in its earnings report that its revenue for the third quarter of fiscal year 2023 (March to May) decreased by 56.6% compared to the same period last year, but it recorded $3.75 billion, surpassing market expectations of $3.65 billion, benefiting from the AI boom.

Micron projected its revenue for the fourth quarter (June to August) at $4.1 billion, exceeding market expectations of $3.87 billion.

Sanjay Mehrotra, CEO of Micron, said, "We believe the memory industry has bottomed out in terms of sales," and expressed expectations that "as the industry's supply-demand balance gradually recovers, margins will improve."

Due to the economic downturn in the second half of last year, demand for smartphones and personal computers (PCs) slowed, leading to semiconductor inventory buildup and a sharp decline in purchase orders. However, Micron explained that customers are now returning to purchasing after clearing all semiconductor inventories.

Last month, Chinese authorities stated that Micron products failed to pass internet security reviews due to relatively serious security issues and ordered operators of critical information infrastructure to stop purchasing Micron products.

Micron’s sales in the Greater China region, including China and Hong Kong, accounted for about 25% of total sales last year, with sales in China alone making up 11% (approximately 4 trillion KRW). Foreign media noted that due to the sanctions imposed by Chinese authorities, changes in Micron’s semiconductor supply chain in China are inevitable, and attention is focused on whether India can emerge as an alternative to China.