Micron Technology has temporarily halted construction on its proposed $4.5 billion memory-chip manufacturing plant in Taiwan, according to a Bloomberg report on Thursday, as a labor dispute with employees escalates. The facility, located in Taoyuan, was expected to be a key production hub for DRAM and high-bandwidth memory (HBM) chips, which are essential for AI data centers.
The company's shares fell about 7% on Wednesday and slipped another 2% in premarket trading Thursday, as investors weighed the potential impact on Micron's expansion plans. The news adds to existing concerns about the sustainability of the AI-driven demand boom, especially after the recent midterm election results.
Why construction was paused
Micron executives in Taiwan have effectively paused work at the site, Bloomberg reported, citing sources familiar with the matter. The company has informed Taiwanese officials and a supplier about the decision. The project, known as Fab 11E, was slated to begin production in 2028, with an estimated budget of $3 billion to $4.5 billion, including advanced equipment purchases from ASML.
The pause stems from uncertainty over labor negotiations, particularly the possibility that an agreement previously reached with one of its unions could be challenged. Micron told Bloomberg that its existing Taiwan operations continue normally and that it remains confident in maintaining business continuity for customers. The company also expressed hope of reaching an agreement with the protesting union.
Workers demand 15% of operating profits
Micron has been one of the biggest beneficiaries of the AI boom, with memory chip prices soaring and demand outstripping supply. In its recent fiscal third quarter, revenue more than quadrupled year-over-year, with gross margins in the mid-80s. However, the labor dispute has become a sticking point as employees seek higher compensation.
Workers are demanding a permanent profit-sharing arrangement that would distribute 15% of the company's global operating profits among employees, similar to plans at rivals Samsung Electronics and SK Hynix. Micron reached an agreement with its larger Taichung union in October, but the Taoyuan union remains dissatisfied with the terms. Some employees are pushing to reopen negotiations, while Micron maintains that the existing agreement is legally binding.
The Taoyuan union said it was not notified about the reported construction suspension, though it hopes the company and employees can reach a consensus. Taiwan's Ministry of Economic Affairs said it supports the legal agreement reached between the company and the union and would work with local authorities to resolve the differences.
"The government supports the legal agreement the company has reached with the union, and will shoulder and share responsibilities with the local government to help resolve the differences and create a win-win outcome," the ministry told Bloomberg.
Investors will be watching for further developments, as the suspension could delay Micron's capacity expansion and affect its ability to meet surging demand for AI memory chips. The company's stock has been volatile amid broader market concerns about AI valuations.
This article is for informational purposes only and does not constitute financial advice.
