Micron to Acquire PSMC’s 300,000-sq-ft Tongluo Fab for $1.8B
Micron Technology has signed a Letter of Intent to acquire PSMC’s 300,000-sq-ft P5 fabrication site in Tongluo, Taiwan for $1.8 billion, with closing expected by Q2 2026. The facility will enable phased DRAM production ramp beginning in H2 2027 to meet accelerating AI-driven memory demand.
1. Explosive Revenue and Profit Growth Fueled by AI Demand
Micron delivered an extraordinary performance in its first quarter of fiscal 2026, generating $13.64 billion in revenue, up 57% year-over-year, while net income surged 180% to $5.24 billion, driving a 38.4% net profit margin. This growth was entirely driven by accelerating demand for high-bandwidth memory modules used in large-scale AI training and inference workloads. Management’s guidance for the second quarter projects further record highs across revenue, gross margin, earnings per share and free cash flow, reflecting full sell-through of current wafer production and stable pricing for AI-optimized memory throughout the remainder of 2026.
2. Undervalued Relative to Growth Trajectory
Despite tripling its market capitalization over the past year, bringing total enterprise value close to $400 billion, Micron still trades at a trailing price-to-earnings ratio of 32 and a forward multiple near 10.5, resulting in a PEG ratio of 0.58. These metrics compare favorably to peers and legacy technology giants, underscoring an unusually low valuation for a company growing revenue at nearly 60% annually and sustaining operating margins above 40%. Investors focusing on free cash flow yield, currently near 8%, may find additional appeal in a business converting over one quarter of sales into cash while expanding capacity to meet a multi-year memory supply deficit.
3. Strategic Manufacturing Expansion to Secure Future Growth
To capitalize on sustained AI memory shortages, Micron has signed a letter of intent to acquire a 300,000-square-foot cleanroom facility in Taiwan for $1.8 billion, with closing expected by the second quarter of 2026. The acquisition will add phased DRAM production capacity beginning in the second half of 2027. Concurrently, Micron has broken ground on a new domestic semiconductor fabrication campus in New York with projected capital expenditures exceeding $100 billion over the next decade. These strategic investments position the company to maintain a leadership role in high-performance memory supply while mitigating geopolitical and logistical risks inherent in a rapidly evolving global semiconductor landscape.