Micron Technology MU has suspended construction plans for a $4.5 billion memory-chip manufacturing facility in Taiwan following an escalating labor dispute with its employees, Bloomberg reported on Thursday.
The proposed facility in Taoyuan, northern Taiwan, was expected to become an important production base for dynamic random-access memory (DRAM) and high-bandwidth memory (HBM), two critical components used in artificial intelligence data centers.
Its shares fell around 7% on Wednesday and declined another 2% in premarket trading Thursday as investors assessed the potential implications for its manufacturing expansion.
The American chipmaking giant has already been under pressure with questions around the sustainability of the AI boom, especially after the Democratic victories in the midterm elections.
Why has Micron halted construction?
Micron executives in Taiwan have effectively paused construction at the planned facility, Bloomberg reported, citing people familiar with the matter.
The company has reportedly informed Taiwanese officials and a supplier about the decision.
The project, known as Fab 11E, was previously scheduled to begin production in 2028.
Micron had budgeted between $3 billion and $4.5 billion for the facility, including purchases of advanced equipment from ASML.
The company is concerned about uncertainty surrounding its labor negotiations and the possibility that an agreement previously reached with one of its unions could be challenged.
Micron told Bloomberg that its existing operations in Taiwan continue normally and that it remains confident in maintaining business continuity for customers.
The company also said it was looking forward to reaching an agreement with the protesting union.
Workers demand 15% of operating profits
Micron has been one of the biggest beneficiaries of the AI boom, with its memory chips in high demand and prices shooting up.
In its recent Q3 results, revenue more than quadrupled year-over-year with gross margins in the mid-80s.
The spat between Micron and its Taiwanese workers has been a bone of contention as employees demand higher compensation.
Workers have been seeking an arrangement under which 15% of the company’s global operating profits would be distributed among employees, similar to profit-sharing measures at rivals Samsung Electronics and SK Hynix.
Micron reached an agreement with its larger Taichung union in October, but the separate Taoyuan union remains dissatisfied with the terms.
Some employees are seeking to reopen negotiations, while Micron believes the existing agreement is legally binding.
The Taoyuan union has said it was not notified about the reported construction suspension, although it hopes the company and employees can reach a consensus.
Taiwan’s Ministry of Economic Affairs said it supports the legal agreement reached between the company and the union and would work with local authorities to resolve the differences.
“The government supports the legal agreement the company has reached with the union, and will shoulder and share responsibilities with the local government to help resolve the differences and create a win-win outcome,” the ministry told Bloomberg.
AI disclosure: AI tools assisted with research and drafting of this piece. An Invezz editor reviewed the facts, sources and wording before publication. Any opinions or analysis are Invezz’s, not those of an automated system.
The post Micron slips in premarket as report says $4.5B Taiwan factory plan suspended appeared first on Invezz