Micron to purchase PSMC’s fab in Miaoli Taiwan as part of DRAM capacity expansion

US memory-chip giant Micron Technology has agreed to acquire a P5 fabrication facility in Taiwan from Powerchip Semiconductor Manufacturing Corporation (PSMC) for US$1.8 billion, a landmark deal that both underscores Taiwan's centrality in the global semiconductor supply chain and aims to bolster Micron's ability to meet surging DRAM demand driven by artificial intelligence (AI).

A turning point in memory manufacturing

Micron Technology, one of the world's leading makers of DRAM or dynamic random-access memory chips, announced on Jan. 17 that it has signed an exclusive letter of intent to purchase PSMC's P5 fabrication plant in Tongluo, Miaoli County, Taiwan, for US$1.8 billion (around NT$56.9 billion) in cash.

The facility, including a 300,000-square-foot 300mm cleanroom dedicated to semiconductor wafer processing, will become part of Micron's expanding manufacturing footprint in Taiwan once the transaction closes, anticipated in the second quarter of 2026 after regulatory approval.

In a company press release, Micron said that the acquisition of the operational cleanroom would integrate with its existing footprint on the island, supporting additional production capacity as demand in the memory market remains ahead of supply.

According to a Reuters report, it is estimated that the capacity contribution from the first phase of this particular ‌fabrication site ‌in the second half of 2027 will be on par with more than 10% of Micron's global capacity in the fourth quarter of 2026.

Why the deal matters

According to market data, memory chip demand, particularly for DRAM used in AI and server applications, has been strong and its pricing has risen sharply as available capacity remains tight, even as suppliers allocate more resources toward high-end segments.

Acquiring an operational fab gives Micron the ability to expand capacity more quickly than building a new facility from the ground up.

Once operational under Micron's control, the Tongluo site is expected to contribute to meaningful DRAM wafer output by the second half of 2027, per Micron's press release, complementing the company's existing production in Taichung and its megafab project underway in New York.

Strategic synergies and long-term partnership

The letter of intent also outlines a longer-term partnership between Micron and PSMC.

Beyond the sale, the two firms plan cooperation in areas such as post-wafer assembly processing and support for PSMC's legacy DRAM products, integrating the foundry's capabilities into broader memory supply chains.

For PSMC, the sale of the P5 fab is not merely an exit from an asset but part of a wider strategic refocusing.

PSMC's official statement said that the company plans to relocate its existing operations to other facilities and concentrate on high-value segments such as, among others, niche DRAM processes, 3D AI DRAM, Wow (Wafer on Wafer), Interposer, IPD and advanced packaging.

PSMC: From foundry to collaborative player

PSMC has been a cornerstone of Taiwan's foundry landscape, ranking among the top global contract chipmakers by revenue prior to the deal.

Its P5 facility in Tongluo, Miaoli, which began operations in May 2024 targeting mature nodes like 55nm, 40nm and 28nm, reflects the company's historical strength in more established process technologies.

However, softer demand for mature-node chips, used in displays and mainstream consumer products, has presented challenges to PSMC's traditional business model.

With DRAM demand driven increasingly by AI data centers and high-performance computing, PSMC's pivot toward collaboration with Micron and focus on niche, advanced segments aligns with broader industry trends, PSMC Chair Frank Huang Chung-jen (黃崇仁) said in the aforementioned company official statement.

Dr. Konrad Young (楊光磊) who is a former R&D Director at TSMC told TCN that Taiwanese semiconductor companies are globally competitive in that they are extremely strong followers  blessed by talents, culture, geography and history.

He said that one distinct feature that allows Taiwanese firms, without naming names, to stand out is that they are harmless to others, which is critically important when it comes to international collaboration or any sort of cooperation.

Looking ahead

As Micron positions itself for the next phase of DRAM demand growth, this acquisition may symbolize  the prioritization of brownfield expansion through fab acquisitions over the longer timelines associated with brand-new construction.

The outcome will be closely watched across global technology markets as memory demand continues its robust trajectory, driven by AI, data centers, and next-generation computing platforms.

In Taiwan, the deal underscores not just the island's manufacturing prowess but its enduring role at the heart of the semiconductor age: Where supply chain resilience and strategic investment intersect on a global stage.