AI Memory Demand to Last Until 2036! GlobalWafers Secures 10-Year Long-Term Agreement and $500 Million Support from Micron, Hsu Hsiu-Lan: Texas Phase II Expansion Inevitable

AI is accelerating the localization trend across the semiconductor supply chain. GlobalWafers (6488) announced today (9th) that it has deepened its long-term strategic partnership with Micron (Micron, NASDAQ: MU). Micron will provide $500 million (approximately NT$14.5 billion) in strategic financial support, and both parties plan to sign a 10-year Long-Term Agreement (LTA), setting a new record for the longest LTA in GlobalWafers' history. Chairman Hsu Hsiu-Lan revealed during an evening online press conference that, as customers seek to increase local supply ratios in the U.S., the Phase II expansion of its 12-inch silicon wafer plant in Texas has become 'inevitable,' reflecting a new investment cycle driven by AI, high-performance computing (HPC), and data center demand that is becoming longer and more stable.

GlobalWafers stated that this collaboration includes not only Micron’s $500 million strategic funding but also the establishment of a long-term supply framework through the 10-year LTA. GlobalWafers will supply advanced semiconductor silicon wafers steadily based on long-term customer demand, supporting the development of AI, HPC, data centers, and next-generation memory technologies, while further enhancing the resilience of the U.S. semiconductor supply chain and critical material supply.

Hsu Hsiu-Lan highlighted three key significances of this collaboration. First, it reflects customer confidence in GlobalWafers’ long-term supply capability, global production footprint, and supply chain resilience. Second, it confirms that demand for AI, HPC, data centers, and advanced memory is not a short-term economic cycle but a long-term trend. She stated bluntly that signing a 10-year LTA means 'customers see further than we do,' and their willingness to make such a long-term commitment demonstrates strong confidence in the current AI-driven cycle—'This cycle is longer and more confident than previous economic cycles.'

The third significance is enhancing GlobalWafers’ advanced wafer manufacturing and local supply capabilities in the U.S., strengthening the stability and resilience of critical material supply. She disclosed that Micron hopes to ship a higher proportion of its products from the U.S. in the future, so this collaboration will accelerate GlobalWafers’ U.S. expansion.

Notably, the $500 million from Micron is not a conventional prepayment. Hsu explained that this funding is positioned as 'Strategic Financial Support' with multiple functions: it helps GlobalWafers manage equipment investment for Texas plant expansion, significantly reducing financial pressure and financing costs; it also serves as a safeguard to ensure the smooth fulfillment of the long-term supply agreement, making it more comprehensive than traditional prepayments.

Texas Phase II Expansion Planning Underway: Hsu Says 'We Must Start Preparing Now'

On the most anticipated topic of Texas plant expansion, Hsu explicitly stated for the first time that, with Micron’s 10-year LTA and concrete shipment volume planning, the capacity of Phase I will be insufficient to meet demand, so Phase II expansion has already entered the planning stage.

She noted that Phase I and Phase II of the Texas 12-inch plant are originally located within the same building (Building 1), so no new factory construction is needed. Instead, Phase II expansion can be gradually completed by adding equipment, utilities, wastewater treatment systems, and related machinery.

Hsu emphasized, 'We must start planning now.' She explained that equipment procurement, engineering design, and process planning must be initiated early, especially since lead times for some advanced equipment have stretched beyond one year. Equipment selection and procurement must be completed in advance, and configurations will be adjusted according to Micron’s future product roadmap.

Two of Three Expansion Conditions Met, Texas Plant Not Yet Profitable

Hsu also reviewed the three conditions previously set for Texas expansion: government support, long-term customer commitments, and plant profitability. She noted that the first two conditions have largely been met—ongoing policy support from the U.S. government and Micron’s 10-year LTA, indicating clear customer commitment. The only unmet condition is that the Texas plant has not yet turned a profit.

She explained that the Texas plant is still in the ramp-up phase, affected by high depreciation costs, workforce training, customer qualification, and the learning curve, so it has not yet achieved profitability. However, as capacity gradually increases, fixed costs will be spread over more output, and operational efficiency is expected to improve continuously.

Texas Plant Orders Are Not Insufficient; Asian Plants Currently Supporting Shipments

Regarding market concerns about whether the Texas plant is fully loaded, Hsu clarified that it is not yet operating at full capacity, but the reason is not insufficient orders.

She stated that many customer orders are still being fulfilled by Asian production bases, primarily because the Texas plant is still undergoing workforce training, customer qualification, and reliability testing. Once these procedures are completed, products previously manufactured in Asian plants will gradually shift to U.S. production.

She pointed out that in addition to customers actively pushing the 'Local for Local' strategy, the recent rise in international logistics costs is another key factor driving local supply. With escalating tensions in the Middle East, international freight rates have surged again, so for customers, local supply not only enhances supply chain resilience but also helps reduce logistics costs.

Other Customers Exploring Similar Models; New CapEx Plan to Be Announced Next Year

Besides Micron, Hsu revealed that other customers have begun discussing similar collaboration models, although Micron remains the first to finalize a formal contract. She also confirmed that this 10-year LTA is not only the longest in GlobalWafers’ history but could also become the largest in terms of total cooperation value.

Regarding future capital expenditures, Hsu acknowledged that CapEx will inevitably increase with the subsequent expansion of the Texas plant. However, as equipment specifications, product mix, and process planning are still under evaluation, no final figures are available yet. A more comprehensive investment plan will be disclosed to the market during next year’s annual report.

From an industry perspective, driven by continuous expansion of AI servers, high-bandwidth memory (HBM), and large data centers, the U.S. semiconductor supply chain is accelerating toward 'local manufacturing, local supply.' Micron’s provision of $500 million in strategic funding and a 10-year supply agreement not only signals that AI demand has shifted from short-term cycles to long-term investment trends but also indicates that global semiconductor competition is extending into key material supply chains like silicon wafers. The strategic importance of GlobalWafers’ Texas footprint will continue to rise with the arrival of the AI era.