Micron Poised to Get Over $6B in Chips Grants in Announcement Next Week

(Bloomberg) -- Micron Technology Inc., the largest US maker of computer-memory chips, is poised to get $6.1 billion in grants from the Commerce Department to help pay for domestic factory projects, part of an effort to bring semiconductor production back to American soil. 

The award is slated to be revealed next week, according to people familiar with the matter. Micron — like Intel Corp. and Taiwan Semiconductor Manufacturing Co. — will also accept loans as part of its award package, said two of the people, who asked not to identified because the deliberations are private. The total value of those loans remains unclear.

Micron shares gained as much as 2.6% in late trading Wednesday after Bloomberg first reported on the planned award, though they retreated in Thursday’s session — part of a broader slide in semiconductor stocks. Micron is up 34% for the year. 

Senator Chuck Schumer, a Democrat from New York, confirmed the $6.1 billion figure in a statement Thursday, saying the money would support Micron’s plans to “construct state-of-the-art fabs in New York and Idaho.”

President Joe Biden is scheduled to travel on April 25 to the Syracuse, New York, region as part of the announcement, the people said. Micron, based in Boise, Idaho, is building factories near Syracuse, as well as in its home state.

Related:Micron Gives Strong Forecast After Data Center Demand Grows

Representatives for Micron, the Commerce Department and the White House declined to comment.

The 2022 Chips and Science Act set aside $39 billion for direct grants, as well as loans and loan guarantees worth $75 billion, to revitalize American chipmaking after decades of production shifting to Asia. Officials have unveiled six preliminary awards so far: three to firms that produce older-generation semiconductors, plus multibillion-dollar packages for Intel, TSMC and South Korea’s Samsung Electronics Co. 

New York Governor Kathy Hochul touted the Micron agreement on Wednesday, saying it would help revitalize the upstate economy. “New federal funding from President Biden’s Chips and Science Act will help lock in 50,000 jobs, a $100 billion investment and millions of dollars in community benefits,” she said in a statement.

Commerce Secretary Gina Raimondo has said the agency plans to spend about $28 billion of the grant funding on leading-edge projects. After the preliminary agreement is announced, Micron would enter months of due diligence and then receive the money in tranches tied to project-specific benchmarks.

Micron has pledged to build as many as four factories in New York state, plus one in Idaho. But those plans “require Micron to receive the combination of sufficient Chips grants, investment tax credits and local incentives to address the cost difference compared to overseas expansion,” Chief Executive Officer Sanjay Mehrotra said last month. The company is proceeding with projects in China, India and Japan as well.

Related:China Hits Micron With Review of Chips, Citing Security Risks

Raimondo has said that her agency will prioritize funding projects that begin production by the end of the decade. Two of Micron’s four New York sites are on track to meet that benchmark, while the other two won’t be operational until 2041, the company said in a recent federal filing. That means that Micron’s award is likely to support only the first two New York facilities, people familiar with the matter said earlier.

Computer memory and storage chips are a vital part of everything from smartphones to the biggest data centers, where they store information and help advanced logic process information. Production is primarily done in Asia. Micron’s biggest two competitors, Samsung and SK Hynix Inc., account for the majority of that manufacturing.

Those firms also plan to build factories in the US — for logic chips and advanced packaging, respectively — as part of a groundswell of more than $200 billion in private semiconductor investment spurred by the Chips Act.

“From smartphones to AI to our nation’s most sensitive defense technologies, the memory chips Micron makes are in nearly every product of our modern economy,” Schumer, the Senate majority leader, said in his statement. “But, as the pandemic showed, when we don’t shore up our supply chains and make these chips in America, we can be left vulnerable, prices can skyrocket, and our national security can be threatened.”