Micron closing Puerto Rico operation, shifts work to China

Semiconductor maker Micron Technology is closing a manufacturing facility in Puerto Rico and moving the work to China.

Around 185 jobs are affected by the closure, which is due to be completed by the end of this month, according to a U.S. government filing.

This is not good news for Puerto Rico, which has an unemployment rate of more than 12% and is now struggling with a debt crisis. But it may be helpful for China; it's trying to increase its semiconductor manufacturing capability by investing in U.S. firms -- to the concern of some U.S. lawmakers.

In 2003, Micron broke ground on a 48,000-square-foot "advanced technology DRAM module assembly" facility in Aguadilla, Puerto Rico. Micron already had more than 200 employees working at a temporary facility on the island.

But last month, Micron filed for Trade Adjustment Assistant (TAA) benefits for the employees in Puerto Rico, and in its application to the U.S. Labor Department the firm wrote: "Due to economic pressures on the business the Micron Puerto Rico site will be closed on approximately Dec. 31, 2015. The module line operation and equipment will be transferred to Xian, China."

Workers displaced by trade are eligible for TAA benefits, which include tuition assistance.

Micron is the only U.S.-based DRAM maker, and has more than 30,000 employees globally. It has other manufacturing operations in the U.S. and overseas.

When asked about the closing of the Puerto Rico manufacturing operation, a Micron spokesman, in an email statement, said that "due to market pressures on the business and as part of ongoing operational efficiency efforts, Micron has determined it is no longer feasible for the company to continue operating its module assembly test facility in Puerto Rico."

Micron "considered and exhausted all options, including seeking a potential buyer, in an attempt to maintain the viability of the facility. These decisions are always difficult, but Micron business conditions are affected by market dynamics," the firm said.

It's unclear how the transfer of Micron's Puerto Rico operation to China plays into the larger scheme of semiconductor trade and investment, but there is clearly a much bigger picture.

China is very interested in expanding its semiconductor capability and a Chinese firm, Tsinghua Unigroup, recently made what was described as a $23 billion bid in an attempt to acquire the Boise-based Micron.

Shane Rau, an analyst at IDC, said that China wants to increase semiconductor manufacturing capability both for the products it exports as well as those produced for its local market.

"The Chinese government is more or less playing hardball with multinationals in making sure there is a local stake for China, either through establishing joint ventures or local manufacturing facilities," said Rau.

China's interest in acquiring U.S. semiconductor manufacturing capability is raising red flags in Congress. In June, U.S. Rep. Dana Rohrabacher (R-Calif.), as chair of the Committee on Foreign Investment in the U.S., wrote Jacob Lew, the secretary of the U.S. Treasury, saying he was concerned "at what I witness to be a gutting of domestic semiconductor capability by China-funded acquirers."

Rohrabacher referred to China's announcement, last year, detailing "an ambitious $100 billion program to invest in and acquire semiconductor companies and technologies." He urged Lew to scrutinize China's effort.


Patrick Thibodeau

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