While Micron Technology Inc. breaks ground today for a new manufacturing plant, its computer memory chips continue to shatter sales records.
The Boise-based company has apparently chosen a good moment in the volatile semiconductor age to double its production capacity. Micron reported record third-quarter earnings in June that more than doubled totals for the same period last year as demand for its primary computer chip remained strong and production skyrocketed.The memory chip market is expected to triple to $90 billion annually in four years. Semiconductor fabrication plants are nearly maxing out, running at 94 percent capacity worldwide.
"When it comes to memory chips, they can't make them fast enough. The situation is the industry must expand, and it must expand rapidly," said Kevin Brett, spokesman for the Semiconductor Industry Association in San Jose, Calif.
Industry analysts expect sales of personal computers and other electronic gadgets to continue soaring off the charts in the next three years. And when Microsoft Windows '95 hits the streets, even more memory will be chewed up.
"We continue to see a strong PC market worldwide and in North America through 1995 and into 1996," said Ronald Bohn, a semiconductor analyst at San Jose-based Dataquest Inc. "That's very good news for Micron."
It's also good news for Utah political and business leaders who haven't stopped grinning since March, when Micron announced plans to build a $1.3 billion fabrication facility at the base of Traverse Ridge, halfway between Provo and Salt Lake City. A successful Micron bodes well for Utah's already healthy economy. The nearly million square feet of production and administration space will eventually hold jobs for 3,500 people.
Gov. Mike Leavitt, Utah County Commissioner Gary Herbert and Lehi Mayor Bill Gibbs are slated to speak at this morning's ceremonial groundbreaking. Earthmovers and tractors began clearing land on the former dry farms two weeks ago.
Micron is one of only a few memory chip makers, and the only American-based company, scheduled to build in the United States this year. Company officials want the Lehi division to be partially operational in one year. The company specializes in dynamic random access memory (DRAM) chips.
"It's a big story," Bohn said. "It's particularly a big story because it's a memory fab being built in North America."
Japanese electronic giant Fujitsu and Korea's Hyundai Electronics intend to construct plants in Oregon, the nation's current semiconductor hot spot. Samsung and Toshiba also are searching for a North American site. Motorola recently optioned land outside Richmond, Va., but hasn't determined what types of chips it will make if the fab is built.
Semiconductors and semicon-ductor technology are a pervasive but generally unseen aspect of everyday life. The fingernail-sized electronic circuits etched on silicon are critical to operation of virtually all electronics from automatic coffee makers and anti-lock braking systems to cellular phones and supercomputers.
"In order to meet the growing global demand, domestic and foreign semiconductor manufacturers must undertake an aggressive capital spending program," Andrew A. Procassini, president of the Semiconductor Industry Association, said in a recent news release.
Micron is doing just that. It's heady $1.3 billion Lehi project exceeds the company's net worth by $3 million. It's banking that the world's healthy appetite for electronics will persist.
Global chip sales are projected to rise almost 40 percent in 1995, reaching $142.3 billion, according to the World Semiconductor Trade Statistics (WSTS). The organization expects double-digit growth rates for the three succeeding years, culminating in a $233 billion industry by the end of 1998.
North America, the world's largest semiconductor market, will retain that distinction for the next four years, according to WSTS.
But the semiconductor industry rises and falls like an ocean tide.
Micron founder Joseph L. Parkinson sold off all his stock after abruptly leaving the company last year.
"There'll be another bust, sure as spring follows winter," he told Forbes magazine in April. "I don't care what anybody says - DRAMs are a boom-and-bust commodity. The cycle is about to turn."
Economists are forecasting a slight recession in 1997. But Brett said the industry doesn't anticipate a slowdown.
For now, Micron's on a roll.
The company said net income for the three months that ended June 1 hit $220.2 million on record three-month sales of $761.2 million. That compared to profits of $104.3 million on $426.4 million in sales during the March-May period of 1994. Second-quarter profits last winter were $183.5 million on sales of $628.5 million.
Micron, which split its stock two-for-one last month, said profit for the first nine months of its fiscal year totaled $563 million, a 117 percent increase from the $258.6 million earned during the nine months that ended on June 2, 1994.
The company's success could also eventually mean a major payoff to the state. Based on the information for the past nine months of operation, Micron's Idaho state corporate tax payment during the new budget year could total $75 million even after adjustments for investment tax credits.