Micron pauses Taiwan plant construction as union demands higher pay

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Micron pauses chip project

Highlights

Micron halts Taiwan chip plant work amid a labor dispute.
The $4.5 billion plant was set to open in 2028.
Taiwan makes 60% of Micron DRAM, raising delay risks.

The U.S. chipmaker has largely stopped work at its Fab 11E facility in Taoyuan, according to Bloomberg. Micron has informed Taiwanese officials and a supplier of its plans, although limited work continues to secure the site.

Labor dispute disrupts factory plans

Micron had allocated between $3 billion and $4.5 billion to the Taoyuan project, including advanced manufacturing equipment from ASML. The factory was scheduled to begin operations in 2028, producing dynamic random access memory and high-bandwidth memory used alongside Nvidia AI processors.

The disagreement centers on how employees should share in profits generated by strong demand for AI chips. Micron reached an agreement with its larger Taiwanese union in October, but some workers are challenging the terms and seeking another round of negotiations. The smaller Taoyuan union wants 15% of operating profit distributed to employees worldwide, along with cash-based incentives.

Taiwanese authorities have expressed support for the existing agreement and efforts to resolve the dispute. The deal would more than double average annual compensation for junior engineers to NT$4 million ($121,450), while senior engineers could receive NT$6 million. Micron says its current Taiwanese operations continue normally.

Taiwan remains central to Micron production

Taiwan accounts for approximately 60% of Micron's global DRAM output and produces a substantial share of its high-bandwidth memory. The company employs about 15,000 people on the island, representing roughly one-quarter of its worldwide workforce.

Micron has invested nearly $50 billion in Taiwan over three decades, making it the island's largest foreign investor. A prolonged suspension could complicate its manufacturing strategy as competitors Samsung Electronics and SK Hynix expand their memory businesses.

The company is also developing production capacity elsewhere, including a planned $250 billion manufacturing investment in the United States and additional expansion in Japan and Singapore.

AI memory supply faces another constraint

The construction pause comes as demand for memory chips continues to exceed available supply. High-bandwidth memory is particularly important for AI accelerators, and shortages have pushed prices higher across the industry.

A delay beyond the planned 2028 opening would remove a potential source of additional production capacity from Micron's schedule. Although the Taoyuan factory is smaller than some of its existing facilities, its advanced equipment and focus on AI-related memory make it strategically significant.

The dispute also highlights a growing challenge for semiconductor manufacturers: balancing large capital investments with employee demands for a greater share of industry profits.

Earlier, we reported that Micron plans $10 billion AI memory research lab investment in Boise.

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