The global semiconductor landscape in early 2026 is characterized by a “scarcity mindset.” From high-bandwidth memory (HBM) to standard server-grade DRAM, the industry is struggling to keep pace with the insatiable appetite of the AI-driven data center market. Against this backdrop, Micron Technology (NASDAQ: MU) has made a decisive move to secure its long-term manufacturing dominance. The company officially announced its intention to acquire the P5 fabrication site in Tongluo, Taiwan, from Powerchip Semiconductor Manufacturing Corporation (PSMC) for a total consideration of $1.8 billion.
This transaction is more than a simple real estate deal; it is a strategic alliance that creates a symbiotic relationship between a leader in advanced memory and a pioneer in foundry logic. By repurposing PSMC’s 300,000-square-foot cleanroom for advanced DRAM fabrication, Micron is effectively “fast-forwarding” its capacity expansion. For investors tracking MU stock and the broader semiconductor ecosystem, this move signals a shift from purely organic growth to aggressive infrastructure capture.
The Anatomy of the Deal: Capacity, Synergy, and the 2027 Horizon
According to the investigation by TrendForce, the acquisition includes a long-term DRAM advanced packaging and assembly partnership. Micron will focus on adding advanced-node DRAM capacity (likely its 1-gamma and upcoming 1-delta nodes), while the agreement ensures that PSMC retains a robust outlet for its mature-process DRAM portfolio.
The immediate impact on production is significant. TrendForce estimates that by the second half of 2027, the first phase of the Tongluo project will contribute a capacity equivalent to more than 10% of Micron’s total global capacity as of Q4 2026. This “step-function” increase in supply is expected to provide much-needed breathing room for a market where demand currently outstrips supply by a factor of nearly two-to-one.
For MU stock, the proximity of the Tongluo fab to Micron’s existing Taichung site is a masterstroke in operational efficiency. The two facilities will share logistics, technical talent, and back-end processing pipelines, creating a “Super Hub” in Taiwan that accounts for nearly 65% of Micron’s global DRAM output.
Financial Breakdown: Why MU Stock Price is Hitting Historic Highs
As of January 19, 2026, the MU stock price is trading at $362.75, following a massive 7.76% surge in the previous session. The stock has been on a relentless bull run, nearly tripling from its 52-week low of $61.54. This momentum is backed by what many analysts call the “perfect financial storm.”
Micron Technology (MU) Key Financial Indicators (FQ1 2026):
| Metric | Reported Value | YoY Growth |
| Total Revenue | $13.64 Billion | +57% |
| Non-GAAP Diluted EPS | $4.78 | +167% |
| Gross Margin | 56.8% | +31.8 pts |
| Free Cash Flow | $3.9 Billion | New Record |
| Cash & Investments | $12.0 Billion | — |
Micron’s FQ1 2026 results shattered Wall Street consensus, with revenue from its Cloud Memory Business Unit doubling year-over-year. The company’s 2026 HBM supply is already 100% committed, with customers signing multi-year volume and price agreements to ensure they aren’t left behind in the AI arms race. By investing $1.8 billion into the Tongluo fab now, Micron is utilizing its record free cash flow to ensure it doesn’t face another capacity bottleneck in 2027.
PSMC (6770): A Strategic Pivot Toward Advanced Foundry
For Powerchip Semiconductor Manufacturing Corp, the sale of the Tongluo plant represents a tactical retreat from capital-intensive DRAM manufacturing in favor of high-growth foundry services. On the Taiwan Stock Exchange, 6770 stock saw its price hit a limit-up of 9.93%, closing at NT$62.00 on the news.
While PSMC has faced challenges with a negative EPS of -2.07, the $1.8 billion cash infusion is a lifeline that allows the company to:
- De-leverage its balance sheet and retire high-interest debt.
- Focus on specialized logic and PMIC (Power Management IC) foundry, where margins are more stable than the volatile memory cycle.
- Maintain a legacy DRAM presence through the Micron partnership without the burden of maintaining the massive Tongluo facility.
Investors are betting that PSMC’s “Asset Light” strategy will eventually lead to a return to profitability by 2027, as it pivots its remaining capacity toward automotive and industrial IoT applications.
Market Implications: The DRAM Supercycle Beyond 2026
The TrendForce report highlights a critical reality: even with Micron’s 10% capacity boost, the global DRAM industry will remain in a supply-constrained state for the foreseeable future. The “AI Supercycle” is absorbing wafers at an unprecedented rate. HBM3E and HBM4 production requires nearly three times the wafer area of standard DDR5 memory, effectively reducing the industry’s net bit growth even as factories run at 100% utilization.
Industry experts like Avril Wu of TrendForce note that server DRAM prices are expected to surge over 60% QoQ in early 2026. This pricing power is why MU stock surged sharply and why the market is assigning Micron a P/E ratio of over 34. Investors are no longer valuing Micron as a cyclical commodity play; they are valuing it as a “Growth Utility” for the AI era.
Product Roadmap: From 1-Gamma to HBM4
Micron’s business development plan for 2026-2027 focuses on two technological frontiers:
- 1-Gamma DRAM: Utilizing Extreme Ultraviolet (EUV) lithography, this node will be the primary output of the Tongluo fab once it ramps up in 2027. It offers a 20% improvement in power efficiency—a critical metric for hyperscale data centers.
- HBM4 Integration: Micron is currently sampling HBM4 modules with 12-high and 16-high stacks. The Tongluo acquisition provides the physical space needed for the “advanced packaging” half of the equation, which is currently the biggest hurdle in the HBM supply chain.
By 2027, Micron aims to have its HBM revenue exceed $100 billion cumulative, up from an estimated $35 billion in 2025. The Tongluo facility is the physical anchor for this financial goal.
Conclusion: The Future of Memory Valuation
The $1.8 billion acquisition of the PSMC Tongluo plant is a watershed moment for Micron Technology. It demonstrates a company operating at the peak of its financial and strategic powers, securing the “land and sea” necessary to dominate the next decade of computing. While the MU stock price has already rewarded early believers, the long-term upward pressure from a structurally tight DRAM market suggests that the 2027 capacity expansion will arrive exactly when the world needs it most.