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Micron taps Singapore as launch pad for NAND offensive

US chipmaker leapfrogs rivals to 176-layer 3D-flash memory milestone

Micron has invested heavily in its Singapore hub, where the company now makes what it says are the world's first 176-layer NAND chips. (Photo courtesy of Micron Technology)

TOKYO -- U.S. chipmaker Micron Technology has put Asia at the center of its strategy for the NAND flash memory market, leveraging Singapore's generous government support as it looks to catch up with deep-pocketed rivals.

Micron sits solidly near the top of the market for DRAM, or dynamic random access memory, chips with a 23% share, part of a global oligopoly with South Korea's Samsung Electronics and SK Hynix. But it ranks only fifth in NAND at 11%, well behind Samsung and the alliance of Japan's Kioxia Holdings -- formerly known as Toshiba Memory -- with U.S.-based Western Digital.

Micron is working to change that. The company said in November that it began mass production of the world's first 176-layer NAND chips at its Singapore fabrication facilities. The move underscores the region's growing importance as an investment destination for chipmakers as U.S.-China frictions show little sign of abating.

"For the first time in our history, Micron has technology leadership in both DRAM and NAND simultaneously," CEO Sanjay Mehrotra said in a January earnings call.

NAND memory is used in devices including smartphones and personal computers, as well as in data centers, an area of intense competition among American and Chinese technology companies. The capacity of NAND chips can be improved by layering more memory cells on top of each other, allowing for larger quantities of data to be stored in less space.

Micron has started shipping 176-layer NAND chips, including in solid-state drives under its own brand. Samsung and the Kioxia-Western Digital partnership have yet to bring any 176-layer products on the market, while SK Hynix has said it plans to begin mass production around mid-2021.

Solid-state drives are among the applications for Micron's 176-layer NAND chips.   © Reuters

Though other technologies such as yield improvements also play important roles in the competition for chipmaking supremacy, this development in layering could serve as a springboard for Micron's NAND operations.

A keystone of this business is Micron's production hub in Singapore, where the chipmaker has invested more than $15 billion since entering the market in 1998 with the acquisition of Texas Instruments' memory operations. Micron completed a third NAND fab in Singapore in 2019.

Development, production and quality control are all concentrated in one place at the Singapore hub, said Manish Bhatia, executive vice president for global operations.

Singapore is known for wooing the semiconductor industry. A Boston Consulting Group report examined capital spending and 10-year operating costs for advanced memory fabrication sites in different markets, with the U.S. as its baseline of 100. Singapore came in at just 79 -- below Japan at 99 and South Korea at 81 -- thanks largely to tax breaks and incentives that reduce the burden of capital spending.

The city-state also has enacted policies to support research and development. Its Research Innovation Enterprise 2020 plan covering 2016-20 positioned advanced manufacturing technology such as factory automation as a priority, and Micron was brought on board as a partner. The RIE 2025 plan for the next five years focuses on applying technologies such as artificial intelligence to manufacturing.

Improving memory prices buoyed Micron's earnings in the three months through November. Revenue rose 12% on the year to $5.77 billion, while operating profit jumped 67% to $866 million.

But while the success of the chipmaker's cutting-edge technology will be crucial to its prospects, Micron also needs to navigate a wave of consolidation sweeping the industry.

SK Hynix, the world's fourth-largest NAND maker, said last year it will buy No. 6 Intel's NAND business, a deal that would propel the South Korean company to third place behind Samsung and Kioxia-Western Digital. SK Hynix also owns convertible bonds in Kioxia that would let it take a 15% stake, a right it plans to exercise once the Japanese company goes public.

Micron ended its NAND partnership with Intel in 2018.

In this environment, deals will be critical for access to resources such as chipmaking equipment and materials. If Micron is left behind, "it could end up being the sole loser," an analyst said.

Taiwan Semiconductor Manufacturing Co. -- a fellow chipmaker, though in a different area of the industry -- plans to invest a record $28 billion this year. Samsung, a direct rival to Micron, is set to pour $30 billion into its semiconductor operations.

Besides its chip development facilities in the U.S. and NAND hub in Singapore, Micron produces DRAM in Japan and Taiwan. The company plans about $9 billion in capital spending during the fiscal year ending in August, with much of this likely going to Asia, and is slated to open a memory assembly and test facility in Malaysia this year.

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