Breaking news, a 30 billion wafer factory is halted!

The demand for storage chips driven by AI continues to heat up, but Micron has hit the brakes on a major expansion plan in Taiwan.

According to Bloomberg, Micron has suspended the construction of a $4.5 billion (approximately 30 billion RMB) storage chip factory in Taoyuan City, Taiwan. This suspension is related to ongoing labor disputes in the region. Micron's management is increasingly concerned about the uncertainties facing the project, including the risk of previously reached agreements with local unions being overturned.

This means that, against the backdrop of ongoing tight global DRAM and HBM supply and storage manufacturers increasing capital investments, a significant expansion project for Micron in Taiwan has encountered new variables.

$4.5 Billion Investment Plan Paused

The suspended project is located in Taoyuan City, Taiwan, with an investment scale of approximately $4.5 billion.

According to informed sources, Micron has essentially halted construction work on the factory. Since the relevant internal discussions have not been made public, the sources requested anonymity.

More notably, Micron has informed the relevant government departments in Taiwan and a supplier about the plan to suspend construction. This indicates that the decision is not merely a simple adjustment of construction progress but has already involved arrangements for the subsequent advancement of the project.

Reports indicate that the core issue of concern for Micron's management is the ongoing tension in local labor relations and the possibility that previously reached agreements with the union may be overturned. These uncertainties are affecting the company's judgment regarding the project.

Currently, Micron has not publicly disclosed specific future arrangements for the project, including when construction will resume and whether adjustments will be made to the original investment plan.

From Bonus Distribution to Strikes, Labor Disputes Escalate

This incident did not occur suddenly.

Since the beginning of this year, with the rapid growth in demand for AI servers, the DRAM and HBM markets have continued to improve, leading to better performance and profits for storage manufacturers like Micron. At the same time, employees' demands for bonuses and profit-sharing mechanisms have begun to increase.

On October 7, the union representing Micron's Taoyuan employees announced that in a strike authorization vote, 99% of the 1,994 voting members supported obtaining strike authorization.

The main demand of the union is for Micron to propose a clear and long-term profit-sharing mechanism, rather than just a one-time bonus arrangement.

In fact, Micron had previously announced an employee reward plan for the fiscal year 2026, providing rewards for over 60,000 employees worldwide. Among them, employees in Taiwan received a cash bonus of 1 million New Taiwan Dollars, approximately $31,400.

However, this arrangement did not quell the controversy.

The Taoyuan union believes that a one-time bonus cannot replace a long-term, institutionalized profit-sharing mechanism, and that the company announced the reward plan during labor mediation without prior agreement with the union.

On October 21, the labor disputes in Micron Taiwan further diverged.

On that day, Micron and the Taichung union announced that they had reached a labor agreement and decided to withdraw from the originally scheduled mediation process. However, the Taoyuan union did not change its position and still plans to hold strike actions, as the two sides failed to reach an agreement on the specific figures of the profit-sharing plan.

It is important to note that Micron has two major unions in Taiwan, representing employees from different regions: Taoyuan and Taichung. The agreement reached in Taichung does not mean that the labor disputes in Taoyuan have been resolved.

As of now, the differences between the two sides regarding bonuses and profit-sharing mechanisms have already had a tangible impact on Micron's investment plans in Taiwan.

How Important is Taiwan to Micron's Storage Strategy?

This incident is noteworthy also because of Taiwan's significant position in Micron's global storage chip landscape.

Micron currently has about 15,000 employees in Taiwan, making it one of its important DRAM production bases, while also undertaking advanced DRAM, HBM-related production, and packaging testing tasks.

In terms of production layout, Taoyuan mainly handles front-end DRAM wafer manufacturing, while Taichung is Micron's largest operational base in Taiwan, involving advanced DRAM, HBM, and packaging testing businesses.

This also means that Taiwan is not only an important base for Micron's traditional DRAM production but also a crucial pivot for its AI storage market.

On October 15, Micron launched a new advanced packaging and testing facility in Taichung. Micron's President and COO Manish Bhatia stated at the time that the entire production capacity of this factory for 2027 has already been sold out, and it is expected that the growth rate of the HBM market will continue to outpace the entire DRAM industry, at least until 2028.

This statement actually reflects Micron's judgment on future storage demand: the demand for high-bandwidth memory from AI servers is still growing rapidly, and advanced storage capacity has become a key factor in industry competition.

From this perspective, the pause of the $4.5 billion factory project in Taoyuan is clearly not just a routine construction issue.

Currently, the global storage market is in a new round of expansion cycle. Micron needs to continue investing in DRAM, HBM, and other areas to meet the demand growth brought about by AI infrastructure construction. Any changes in the expansion progress of important production bases could affect its future capacity layout.

However, it is also necessary to distinguish that the publicly available information points to the suspension of the $4.5 billion factory construction plan in Taoyuan, which does not mean that all of Micron's production activities in Taiwan have been affected, nor can it be concluded that global DRAM or HBM supply will immediately change.

What is truly worth noting is that after AI has driven storage chips into a high prosperity cycle, the challenges faced by storage manufacturers are no longer just capital expenditures, equipment delivery, and capacity construction. How to stabilize the workforce and address profit distribution demands has also begun to become an important factor affecting expansion progress.

For Micron, whether the $4.5 billion investment plan can be restarted ultimately depends on whether both labor and management can find a sustainable solution.