The Zhitong Finance App learned that, according to people familiar with the matter, due to a protracted labor dispute, Micron Technology (MU.US) has suspended plans to build a memory chip factory in Taiwan Province of China, overshadowing the prospects for this important production base for key AI components.
According to people familiar with the matter, the US company has basically stopped work at its factory in Taoyuan City in northern Taiwan Province. Company executives are concerned about growing uncertainty, including the risk that agreements reached with local unions may be overturned. People familiar with the matter said that Micron has informed local officials and a supplier that it is suspending plans to build a factory in the city.
This year, the tension between Micron and its workers heated up after employees demanded higher pay and hoped to get more out of the record profits brought by AI construction. Micron's plans in Taiwan Province of China may be disrupted, and Taiwan Province of China produces three-fifths of the US company's conventional chips, threatening further pressure on a market already facing a general shortage of memory chips.
Over the past 30 years, Micron has invested nearly 50 billion US dollars in Taiwan Province of China. The original plan was to use top ASML.US (ASML.US) equipment to produce high-bandwidth memory (HBM) and DRAM at its new plant in Taoyuan. Although it's not a very large factory by modern standards, these components are closely linked to the Nvidia (NVDA.US) accelerator and the global AI data center boom, and the supply is extremely scarce, and prices are soaring.
Micron said in a statement: “Taiwan Province of China plays an important role in Micron's global layout, and we are currently operating as usual.” However, the statement did not respond to issues at the Taoyuan factory area. “We are confident in maintaining business continuity for our customers.”
People familiar with the matter said that Micron reached an agreement with the larger of its two major trade unions in October, but the company may have to renegotiate because some employees are dissatisfied with the terms.
The shutdown raised the possibility that Micron might reconsider its plans for a broader manufacturing hub in Taiwan Province, which helps it compete with South Korea's Samsung Electronics, SK Hynix, and China's Changxin Storage.
A person familiar with the matter said that Micron has budgeted 3 billion to 4.5 billion US dollars for the Taoyuan plant, including the purchase of Asmack equipment. People familiar with the matter added that some minor work to ensure safety is still being carried out at the site, but construction will be frozen later. The plant, known as Fab 11E, was originally scheduled to start production in 2028.
Micron is the largest foreign investor in Taiwan Province of China, and if the company were to scale down locally, it would be a major blow to the region.
Taiwan's economy and stock market are being boosted by the AI boom, and companies such as TSM.US are building factories at an unprecedented rate. However, its viability as a long-term investment destination is being threatened by the risk of potential military intervention.
Even though Micron is considering slowing down in Taiwan Province of China, it is stepping up preparations for factories in other regions. The company promised to invest $250 billion in manufacturing in the US, including New York State. It is also expanding in Japan and Singapore.
The department responsible for economic affairs in Taiwan Province of China said in a statement: “The competent authorities support the legal agreements the company has reached with trade unions and will share responsibilities with local governments to help resolve differences and create win-win results.” The local government in Taoyuan said it has not received a notice to stop work, but it is hoped that Micron and its employees can reach an agreement.
The Taoyuan plant is not Micron's largest factory in Taiwan Province, but it is a signature project for the American company, which has a huge presence there.
Taiwan Province of China currently accounts for 60% of Micron's global DRAM (Dynamic Random Access Memory) output, a commonly used storage format for computers and mobile phones. The region also produces a significant portion of its high-bandwidth memory (HBM) for AI systems.
In terms of personnel, Taiwan Province of China is Micron's largest base, with 15,000 employees, accounting for about a quarter of the company's total workforce. The Taoyuan trade union has fewer than 3,000 representatives, and most of the remaining employees have joined the much larger Taichung trade union.
The Taoyuan Union asked Micron to distribute 15% of its operating profit to global employees on the grounds that Samsung and SK Hynix have taken similar measures. Trade union chairman Jerry Lin (Jerry Lin) said that employees also want full cash incentives rather than partial distribution in the form of shares.
Jerry Lin said that the union is now trying to recruit members from the Taichung trade union to form a larger organization to help annul the existing agreement, and then ask Micron to restart negotiations.
Although Micron did not disclose the terms of the existing agreement, the economic affairs department of Taiwan Province of China said that the agreement would more than triple the average annual salary of junior engineers to NT$4 million (about US$121.45 million). Senior engineers will receive a threefold increase to NT$6 million. According to data from the job search website 104 Human Resources Bank, the average annual salary of engineers at local listed semiconductor companies in 2025 was NT$2.58 million.
According to a source familiar with the matter, Micron is convinced that the agreement reached with the larger trade union is legally binding. The president of the Taichung Trade Union also acknowledged its legality, but said he respected the move of smaller trade unions to form larger organizations.
Negotiations with the Taoyuan Trade Union are still ongoing. “We look forward to reaching an agreement,” Micron said.