Micron to expand capacity with US$1.8 billion purchase of Taiwan P5 fab
Micron will acquire PSMC’s P5 fab in Tongluo, Miaoli County, Taiwan, for US$1.8 billion in cash to boost memory manufacturing capacity. The company has also sold out of high-bandwidth-memory chips through 2026 and estimates it can meet 60% of AI DRAM demand this year, signaling continued supply constraints and pricing power.
1. Micron to Acquire Taiwan P5 Fab for $1.8 Billion
Micron Technology announced it will acquire Powerchip Semiconductor’s P5 fabrication site in Tongluo, Miaoli County, Taiwan, for approximately $1.8 billion in cash. The 12-inch wafer fab, currently producing DRAM memory chips, will add an estimated 60,000 wafer starts per month to Micron’s global capacity. The transaction is expected to close in the second half of 2026, pending regulatory approval, and will be integrated into Micron’s existing Taiwan manufacturing hub to streamline logistics and reduce per-unit production costs by an estimated 5 percent.
2. Record Fiscal 2025 Results Driven by AI Memory Demand
In its fiscal year ending August 28, 2025, Micron reported revenue of $37.38 billion, a 49 percent increase from $25.11 billion in fiscal 2024. Non-GAAP earnings per share rose to $8.29 from $1.30 a year earlier, reflecting strong pricing power on high-bandwidth memory (HBM) products used in artificial-intelligence data centers. Gross margin expanded by 12 percentage points to 45.5 percent, benefiting from higher average selling prices and improved fab utilization rates above 90 percent.
3. Continued Momentum in Q1 FY26 and Sold-Out HBM Capacity
For the quarter ended November 27, 2025, Micron posted revenue of $13.64 billion, up 56.6 percent year-over-year, while adjusted EPS climbed 167 percent to $4.78. Management disclosed that its HBM inventory is fully committed through the end of 2026, leaving the company able to meet only 60 percent of forecasted AI memory demand for the coming year. Capital expenditures of $5 billion were invested in fab expansions and advanced node development during the quarter, underscoring Micron’s focus on high-margin enterprise memory solutions.
4. Supply Shortage to Extend Beyond 2026 and Valuation Metrics
Micron has warned that the global memory chip shortage will persist past 2026 as AI workloads continue to outpace capacity growth. Industry analysts project DRAM spot prices to increase another 50 percent in the first half of 2026. Despite a trailing P/E ratio near 30 and a PEG ratio below 1, Micron remains attractively valued relative to peers given its expected quadrupling of earnings over the next two years. Free cash flow is forecast to exceed $12 billion in fiscal 2026, supporting both capacity build-out and return of capital initiatives.