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Micron Technology shares climbed 2.70% on Friday after new reports indicated that Japan has approved a massive ¥1.5 trillion (US$9.6 billion) investment for a next-generation memory chip plant in Hiroshima.

The expansion comes as global demand for high-performance memory used in artificial intelligence systems shows no signs of slowing.

According to sources familar mwith the matter, Micron intends to establish a cutting-edge fabrication site to produce advanced DRAM and high-bandwidth memory (HBM) components, key building blocks for AI infrastructure across cloud, data center, and enterprise workloads.

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Japan Backs Major Fab

Japan’s decision to support Micron’s expansion underscores the country’s accelerated push to rebuild semiconductor leadership. According to the report, Tokyo is set to subsidize up to ¥536 billion (US$3.63 billion) of the total cost, covering roughly 36% of the project.

The financial backing aligns with Japan’s broader initiative to attract chipmakers amid global supply chain strains and rising geopolitical competition.

The new facility is expected to deploy extreme ultraviolet (EUV) lithography, a leading-edge manufacturing technique that enables more powerful and energy-efficient memory chips. Once complete, the Hiroshima plant will produce the company’s upcoming 1-gamma DRAM generation alongside high-bandwidth memory designed specifically for AI accelerators.

Targeting 2027 Output

The plant is slated to begin mass production in 2027, timing that would allow Micron to match or surpass rivals already scaling EUV-enabled DRAM.

Japan has also previously funded Micron in 2022 and 2023, mirroring similar support given to TSMC for its Kumamoto fabs. Together, these initiatives form part of a multi-year semiconductor revitalization plan expected to exceed ¥5 trillion by 2029.

The ¥1.5 trillion investment will create meaningful ripple effects across Japan’s chip ecosystem. Local equipment makers, materials suppliers, construction firms, and engineering contractors are all positioned to benefit as procurement begins. Industry analysts highlight companies such as ROHM Co. Ltd. and Kioxia among those likely to secure new orders as the project advances.

AI Memory Demand Surges

Micron’s expansion news arrives during a period of intense AI-driven demand for memory hardware. Back in September, the company issued a strong outlook, forecasting US$12.5 billion in quarterly revenue, well above analyst estimates.

The chipmaker also beat expectations with US$11.3 billion in Q4 revenue, a 46% year-on-year increase fueled largely by its data center business.

Micron executives emphasized that demand for high-bandwidth memory used in AI systems continues to outpace supply, with CEO Sanjay Mehrotra pointing to record results in the data center division. According to Citigroup analyst Christopher Danely, Micron’s data center segment now accounts for more than half of its total revenue, demonstrating how deeply AI has reshaped the company’s product mix.

Market Reacts to Expansion

News of Japan’s backing amplified investor optimism. Shares rose as markets interpreted the development as a sign of long-term stability and increased production capacity.

With the 2027 output target aligning with forecasts that AI memory demand will multiply over the next three years, Micron appears positioned to capture a significant share of that growth.

The proposed Hiroshima fab also strengthens Micron’s competitive stance against major Korean and Taiwanese memory suppliers, especially as global buyers prioritize diversified supply chains. Even without an official company announcement, the market viewed the Japanese approval as a strategic win for Micron’s global expansion roadmap.

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