Powerchip Semiconductor Manufacturing Corporation (PSMC) announced on the 17th that it has signed an exclusive Letter of Intent (LOI) with Micron Technology, Inc. (Nasdaq: MU) to sell its P5 fabrication site in Tongluo to Micron for total cash consideration of US$1.8 billion. Micron will establish a long-term foundry relationship with PSMC on DRAM advanced packaging wafer manufacturing. Furthermore, Micron will assist PSMC in enhancing its existing specialty DRAM process technologies at it’s Hsinchu P3 fabrication. Through this move, PSMC aims to strengthen its financial structure. Amidst the global recovery of the memory market, PSMC plans to integrate advanced packaging technologies and materials—such as 3D Wafer-on-Wafer (WoW) and Interposers—to pivot into a key player within the AI supply chain.

Dr. Frank Huang, chairman of PSMC, stated that the current wave of AI applications is driving a global upturn in the DRAM industry. The new Tongluo fabrication, capable of rapid capacity expansion, has become a strategic pivot for a "win-win" collaboration between Micron and PSMC. Beyond improving PSMC’s financial health, the company will be integrated into Micron’s DRAM advanced packaging supply chain upon passing certification. The collaboration to refine specialty DRAM processes at the P3 fabrication will significantly optimize PSMC’s operational structure.

Dr. Frank Huang further pointed out that PSMC will target the AI supply chain by reorganizing its production resources (currently three 12-inch and two 8-inch wafer fabs). The company will focus on high-value-added wafer foundry products required for AI, including:3D AI DRAM and Wafer-on-Wafer (WoW)、Silicon Interposers and Integrated Passive Devices (IPD)、Power Management ICs (PMIC) and Power Components (GaN/MOSFET). PSMC intends to gradually phase out non-AI-related business to optimize its product portfolio and enhance long-term profitability.

Regarding internal adjustments, Martin Chu, president of PSMC, stated that the company will systematically relocate personnel, equipment, and product lines from the Tongluo fabrication back to the Hsinchu site, ensuring zero production downtime and no impact on the Fab IP business. While replacing legacy equipment in Hsinchu, the company will phase out low-margin products to reduce reliance on mature process foundry services.

Dr. Frank Huang emphasized that this partnership will significantly elevate domestic memory technology levels and supply chain completeness. It strengthens Taiwan's critical position in the global semiconductor industry and consolidates the nation’s competitive advantage in future AI-centric technologies.

Regarding the execution of this cross-border cooperation, PSMC noted that specific details will depend on the final formal contract. Following the signing of the formal agreement and regulatory approval, the sale of the plant is expected to be completed in the second quarter of this year.