Munich It’s a huge sum: the chip company Micron plans to spend 150 billion dollars over the next ten years – for new plants and for research and development. Europe will only benefit marginally from this. Additional factories would only be built in Asia and America, where the US manufacturer is already represented, CEO Sanjay Mehrotra told Handelsblatt. Because it is important to use economies of scale in order to produce as cost-efficiently as possible.
This is not good news for Europe. EU Commissioner Thierry Breton has been trying for months to attract large chip companies. The Frenchman’s goal is to double Europe’s share of global semiconductor production from ten to 20 percent. Breton wants to ensure that Europe can supply itself with semiconductors far more than before. Because the industry suffers severely from delivery bottlenecks of the contract manufacturers in Asia.
Nevertheless, Europe is important for Micron, explained Mehrotra. “We are strong in research here.” The group employs 140 people in Munich alone. “I’m proud of the team,” emphasized the 63-year-old. It has secured 800 patents for Micron over the past few years. In the Bavarian capital, Micron also works closely with the car manufacturer BMW.
Micron is also involved in other areas in Germany: For example, the fourth largest chip manufacturer in the world has acquired a stake in the air taxi manufacturer Volocopter. The start-up from Bruchsal is developing a technology “that is highly relevant for us,” says Mehrotra. After all, the aircraft needed a lot of memory.
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Micron is number three among the memory chip manufacturers. Samsung and SK Hynix from South Korea are leaders in the memory chip business. For more than ten years, Europe has been completely dependent on deliveries from overseas for these important components. In 2009, Qimonda, the last domestic provider, went bankrupt. A few years earlier, the Dax group had split off Infineon Qimonda and went public.
Europe is important to Micron, says Mehrotra. “Here we are strong in research.”
(Photo: press photo)
Memory chips are becoming more and more important. 20 years ago they represented only a fifth of the turnover in the semiconductor industry, now it is more than a third, and the trend is rising. The industry association WSTS assumes that sales will climb by 37 percent this year. By way of comparison: the forecast shows that the entire market will only grow by a good 25 percent.
The numbers of the corporations reflect the boom: In the latest, fourth quarter of the fiscal year, the turnover of Micron shot up by a good third to 8.3 billion dollars. The bottom line was around $ 2.7 billion, almost three times as much as last year. At rival Hynix, revenues rose 45 percent and profits rose 206 percent.
Micron produces two types of semiconductors: NAND chips store data even when the device is switched off, whereas DRAM is pure memory. The Americans recently generated almost three quarters of their sales with DRAM.
In the past, the memory chip manufacturers were dependent on the business with PCs and notebooks. Data center operators are now the largest customers. But the automotive industry is also purchasing more and more components. And with the Internet of Things, machines in companies are networked, with the so-called smart home also the household is digitized. In many places where memory chips have not yet been used, they will soon be indispensable, according to the manufacturers’ calculations.
Mehrotra therefore assumes that the memory chips still have their prime still ahead of them: “The memory business will grow faster than the rest of the industry,” promises the manager. He is therefore confident that the high investments will pay off.
The memory chip business is extremely capital-intensive. In the current fiscal year, Micron will invest between eleven and twelve billion dollars in new machines and factories, according to Mehrotra. For comparison: In the past fiscal year ended September 2, the company achieved sales of $ 27.7 billion.
The huge investments over the years ensured a merciless selection of the memory chip providers. In 1990, according to the German electronics association ZVEI, there were still 31 competitors worldwide. Ten years later there were only 17 left. In 2010 the number of competitors finally shrank to 15. Europe had already disappeared from the map of memory chip manufacturers. There are now only four: Samsung and Hynix, Kioxia from Japan and Micron from the US state of Idaho.
Micron wants grants for factories in the US
“We are the only manufacturer of memory and data storage in the western hemisphere,” emphasized Mehrotra. The manager recently demanded massive subsidies from the US government in order to invest in America. Because the costs in the USA are up to 45 percent higher than in Asia. US President Joe Biden wants to support the chip industry with more than 50 billion dollars in order to provide the country with more of its own components in view of the supply bottlenecks that have persisted for months. The House of Representatives has not yet approved the plans.
The EU is also ready to put billions in government money into new semiconductor factories. Of the leading chip manufacturers, however, only the world market leader Intel is interested in investing in Europe with the help of the public sector. Intel produces processors, they are the brain of every computer. For months, the new Intel boss Pat Gelsinger has been haggling with national governments and the EU over the amount of the grant. According to the American’s will, a decision should be made by the end of the year.
Micron boss Mehrotra is planning to travel to Germany early next year. He doesn’t want any subsidies here, but orders. Above all, the up-and-coming business with the automotive industry is attractive, says the manager, and his customers include corporations such as BMW, Daimler and Continental.
More: Boost for the share: Infineon wants to become more profitable with the concept of the virtual factory