Micron has effectively fully suspended construction of its Fab 11E HBM plant under construction in Taoyuan, Taiwan. The breakdown of profit-sharing negotiations with the labor union has put an investment plan worth $3 billion-$4.5 billion at risk.
US semiconductor major Micron Technology is reported to have almost halted construction of a new memory plant in Taoyuan, Taiwan. Only minimal work is being carried out on-site to ensure safety, and the site is expected to remain frozen going forward.
The Fab 11E plant was planned to use ASML’s most advanced lithography equipment to produce HBM and advanced DRAM, with supplies to companies including Nvidia scheduled to begin in 2028. The investment is estimated at approximately $3 billion-$4.5 billion and the plant had been positioned as an important site for meeting growing AI-related demand.
The labor union is seeking, among other things, the distribution of 15% of operating profit in cash to employees worldwide. It rejected the tentative agreement and is calling for renewed negotiations. The union had secured the right to strike, raising the possibility that the conflict in the Taoyuan region could become prolonged.
The Taiwan government has stepped in to resolve the situation and indicated that it intends to mediate the labor-management negotiations. Taiwan’s Ministry of Economic Affairs said the government would support a legal agreement and indicated that dialogue toward resolving the dispute would continue.
From a market and supply perspective, existing production lines are said to be operating normally, and some believe that supplies are unlikely to be disrupted immediately even if the dispute continues for an extended period. At the same time, the extent of Micron’s dependence on Taiwan and the structure of its labor-cost burden could affect its strategy going forward.