Micron to Buy PSMC Tongluo Fab for $1.8B

On January 17, Taiwan-based foundry Powerchip Semiconductor Manufacturing Corp. (PSMC) and U.S. memory leader Micron Technology jointly announced that they have signed an exclusive Letter of Intent (LOI). Under the agreement, Micron will acquire the buildings and fab infrastructure of PSMC's P5 wafer facility in Tongluo, Miaoli County, for a total cash consideration of USD 1.8 billion. The transaction excludes production equipment.

The deal covers an existing 300 mm wafer fab cleanroom with a total area of approximately 300,000 square feet. By adding this facility, Micron aims to strengthen its ability to meet the rapidly growing global demand for memory solutions, particularly as AI-driven applications continue to expand.

Beyond the asset acquisition, the LOI outlines a long-term strategic partnership between the two companies. Micron and PSMC plan to establish a sustained foundry relationship focused on advanced DRAM packaging technologies. Micron will also support PSMC in enhancing its specialty DRAM process technologies at PSMC's P3 fab in Hsinchu.

Micron Executive Vice President of Global Operations Manish Bhatia said the acquisition is a strategic extension of Micron's existing footprint in Taiwan. He noted that the Tongluo facility's proximity to Micron's Taichung fab will create operational synergies and enable faster capacity expansion in a market where demand continues to outpace supply.

PSMC Chairman Frank Huang highlighted that the ongoing AI boom is driving a strong upcycle in the DRAM market. The Tongluo fab, which can be scaled up relatively quickly, has become a key anchor for a mutually beneficial partnership. For PSMC, the transaction improves its financial structure while opening the door to participation in Micron's advanced DRAM packaging ecosystem, subject to qualification.

Looking ahead, PSMC plans to reposition itself more deeply within the AI supply chain. The company will reorganize production resources across its existing 12-inch and 8-inch fabs, shifting focus toward high-value products such as 3D AI DRAM, Wafer-on-Wafer (WoW), silicon interposers, integrated passive devices (IPD), power management ICs, and power semiconductors including GaN and MOSFET technologies. Lower-margin, non-AI-related business will be gradually reduced to improve long-term profitability.

PSMC President Chu Hsien-kuo added that internal adjustments will be carried out in phases to ensure uninterrupted production. Personnel, equipment, and product lines from the Tongluo site will be relocated to Hsinchu in an orderly manner, while older tools and low-margin products are phased out to reduce reliance on mature-process foundry work.

Both companies emphasized that the collaboration is expected to strengthen Taiwan’s overall memory technology capabilities and supply chain completeness, reinforcing its strategic role in the global semiconductor industry—especially as AI becomes a central driver of future technology competition.

Subject to the signing of definitive agreements and regulatory approvals, the transaction is expected to close in the second quarter of 2026. After completion, Micron will take ownership and operational control of the P5 facility, installing equipment in stages and ramping DRAM capacity. Micron expects the acquisition to contribute to a significant increase in DRAM wafer output starting in the second half of 2027.

Micron stated that this move aligns with its broader global expansion strategy and reflects continued investment to support long-term customer demand in the memory market.