By CIO Insider Team
 

Shares of Taiwan’s Powerchip Semiconductor Manufacturing Corp surged nearly 10 percent on Monday following an announcement that the US-based memory chipmaker Micron Technology plans to acquire one of the company’s fabrication facilities, a move seen as strengthening Micron’s manufacturing footprint in Asia.

Micron technology announced that it has entered into a letter of intent to buy the Powerchip P5 fabrication plant in Tongluo, Miaoli County, Taiwan, at 1.8 billion in cash. It is estimated that the deal will be a big growth in capability of Micron to do advanced manufacturing especially in the area of making memory semiconductors.

The acquisition highlights how Micron has been planning to acquire more manufacturing capacity due to increasing demand for memory chips in the world which is fueled by artificial intelligence, data centers and high-performance computing.

Taiwan is a strategic node in the world semiconductor supply chain, and with an already existing and operational fabrication node, the acquisition enables Micron to short-cut capacity growth without having to go through extended lead times commonly experienced with the construction of new plants.

In the case of Powerchip, the sale is an act of strategic value creation on its assets and to build a stronger financial base. Investors took the news as a positive impetus and drove the company shares to the sky in the initial trading, as it indicated the confidence in the valuation and the possibility of using the capital to be deployed in other growth spheres.

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According to analysts in the industry, the acquisition has the potential to further enhance the partnership between Micron and Taiwan semiconductor industry that has the world leading chipmakers, suppliers and talented workforce. Although the deal remains under regulatory license and the finalization of conclusive deals, it is an indication of further merging and repositioning in the semiconductor industry.

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The proposed acquisition comes at a moment when the world's chipmakers are redefining supply chains based on geopolitical factors and growing pressure to acquire secure bases of production. The deal, should it come to fruition, would also serve to establish Micron in Taiwan even more, but more importantly it will showcase the longevity of Taiwan as a semiconductor hub in the worldwide industry.