By Adam Clark and Callum Keown
Micron Technology was falling 4% early Monday after the memory-chip maker's South Korean rivals SK Hynix and Samsung Electronics made huge spending pledges.
SK Hynix and Samsung are set to spend a combined 800 trillion won ($518.58 billion) to build new chip-making hubs in southwest Korea, the country's industry minister said in a briefing on Monday.
Micron is the chief rival of South Korea's Samsung and SK Hynix in making high-bandwidth chips, which are crucial for the latest AI chips from the likes of Nvidia. All three are making a grab for the lucrative market.
Micron shares were down 4% at $1,087.16 in premarket trading Monday, after falling 6.7% on Friday.
It might not be all that bad for Micron, though. Big chip manufacturing plants take years to build — Micron's own $100 billion project in New York state was announced in 2022 and isn't expected to start production until 2030.
As Barron's has written, no new major memory-chip manufacturing capacity will begin to come on line until about a year from now, with more slated for 2028. The Korean additions may simply be too far in the future for investors to worry about right now.
Additionally, Micron is already securing long-term supply deals with minimum price agreements. Those contracts are set to constitute about 40% of Micron's revenue, and the company hopes to raise that percentage. That means by the time the additional Korean manufacturing capacity is in operation, it could be shielded from the pricing effects.
Write to Adam Clark at [email protected]
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