Micron freezes Taoyuan fab construction after labour dispute

Amara Osei

As of November 5, Micron Technology had all but halted construction of its US$3 billion-US$4.5 billion Fab 11E memory-chip plant in Taoyuan, which Micron had scheduled to open in 2028, according to people familiar with the matter.

Only minor safety work continues at the site, after which construction will stop, the people said. Micron has notified Taiwanese officials and a supplier about the suspension. The company did not address the project in its statement.

What has Micron suspended?

Micron planned to produce high-bandwidth memory (HBM) and DRAM at Fab 11E using top-end equipment from ASML Holding NV. One person said the project budget included ASML purchases. The plant would rank below the industry's largest facilities, but its planned HBM is closely linked to Nvidia Corp accelerators and the global AI data-centre build-out.

HBM and DRAM remain in short supply, and prices are rising sharply. Micron's statement did not address the suspension:

“Taiwan plays an important role in Micron’s global footprint, and our operations today continue as normal,” Micron said. “We are confident in maintaining business continuity for our customers.”

The pause affects a future production base rather than current output.

What can unwind the labour agreement?

Tensions between Micron and its workers flared this year after employees demanded higher compensation linked to record profits from the AI build-out. Micron reached a deal with the larger of its two unions in October, but the company may need to renegotiate because some employees balked at the terms, according to the people. Executives also cited the risk that an agreement with a local union could be overturned.

The Taoyuan union represents fewer than 3,000 workers, while most of Micron's 15,000 Taiwan employees sit in the much larger Taichung union. Chair Jerry Lin said the Taoyuan group wants Micron to distribute 15% of operating profit to global employees, citing similar measures at Samsung Electronics and SK Hynix. It also wants all-cash incentives rather than partial stock awards.

The Taoyuan union plans to recruit members from Taichung to form a larger bargaining group. Lin said it will seek to annul the existing pact and then demand renewed negotiations.

Micron believes its agreement with the larger union is legally binding, according to one person familiar with the matter. Taichung chair Mark Hsu also accepted its legality while respecting the smaller union's organising move.

Micron has not disclosed the standing agreement's terms. The ministry supplied the pay figures, while employment site 104 Job Bank provided the market benchmark:

• Junior engineers' annual packages would rise more than twofold to an average NT$4 million (US$121,450 or RM491,528).
• Senior engineers' packages would triple to NT$6 million.
• The mean annual pay for an engineer at listed Taiwanese semiconductor companies was NT$2.58 million in 2025, according to 104 Job Bank.

Two immediate variables define the next step: whether the Taoyuan union can add Taichung members and whether Micron must reopen the October terms.

How exposed is Micron to Taiwan?

Micron has invested close to US$50 billion (RM202 billion) in Taiwan over three decades. Taiwan produces three-fifths, or 60%, of Micron's global DRAM output, the memory commonly used in computers and phones. The island also produces a large share of its HBM for AI systems.

Taiwan is Micron's largest site by personnel, with 15,000 employees, or about one-quarter of the company's total workforce. Micron is also Taiwan's largest foreign investor, making any scale-back more significant than Fab 11E's relatively modest size would suggest.

Fab 11E is not Micron's largest Taiwanese plant, but it serves as a showpiece for the US group's local presence. The suspension raises the possibility that Micron will reconsider its broader manufacturing hub in Taiwan and its ability to compete with Samsung, SK Hynix and China's CXMT. The wider memory market already faces persistent shortages.

Taiwan's economy and stock market have benefited from the AI boom, with Taiwan Semiconductor Manufacturing Co building plants at an unprecedented pace. That expansion has not removed geopolitical risk, as potential Chinese military intervention threatens Taiwan's viability as a long-term investment destination.

The dispute now links a local pay negotiation to Taiwan's wider investment case.

What have officials and Micron said?

Taiwan's Ministry of Economic Affairs did not comment on the construction pause but said the government continues helping Micron implement its investment plans.

“The government supports the legal agreement the company has reached with the union, and will shoulder and share responsibilities with the local government to help resolve the differences and create a win-win outcome,” the ministry said.

The Taoyuan government said it had not received notification of a suspension. It said it hopes Micron and the employees can reach consensus.

Micron is accelerating factory preparations outside Taiwan while considering a slowdown on the island. It has committed US$250 billion to US manufacturing, including New York state, and is expanding in Japan and Singapore.

The company can restrain capital spending in Taiwan while still adding capacity in other markets.

What happens next?

Talks with the Taoyuan union remain ongoing.

“We look forward to reaching an agreement,” Micron said.

Until the union and Micron settle the pay agreement and the site's status, construction on the US$3 billion-US$4.5 billion plant will remain largely frozen.