How Micron is building the biggest chip fab in U.S. history despite a China ban and smartphone slump

Published

2 years ago

October 23, 2023

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Memory chips are at the center of all devices, helping store and access data in smartphones, computers and the servers training generative artificial intelligence models.

Just three companies make more than 90% of the world’s dynamic random-access memory, or DRAM, chips. With Samsung and SK Hynix both headquartered in South Korea, Idaho-based Micron is the only manufacturer in the U.S. — that has made it the latest target of China’s bans on U.S. technologies.

About a quarter of Micron’s revenue comes from China, and “about half that revenue is at risk,” Micron CEO Sanjay Mehrotra told CNBC in an interview.

Meanwhile, Micron is doubling down on U.S. manufacturing. Its current leading-edge chips are made in Japan and Taiwan, but Micron is aiming to bring advanced memory production to the U.S. starting in 2026 with a new $15 billion chip fabrication plant in Boise, Idaho. Micron celebrated its 45th anniversary in October by pouring the first cement at the new fab.

The facility is located next to Micron’s huge research and development facility, where CNBC got a behind-the-scenes tour.

Micron’s existing research and development facility in Boise, Idaho, shown here on Oct. 6, 2023.

Ben Farrar

“Memory is very cost-sensitive and we have to get economies of scale to mass produce our chips on a level that meets the market demands,” said Scott Gatzemeier, Micron’s corporate vice president of front end U.S. expansion.

DRAM and NAND memory chips are a cheaper type of semiconductor than the high-powered central processing units from Intel and AMD and graphics processing units that sparked Nvidia’s growth. But multiple memory chips are needed to support each GPU or CPU, so making memory requires more fab space.

That’s why Micron is planning the biggest chip project in U.S. history, spending $100 billion over 20 years to build four 600,000 square foot fabs in upstate New York.

Mehrotra told CNBC that Micron’s goal is to vastly increase the U.S. share of DRAM production, which he said currently sits at just 2%. That production comes from Micron’s fab in Manassas, Virginia. The company is getting assistance from the federal CHIPS and Science Act, which offers billions of dollars to incentivize domestic production.

“With Micron’s investments through CHIPS support in Boise, Idaho, as well as in Syracuse, New York, that 2% over the course of nearly 20 years will be changing to about 15% of the worldwide production coming from the U.S.,” Mehrotra said.

The U.S. share of overall chip manufacturing has plummeted from 37% to 12% in the last three decades, largely because it costs at least 20% more to build and operate a new fab in the U.S. than in Asia. Labor is also cheaper there, the supply chain is more accessible and government incentives have been far greater. That’s why the CHIPS and Science Act set aside $52.7 billion for companies that manufacture in the U.S.

Senate Majority Leader Chuck Schumer, D-N.Y., co-sponsored the bill.

“When it came to chips so essential to everything we do, we had lost that edge,” Schumer told CNBC in an interview. “And if we didn’t get back that edge, not just on chips but on science broadly, we would no longer be the No. 1 economic power in the world.”

Micron and at least 460 other companies have applied for funds from the CHIPS Act. States are also offering incentives to entice chip companies. Micron told CNBC it’s eligible for up to $5.5 billion from the state of New York for the four fabs it’s building just north of Syracuse. New York Gov. Kathy Hochul signed the state’s Green CHIPS Act into law last year.

“If they hadn’t passed the CHIPS and Science Act first, I don’t think it would have been as many incentives as necessary,” Hochul said. “I knew I had to woo them, talk about our incentives, but also we get out of it 50,000 jobs. That’s a good deal for us any day of the week.”

These promises come on the heels of a major price slump for memory chips, which led to layoffs at Micron and SK Hynix, and resulted in Samsung slashing production. Now, Micron is betting big that the memory market will grow.

“The large language learning models and other things like that continue to increase large demand,” Gatzemeier said.

“We’re now moving into things like FaceTime, higher resolution images, movies on demand,” he said. “All of that requires more and more memory to be made available.”

Micron says construction in New York will begin at the end of 2024 and chip production there will start in 2027. With both Idaho and New York fabs online, Mehrotra told CNBC that Micron plans to increase the share of chips it makes in the U.S. from 10% to nearly 60% in the next two decades.

Micron CEO Sanjay Mehrotra shows CNBC’s Katie Tarasov a 300mm silicon wafer at the memory company’s San Jose office on Oct. 2, 2023.

Kent Kessinger

‘Feast or famine’

Micron was founded in 1978 by three chip engineers, along with one of their twin brothers, in the basement of a dental office in Boise. By 1980, it was building its first fab and a year later was pumping out a revolutionarily small 64K DRAM chip. These chips, used for storing bits of data that can be quickly accessed by a CPU, ended up in many of the early PCs.

Gatzemeier, who joined as an intern in 1997, explained the two main kinds of memory: DRAM and NAND.

DRAM is “volatile memory, which means that when the power is removed, it loses all of its information. It’s very fast but has to be, and it sits near the CPU and it’s used for real-time processing,” he said. “NAND flash memory is what’s in your SSDs or your storage cards. And NAND flash is nonvolatile, meaning it’ll still store your memory even when the power’s removed.”

Micron went public in 1984. Memory was a crowded field, but over the years, it has whittled down to just three top players.

“The name of the game is high performance and low cost at the same time,” said Patrick Moorhead, CEO of Moor Insights and Strategy. “Otherwise, you’re going to be blasted out of the market.”

When it comes to the biggest type of memory, DRAM, Samsung is by far the leader, followed by SK Hynix and then Micron. Micron has made 11 acquisitions since 1998, including Texas Instruments‘ memory division, Numonyx, Elpida and Inotera.

“For a very long period, they had not invested in a new fab,” said Gaurav Gupta, an analyst at Gartner. “But they were still able to retain their market share by acquiring other smaller memory firms, which were either going out of business or bankrupt.”

Unlike many kinds of chips, memory wasn’t in short supply during the chip shortage. Micron and its competitors saw a major upswing in the pandemic-fueled boom in consumer electronics. Micron’s profits then fell significantly due to weakened demand for PCs and smartphones and a chip oversupply that led to lower prices. It’s a downturn that has affected much of the chip industry.

“When I look at this market over the past 30 years, it’s always feast or famine,” Moorhead said. “We have an oversupply now. But guess what? Give it a couple of months and we will be in an undersupply and prices will go up.”

Even amid the downturn, Mehrotra is optimistic about the growth of Micron’s smartphone business. It supplies memory in phones from Apple, Motorola, Asus and more.

“The mix of smartphones is going more and more toward higher-end smartphones, toward the flagship smartphones, which require more memory as well,” Mehrotra said. “When we look ahead at 2024, we actually expect that year-over-year total worldwide smartphone unit sales will increase.”

Micron is also focused on rapid growth markets such as automotive and AI. The next generation of its most advanced product, High Bandwidth Memory, is set for volume production next year. HBM helps AI models such as ChatGPT remember past conversations and user preferences to generate more humanlike responses.

“It is able to pack 50% more memory capacity in a memory cube,” Mehrotra said. “It is able to give you 50% faster performance and is able to give you about 2.5 times better power and performance efficiency. And these are all the elements that are critically important in AI applications.”

Banned in China

Micron is facing one major specific challenge. In May, China’s cybersecurity administration banned some of its sales to key China infrastructure projects, saying it failed a security review. Last year, the U.S. barred chip companies from supplying China with certain key technologies.

“Micron is absolutely just a pawn in this game right now,” Moorhead said. “They weren’t the first and they were not the last.”

Mehrotra offers a more diplomatic approach.

“It’s very important for U.S. and China to provide an environment to the businesses so that they can invest in a predictable manner,” he said. “And what I can also tell you is that Micron, of course, is totally committed to bringing the value of its technology and products and manufacturing scale to the benefit of our customers across various end markets in China.”

Meanwhile, Micron has started construction on a $2.75 billion assembly and test facility in India.

“Micron is obviously trying to diversify its base,” Gartner’s Gupta said. “It has testing and packaging facilities in China. And obviously they are trying to move, diversify out of China.”

China can still rely on chips from Samsung, SK Hynix and smaller Chinese memory makers. That’s because memory is considered a commodity, meaning it’s relatively easy to switch between products from different companies. But that’s not guaranteed to last.

“When we get back to the boom days and Hynix and Samsung can’t fulfill all the volumes, you might see China diving back into Micron and suddenly lifting any restrictions,” Moorhead said.

Moorhead added that China’s cybersecurity risk accusation about Micron is “a front.”

“Compared to a CPU or a GPU system, it’s pretty hard to embed something nefarious into something like storage or memory,” he said. “That would be technology that I have never heard of.”

Schumer led a delegation of senators to visit China in October for a rare meeting with President Xi Jinping, in part to discuss the ban on Micron.

“We think China was being very nasty about this to Micron,” Schumer told CNBC ahead of the visit. “China’s upset with the Biden administration’s very smart prohibition of selling certain types of chip manufacturing equipment to China. But we’re going to stick up for Micron.”

This also isn’t the first time Micron has been at the center of U.S.-China tensions. In 2018, the U.S. accused Chinese chip company Fujian Jinhua of stealing intellectual property from Micron, a claim the Chinese company denied.

With no slowdown in geopolitical tension, Micron is instead focusing on U.S. expansion. Water and power were both significant reasons Micron settled on New York for its biggest project.

A rendering of Micron’s planned four memory chip fabs it will build north of Syracuse, New York, spending $100 billion over the next 20 years.

Micron

“Not just the Finger Lakes, but two Great Lakes: Lake Erie and Lake Ontario,” Hochul said. “There’s plentiful water and low-cost power generated primarily by hydroelectric and wind and solar. So we’re ready for it. We know it’s going to be a transition, but that’s what we want to do.”

Micron said each of its new fabs will use the equivalent of 25 Olympic-size swimming pools worth of water each day, with a goal of reusing or recycling 75% of that. Micron will also use the same amount of energy required to power some 25,000 homes.

“The energy costs are, interestingly enough, lower in the United States than most parts of the world,” Moorhead said. “People are more expensive in the United States, and so is the materials and the cost to build that factory. But that gap is narrowing over time.”

In Arizona, the world’s advanced chip leader, Taiwan Semiconductor Manufacturing Company, recently blamed a shortage of skilled labor for delays to its massive $40 billion fab under construction.

“That won’t happen in New York because we already have a legacy,” Hochul said. “We have Wolfspeed, we have GlobalFoundries. So this is not a new industry to us.”

Micron runs a Chip Camp in Boise for middle schoolers, which Gatzemeier’s daughter attended over the summer, and is investing in university programs to feed the pipeline for future semiconductor engineers.

“We’re actively starting our hiring ramp now,” Gatzemeier said. “We’ve started aggressively targeting all the universities. We’re also really going to draw on the global resources that Micron has across the world and bring in some of that semiconductor expertise to help train these new team members.”

Technology

Apple scores big victory with ‘F1,’ but AI is still a major problem in Cupertino

Published

15 hours ago

July 4, 2025

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Apple scores big victory with 'F1,' but AI is still a major problem in Cupertino

Formula One F1 – United States Grand Prix – Circuit of the Americas, Austin, Texas, U.S. – October 23, 2022 Tim Cook waves the chequered flag to the race winner Red Bull’s Max Verstappen

Mike Segar | Reuters

Apple had two major launches last month. They couldn’t have been more different.

First, Apple revealed some of the artificial intelligence advancements it had been working on in the past year when it released developer versions of its operating systems to muted applause at its annual developer’s conference, WWDC. Then, at the end of the month, Apple hit the red carpet as its first true blockbuster movie, “F1,” debuted to over $155 million — and glowing reviews — in its first weekend.

While “F1” was a victory lap for Apple, highlighting the strength of its long-term outlook, the growth of its services business and its ability to tap into culture, Wall Street’s reaction to the company’s AI announcements at WWDC suggest there’s some trouble underneath the hood.

“F1” showed Apple at its best — in particular, its ability to invest in new, long-term projects. When Apple TV+ launched in 2019, it had only a handful of original shows and one movie, a film festival darling called “Hala” that didn’t even share its box office revenue.

Despite Apple TV+ being written off as a costly side-project, Apple stuck with its plan over the years, expanding its staff and operation in Culver City, California. That allowed the company to build up Hollywood connections, especially for TV shows, and build an entertainment track record. Now, an Apple Original can lead the box office on a summer weekend, the prime season for blockbuster films.

The success of “F1” also highlights Apple’s significant marketing machine and ability to get big-name talent to appear with its leadership. Apple pulled out all the stops to market the movie, including using its Wallet app to send a push notification with a discount for tickets to the film. To promote “F1,” Cook appeared with movie star Brad Pitt at an Apple store in New York and posted a video with actual F1 racer Lewis Hamilton, who was one of the film’s producers.

(L-R) Brad Pitt, Lewis Hamilton, Tim Cook, and Damson Idris attend the World Premiere of “F1: The Movie” in Times Square on June 16, 2025 in New York City.

Jamie Mccarthy | Getty Images Entertainment | Getty Images

Although Apple services chief Eddy Cue said in a recent interview that Apple needs the its film business to be profitable to “continue to do great things,” “F1” isn’t just about the bottom line for the company.

Apple’s Hollywood productions are perhaps the most prominent face of the company’s services business, a profit engine that has been an investor favorite since the iPhone maker started highlighting the division in 2016.

Films will only ever be a small fraction of the services unit, which also includes payments, iCloud subscriptions, magazine bundles, Apple Music, game bundles, warranties, fees related to digital payments and ad sales. Plus, even the biggest box office smashes would be small on Apple’s scale — the company does over $1 billion in sales on average every day.

But movies are the only services component that can get celebrities like Pitt or George Clooney to appear next to an Apple logo — and the success of “F1” means that Apple could do more big popcorn films in the future.

“Nothing breeds success or inspires future investment like a current success,” said Comscore senior media analyst Paul Dergarabedian.

But if “F1” is a sign that Apple’s services business is in full throttle, the company’s AI struggles are a “check engine” light that won’t turn off.

Replacing Siri’s engine

At WWDC last month, Wall Street was eager to hear about the company’s plans for Apple Intelligence, its suite of AI features that it first revealed in 2024. Apple Intelligence, which is a key tenet of the company’s hardware products, had a rollout marred by delays and underwhelming features.

Apple spent most of WWDC going over smaller machine learning features, but did not reveal what investors and consumers increasingly want: A sophisticated Siri that can converse fluidly and get stuff done, like making a restaurant reservation. In the age of OpenAI’s ChatGPT, Anthropic’s Claude and Google’s Gemini, the expectation of AI assistants among consumers is growing beyond “Siri, how’s the weather?”

The company had previewed a significantly improved Siri in the summer of 2024, but earlier this year, those features were delayed to sometime in 2026. At WWDC, Apple didn’t offer any updates about the improved Siri beyond that the company was “continuing its work to deliver” the features in the “coming year.” Some observers reduced their expectations for Apple’s AI after the conference.

“Current expectations for Apple Intelligence to kickstart a super upgrade cycle are too high, in our view,” wrote Jefferies analysts this week.

Siri should be an example of how Apple’s ability to improve products and projects over the long-term makes it tough to compete with.

It beat nearly every other voice assistant to market when it first debuted on iPhones in 2011. Fourteen years later, Siri remains essentially the same one-off, rigid, question-and-answer system that struggles with open-ended questions and dates, even after the invention in recent years of sophisticated voice bots based on generative AI technology that can hold a conversation.

Apple’s strongest rivals, including Android parent Google, have done way more to integrate sophisticated AI assistants into their devices than Apple has. And Google doesn’t have the same reflex against collecting data and cloud processing as privacy-obsessed Apple.

Some analysts have said they believe Apple has a few years before the company’s lack of competitive AI features will start to show up in device sales, given the company’s large installed base and high customer loyalty. But Apple can’t get lapped before it re-enters the race, and its former design guru Jony Ive is now working on new hardware with OpenAI, ramping up the pressure in Cupertino.

“The three-year problem, which is within an investment time frame, is that Android is racing ahead,” Needham senior internet analyst Laura Martin said on CNBC this week.

Apple’s services success with projects like “F1” is an example of what the company can do when it sets clear goals in public and then executes them over extended time-frames.

Its AI strategy could use a similar long-term plan, as customers and investors wonder when Apple will fully embrace the technology that has captivated Silicon Valley.

Wall Street’s anxiety over Apple’s AI struggles was evident this week after Bloomberg reported that Apple was considering replacing Siri’s engine with Anthropic or OpenAI’s technology, as opposed to its own foundation models.

The move, if it were to happen, would contradict one of Apple’s most important strategies in the Cook era: Apple wants to own its core technologies, like the touchscreen, processor, modem and maps software, not buy them from suppliers.

Using external technology would be an admission that Apple Foundation Models aren’t good enough yet for what the company wants to do with Siri.

“They’ve fallen farther and farther behind, and they need to supercharge their generative AI efforts” Martin said. “They can’t do that internally.”

Apple might even pay billions for the use of Anthropic’s AI software, according to the Bloomberg report. If Apple were to pay for AI, it would be a reversal from current services deals, like the search deal with Alphabet where the Cupertino company gets paid $20 billion per year to push iPhone traffic to Google Search.

The company didn’t confirm the report and declined comment, but Wall Street welcomed the report and Apple shares rose.

In the world of AI in Silicon Valley, signing bonuses for the kinds of engineers that can develop new models can range up to $100 million, according to OpenAI CEO Sam Altman.

“I can’t see Apple doing that,” Martin said.

Earlier this week, Meta CEO Mark Zuckerberg sent a memo bragging about hiring 11 AI experts from companies such as OpenAI, Anthropic, and Google’s DeepMind. That came after Zuckerberg hired Scale AI CEO Alexandr Wang to lead a new AI division as part of a $14.3 billion deal.

Meta’s not the only company to spend hundreds of millions on AI celebrities to get them in the building. Google spent big to hire away the founders of Character.AI, Microsoft got its AI leader by striking a deal with Inflection and Amazon hired the executive team of Adept to bulk up its AI roster.

Apple, on the other hand, hasn’t announced any big AI hires in recent years. While Cook rubs shoulders with Pitt, the actual race may be passing Apple by.

WATCH: Jefferies upgrades Apple to ‘Hold’

Technology

Musk backs Sen. Paul’s criticism of Trump’s megabill in first comment since it passed

Published

15 hours ago

July 4, 2025

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Musk backs Sen. Paul's criticism of Trump's megabill in first comment since it passed

Tesla CEO Elon Musk speaks alongside U.S. President Donald Trump to reporters in the Oval Office of the White House on May 30, 2025 in Washington, DC.

Kevin Dietsch | Getty Images

Tesla CEO Elon Musk, who bombarded President Donald Trump‘s signature spending bill for weeks, on Friday made his first comments since the legislation passed.

Musk backed a post on X by Sen. Rand Paul, R-Ky., who said the bill’s budget “explodes the deficit” and continues a pattern of “short-term politicking over long-term sustainability.”

The House of Representatives narrowly passed the One Big Beautiful Bill Act on Thursday, sending it to Trump to sign into law.

Paul and Musk have been vocal opponents of Trump’s tax and spending bill, and repeatedly called out the potential for the spending package to increase the national debt.

On Monday, Musk called it the “DEBT SLAVERY bill.”

The independent Congressional Budget Office has said the bill could add $3.4 trillion to the $36.2 trillion of U.S. debt over the next decade. The White House has labeled the agency as “partisan” and continuously refuted the CBO’s estimates.

Microsoft layoffs hit 830 workers in home state of Washington

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1 day ago

July 3, 2025

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Microsoft layoffs hit 830 workers in home state of Washington

Microsoft CEO Satya Nadella speaks at the Axel Springer building in Berlin on Oct. 17, 2023. He received the annual Axel Springer Award.

Ben Kriemann | Getty Images

Among the thousands of Microsoft employees who lost their jobs in the cutbacks announced this week were 830 staffers in the company’s home state of Washington.

Nearly a dozen game design workers in the state were part of the layoffs, along with three audio designers, two mechanical engineers, one optical engineer and one lab technician, according to a document Microsoft submitted to Washington employment officials.

There were also five individual contributors and one manager at the Microsoft Research division in the cuts, as well as 10 lawyers and six hardware engineers, the document shows.

Microsoft announced plans on Wednesday to eliminate 9,000 jobs, as part of an effort to eliminate redundancy and to encourage employees to focus on more meaningful work by adopting new technologies, a person familiar with the matter told CNBC. The person asked not to be named while discussing private matters.

Scores of Microsoft salespeople and video game developers have since come forward on social media to announce their departure. In April, Microsoft said revenue from Xbox content and services grew 8%, trailing overall growth of 13%.

In sales, the company parted ways with 16 customer success account management staff members based in Washington, 28 in sales strategy enablement and another five in sales compensation. One Washington-based government affairs worker was also laid off.

Microsoft eliminated 17 jobs in cloud solution architecture in the state, according to the document. The company’s fastest revenue growth comes from Azure and other cloud services that customers buy based on usage.

CEO Satya Nadella has not publicly commented on the layoffs, and Microsoft didn’t immediately provide a comment about the cuts in Washington. On a conference call with analysts in April, Microsoft CFO Amy Hood said the company had a “focus on cost efficiencies” during the March quarter.

WATCH: Microsoft layoffs not performance-based, largely targeting middle managers