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Micron ‘Double-Digit’ Share Gain At Risk after China ban!

Beijing’s decision to ban major Chinese companies from buying Micron Technology’s products is going to be costly.

Micron Technology said it would invest about $600 million to expand production in the Chinese city of Xi’an, a move that comes about a month after Beijing blacklisted the memory-chip company.

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Micron said that as part of its 4.3 billion yuan investment, equivalent to around $605 million, it will acquire packaging equipment owned by Taiwan’s Powertech Technology that is inside an existing Micron plant in the central Chinese city. It will also build a new plant in Xi’an for packaging and testing, the company said.

The new plant will include a new production line of memory chips. Micron said the investment would further help it meet Chinese customer demand. The company said it would offer contracts to 1,200 Powertech employees and create 500 new jobs, bringing Micron’s total workforce in China to more than 4,500.

Micron said in a securities filing that a “low-double-digit percentage” of total sales is now “at risk of being impacted” by the ban. The memory-chip maker booked just under $31 billion in revenue in its most recent fiscal year, which ended in August. Micron said it is working to mitigate the impact and expects “increased quarter-to-quarter revenue variability.”

Micron stock was off nearly 2% on Friday afternoon, but is still up 35% so far this year.
Image: Micron