What's bogging down the data center trade has nothing to do with demand

Breaking news from the markets: Nine thousand people working long hours, six days a week, to meet a deadline for full production of memory chips by the first quarter of 2027. The workers know they can each make $200,000, maybe more. They seem united in their mission; no Potemkin village going up in Boise, Idaho.

Just two state-of-the-art fabs for the number three producer of dynamic random access memory (DRAM), Micron . All for one reason: Demand for DRAM is so strong that this proud American company — which stuck with memory-chip manufacturing even as peers, including Intel, closed U. factories — needs to get more chips into data centers as quickly as possible.

Economic Details

Sanjay Mehrotra, Micron's CEO since 2017, does not want his company to be the bottleneck in the great AI build-out in the U. and around the world. He cares passionately about how well Micron is doing, how many thousands of patents this innovative company amasses, and how specialized and powerful his semiconductors are, especially high-bandwidth devices.

Mehrotra hears the argument from influential voices, including Tesla and SpaceX CEO Elon Musk, that the balance of power in the data center buildout is shifting toward DRAM makers. Maybe he reads the postings. But one look at the commitment you see in Boise, the kind of job you might think could only be done by China's fabled Eighth Route Army, tells you he doesn't want that kind of chokehold power.

Sanjay, as everyone knows him, would rather have it stem from better, more powerful chips and the proprietary intellectual property they contain. He wants to take share from Samsung and the all-powerful SK Hynix, rather than wield the de facto power that comes from being a bottleneck. He wants to beat the Koreans, not hold Musk or any other hungry data center or neo-hyperscaler CEO hostage to tight memory supply.

Analyst Views

He believes Micron can do that even as its rivals make their chips in the obviously lower-cost geographies. is a higher-cost producer. But Mehrotra says technology can make up the difference.

Two massive fabs are taking shape in Boise, and their importance can't be overstated. On top of that, Micron is building two fabs in Clay, New York, near Syracuse, this time hiring both union and non-union employees, as in Boise. They could be tougher.

Will the unions allow employees who want to work six days a week to do so? Will it matter that it's a CHIPS and Science Act project? Micron's putting up $100 billion here.

Financial markets are tracking the development closely as investors assess the likely impact.