The Six Five team discusses Micron’s $100B New York investment.
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Transcript:
Patrick Moorhead: Okay, let’s move into some chip-chip-chippery news here. We covered Micron earnings last week with a pretty big decline in the forecast, and then they follow through the next week and say, “Hey, we’re going to spend a hundred billion dollars over New York over 20 years. Screw you Texas. We don’t need you. Take you and your horse a-packing.”
Daniel Newman: Yeah. Well, I don’t have a horse, but you have several, so can I borrow one? But I don’t think I can ride, I would be thrown off the back. So…
Patrick Moorhead: I’d love to see you ride. I’d get that on video and put it up there on the YouTube.
Daniel Newman: I’ll be in my tube, my six shooters on my hip, but that’s Texas, buddy.
Listen, this is just a continuation of the announcements that we’re getting. New York, for whatever reason, is becoming a little bit like the next Silicon Valley. I don’t know Pat, but you got GlobalFoundries, we got IBM Research, and now we got
Micron building mega fabs. Hundred billion dollar, 20 year commitment with a $20 billion phase one. Talk about a big commitment to New York.
Now to the credit of the state, Pat, there must be some serious tax breaks in this deal. Because we obviously know right now, no company’s going to commit to any major project, whether that was Intel going to Ohio or this in New York, if the tax situation isn’t going to be beneficial to them. Having said that though, look, this is a really important continuation of taking what happened with the passage of the CHIPS and Science Act and making bigger commitments.
Oh Pat, by the way. Tax break, it’s 5.5 billion of incentives. So it’s not inconsequential, and I’m not sure that’s going to be all of it, but that’s what they’re saying it’s going to be in terms of incentives. You and I have talked a lot about Micron, and obviously the company has come out with some softer guidance, slowing numbers. The company had an incredible run during the pandemic. And guess what? This is literally the same thing we just talked about with AMD.
Micron makes memory, which is tied directly to compute. There’s a very strong correlation, more compute, more memory. And they have a pretty significant business tied to the PC. And so when you have a big decline in pc, so you’ll see those numbers, you can be certain that it’s going to be a decline for Micron. Now the good news, and we’ve talked about this, is that Micron has also invested very heavily in diversification of its business to have more of the memory technologies for things like automotive, Edge, IoT, Data Center. And those should be areas that could help the company keep a more robust footing.
But long story short, we need to separate the short term gyrations that semiconductors… booms and busts that happen every handful of years, and talk about the national security technology leadership, and really the purpose that stood behind the implementation of the CHIPS and Science Act. And that is that the United States is almost 100% dependent on China and Taiwan for the manufacturing of all leading edge, and that we not only need more leading edge, but we need all manufacturing, we need capacity here in the United States.
So whether it’s GlobalFoundries, whether it’s Micron, whether it’s Intel, whether it’s Samsung, or even TSMC, we need more capacity here. And so having more chip building here is going to be important. And Micron, I think, is making the right long term decision to continue to invest here. But to your point Pat, I’ll finish where I started. Would have been awesome in Austin, but congratulations to New York.
Patrick Moorhead: Micron currently has the highest density storage and is first to market with DDR5. This company is going to do really well. Just like Logik in chips, leading in transitions is a big deal. And whether it’s memory, whether it’s storage, whether it’s things like CXL, Micron is leading in those areas over Samsung and Hynix.
Challenges, though. The biggest challenge and the biggest threat, I would say, at the low end of the margin spectrum, is the new Chinese manufacturers that are standing up and building a bunch of memory. There was an interesting rumor about Apple, who is going to start buying its memory from Chinese manufacturers for its iPhone. Wave that flag, Apple.
But anyways, I was very skeptical that Micron would have landed in Texas, because their archrival Samsung committed to $200 billion in 11 cities in Texas over two decades. And Daniel, don’t you love… We should put out a number about what we think we’re going to do in two decades, and forecast that and put that out there.
Daniel Newman: Yes. And I want immediate valuation and possibly even some liquidity based upon it.
Patrick Moorhead: Exactly. Pay me up front for it please. But anyways, I was skeptical because I couldn’t imagine both Micron and Samsung near the same city. As much as I would love to blow up and attack and blame our city, our woke city leaders, on shooing people away, I can’t do that in here. I never thought it was going to happen. But I hope this is not a trend where semiconductor companies are not choosing Austin, but choosing New York. And New York for decades has been a leader in semiconductor research or even manufacturing, so congratulations to New York.
Author Information
Daniel is the CEO of The Futurum Group. Living his life at the intersection of people and technology, Daniel works with the world’s largest technology brands exploring Digital Transformation and how it is influencing the enterprise.
From the leading edge of AI to global technology policy, Daniel makes the connections between business, people and tech that are required for companies to benefit most from their technology investments. Daniel is a top 5 globally ranked industry analyst and his ideas are regularly cited or shared in television appearances by CNBC, Bloomberg, Wall Street Journal and hundreds of other sites around the world.
A 7x Best-Selling Author including his most recent book “Human/Machine.” Daniel is also a Forbes and MarketWatch (Dow Jones) contributor.
An MBA and Former Graduate Adjunct Faculty, Daniel is an Austin Texas transplant after 40 years in Chicago. His speaking takes him around the world each year as he shares his vision of the role technology will play in our future.
