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China bans Micron from key infrastructure projects
03:07 - Source: CNN

Micron said Friday it was committed to China and would invest 4.3 billion yuan ($603 million) over the next few years in its chip packaging facility in the city of Xian.

Micron, the biggest US memory chipmaker, was last month targeted by China’s cyberspace regulator, which said the firm had failed a network security review. The Chinese regulator added that it would block operators of key infrastructure from buying from the company.

Micron made no mention of the regulator’s decision in its Friday statement, posted on WeChat.

“This investment project demonstrates Micron’s unwavering commitment to its China business and team,” it quoted CEO Sanjay Mehrotra as saying.

The investment will include buying packaging equipment from a Xian-based subsidiary of Taiwan’s Powertech Technology Inc, which Micron has been using in the factory since 2016, the company said.

Micron will also open a new production line at the site to manufacture mobile memory, storage and solid-state drive products to strengthen the plant’s packaging and testing capabilities.

Powertech said in a separate statement that the plan for Micron to buy the equipment was part of the 2016 agreement between the firms, so the financial impact on Powertech would be limited.

Micron, China’s commerce ministry and the Cyberspace Administration of China did not immediately respond to requests for comment.

Micron did not disclose the value of the deal with Powertech but said it would offer contracts to 1,200 employees of the Taiwanese company’s Xian subsidiary and that the investment would create an additional 500 jobs.

This would bring Micron’s workforce in China to more than 4,500 people, the company added.

In May, Micron forecast a hit to revenue in the low-single to high-single digit percentages after the China ban. A Reuters review of more than 100 public government tenders found that Chinese authorities were already scaling back purchases of Micron’s chips before the ban.