Micron Tech cements bond with China

US memory chipmaker Micron Technology will strengthen cooperation with local supplier ecosystem in China, as it aims to maintain a big part of its global business in the world's second-largest economy despite challenges, company executives said.

Their comments came as Micron held a groundbreaking ceremony for its new factory in Xi'an, Shaanxi province, on Wednesday, highlighting the company's commitment to the Chinese market.

Sanjay Mehrotra, president and CEO of Micron, said in a speech that the US company has been continuously investing in the Chinese market for over 20 years, with a presence in Beijing, Shanghai, Xi'an, and Shenzhen, Guangdong province.

"Together, we will continue to share the future of the semiconductor industry here in China and across the globe. The best is yet to come," Mehrotra said.

Asked how Micron would position the Chinese market in its global business amid challenges, Manish Bhatia, executive vice-president of global operations at Micron, said: "China is a critical part of our global business. We are focused on being able to support that business."

China, Bhatia observed, has many different innovations in customer-oriented products and it is a very important part of Micron's global presence. The company wants to make sure that it has a strong share of business in China.

"There's a huge appetite for newer technology solutions in China. And we want to be able to support that desire from Chinese consumers for leading-edge products and support our customers who want to use them," Bhatia said.

Micron said it will set up new engineering labs in Xi'an to shorten the time taken to serve customers. Meanwhile, the company will be working with local suppliers to develop a better ecosystem around that factory and help the company execute its orders faster.

The US company's total investment so far in Xi'an has exceeded 11 billion yuan ($1.5 billion), and the recent additional investment plan of 4.3 billion yuan emphasizes Micron's ongoing commitment to its local customers, the company said.

Micron first announced the plan in June last year. The investment will be used to open a new production line to make chips to strengthen its Xi'an plant's packaging and testing capabilities.

The new production line is expected to be completed in 2025 and the company expects to have production output from this new space toward the second half of calendar year 2025, Micron said.

According to the local government, the annual output value of the new production line is expected to hit 3.6 billion yuan.

On Saturday, China's Minister of Commerce Wang Wentao met with Mehrotra, and said that China welcomes Micron to continue to take root and deeply cultivate the Chinese market, and achieve better development while complying with Chinese laws and regulations.

Mehrotra said Micron plans to increase its investment in China, meet the demand of Chinese customers and contribute to the development of China's semiconductor industry and the digital economy.

The Xi'an plant expansion comes after the Cyberspace Administration of China said in May last year that products of Micron sold in China had not passed the latest cybersecurity review, and operators of the country's key information infrastructure should stop purchasing its products.

Roger Sheng, vice-president of Gartner, a US market research company, said the investment plan clearly showed Micron's attitude toward the Chinese market, which accounted for around 11 percent of the company's $30.8 billion global sales in 2022.

Pan Helin, co-director of the Digital Economy and Financial Innovation Research Center at Zhejiang University's International Business School, said that for many foreign companies, China is a big market, a key part of their supply chains and a major source of innovation. "Any attempt to decouple from China is infeasible," Pan said.