Micron Technology (MU) stock surged by more than 5% through midday trading on Monday after the digital memory and storage provider announced plans to build a second chip manufacturing facility in Taiwan.
The new chip facility will be built at a newly acquired site from Powerchip Semiconductor Manufacturing Corp., and it will produce cutting-edge DRAM products, such as high-bandwidth memory (HBM), to meet AI demand.
Investors were also preparing for the company’s fiscal second-quarter earnings report due after the closing bell on Wednesday.
Micron is expected to report $19.3 billion in revenue, according to estimates compiled by S&P Global Market Intelligence, representing growth of more than 40% quarter-on-quarter and more than 130% year-on-year. Analysts are estimating adjusted earnings of $8.66 per share, more than 80% over the prior quarter and more than 450% higher than a year ago.
Shares in Micron, the largest American manufacturer of memory chips, are up more than 340% year-on-year. At the same time as the company is investing its new Taiwan facility, Micron is also spending $50 billion to double the size of its manufacturing facility in Boise, Idaho, where the company is based.
The construction will include two new chip fabrication facilities, The Wall Street Journal reported.
S&P Global analyst Melissa Otto noted in a recent memo that stocks such as Micron and Sandisk (SNDK), which are up more than 1,200% from a year ago, have heavily benefited from the rotation out of software into memory, which is poised to be a large beneficiary of the AI boom and related drive for computing power.
Memory chips are key components of the data centers that Big Tech is planning to spend hundreds of billions of dollars building out in 2026 as the demand for AI continues to surge. The processing chips designed by companies like Nvidia and AMD require increasing amounts of memory chips to function.
“MU’s continued strong technological execution and discipline on capex is resulting in what we view to be a paradigm shift in the memory sector,” Deutsche Bank analyst Melissa Weathers wrote in a recent client note.
She added: “We are seeing stronger evidence of a memory industry that is structurally low on supply, which could sustain for multiple years to come.”
Jake Conley is a breaking news reporter covering US equities for Yahoo Finance. Follow him on X at @byjakeconley or email him at jake.conley@yahooinc.com.