TI to Buy Micron's 3D XPoint Memory Chip Fab for $900 Million
Texas Instruments has agreed to pay $900 million to buy Micron Technology’s 300-mm semiconductor fab in Lehi, Utah, in a move to increase its production capacity and exert more control over its supply chain.
Texas Instruments, the world’s largest analog chip manufacturer, said it plans to reequip the fab from flash memory chips to the production of analog and embedded processors on the 65-nm and 45-nm nodes, with the ability to take the fab to additional nodes as required. The company said that it will be the fourth 300-mm fab in its global manufacturing network, including its RFAB1 and soon-to-be-completed RFAB2 plant in Texas.
"This investment continues to strengthen our competitive advantage in manufacturing and technology and is part of our long-term capacity planning," explained Richard Templeton, TI's president, and CEO, in a statement. The company plans to start supplying analog and other chips manufactured at the plant by early 2023. It also warned that it will incur charges totaling $300 million in 2022 while it converts the fab for mass production.
Micron, the largest US manufacturer of memory chips, said in March that it would halt the development of its 3D XPoint memory due to insipid demand. Micron, which also sells DRAM and NAND flash, said it would also shut down and sell the Lehi plant, where it manufactured the chips exclusively. The fab was the headquarters of the IM Flash Technologies (IMFT) venture that it founded with Intel but has been unraveling in recent years.
In 2019, Micron agreed to buy Intel's share in IMFT—the only semiconductor fab in the world equipped for the mass-production of 3D XPoint wafers—for $1.5 billion. As a result of the deal, Intel was forced to contract out the production of the 3D XPoint chips at the heart of its Optane memory and storage products to Micron. But weak demand forced Micron to keep large parts of the more than two million-square-foot factory shut down.
The world is in the throes of a severe global shortage of chips that has ravaged global supply chains in recent months. The soaring demand for game consoles, smartphones, and other consumer devices has drained the supply of chips to the automotive sector, leading to a global scramble for slots at chip foundries. As demand outruns the supply, many components have become harder to buy or more expensive. Catastrophic storms, plus prolonged droughts, fires at chip fabs, and other disasters, have hampered operations globally, too.
According to industry watchers and executives, the supply gap is expected to last into 2022 or even 2023.
TI is not retooling the fab fast enough to ease the production crunch in the short term. But this deal gives it more control over its supply chain over the long term as more of its analog, power management, and other ICs are used cars, factories, and other areas. TI’s core markets—industrial, consumer, and automotive—are highly profitable areas that TI's leadership believes afford it the best opportunities for robust future growth.
Kyle Flessner, TI's senior vice president of technology and manufacturing, said it plans to give workers at the fab the opportunity to become its employees. TI plans to complete the purchase by the end of 2021.
