US-based semiconductor firm Micron Photo: VCG

US memory chip giant Micron Technology will invest over 4.3 billion yuan ($603 million) in its packaging and testing plant in Xi'an, capital of Northwest China's Shaanxi Province, in the next few years, a move which the company said "showcased its unswerving commitment" to Chinese business and team members.

The investment provides both a vivid display of US companies' confidence in the Chinese market and fresh proof defying what some Western politicians tout as "China's crackdown against foreign firms," after Micron's failure to pass China's cyber security review last month fuelled malicious speculation of a "tit-for-tat" amid frosty China-US bilateral relations, observers said.

The investment includes purchasing packaging equipment from a semiconductor firm in Xi'an, which is reportedly a subsidiary of Powertech Technology Inc. Micron said in a post on its WeChat account on Friday that the equipment had been running on Micron's factory since 2016 based on a previous long-term strategic agreement, which has expired.

Micron estimated that the asset acquisition would be completed within a year, waiting for approval from Chinese regulatory authorities.

The investment also includes building a new plant as well as introducing brand-new packaging and testing equipment with high performance, to better serve the needs of Chinese customers, the post said. The new plant will introduce a new production line for manufacturing mobile DRAM, NAND and SSD products to strengthen the plant's packaging and testing capabilities.

The deal would offer contracts to 1,200 employees of Powertech's Xi'an subsidiary, and the new investment project would create an additional 500 job opportunities, bringing the number of Micron's Chinese employees to 4,500.

Micron's active investment in China comes after its products were found to have serious network security risks after a seven-week investigation by Chinese regulators in accordance with law, which pose a significant security risk to China's critical information infrastructure supply chain and affect China's national security.

According to laws and regulations such as the country's Cybersecurity Law, operators of critical information infrastructure in China must stop purchasing Micron's products.

Liang Zhenpeng, an industry analyst, told the Global Times on Friday that Micron's decision to continue investing in China refuted previous hype by foreign media that China is "targeting" US companies amid fractious relations.

The stepped-up investment by Micron also shows that China's door to foreign companies continues to open wider, as long as they abide by relevant laws including domestic security laws, Liang noted.

This attitude is in stark contrast to the US, which has been sparing no efforts in its relentless crackdown on Chinese firms and squeezing them out of the American market amid a "decoupling push," observers noted.  

Liang added that the investment demonstrates that China still holds the advantage of cost-effectiveness in the semiconductor industry, and Micron continues to benefit from China's comprehensive industrial chain.

China is a critical market for Micron, which accounts for hundreds of millions of dollars in sales. In the fiscal year of 2022, the company generated a total revenue of $3.31 billion from the Chinese mainland market, accounting for 10.76 percent of its total sales.

Chinese Foreign Ministry spokesperson Wang Wenbin said on Friday that China is willing to see foreign enterprises invest in the Chinese market and share the country's development dividends. Meanwhile, the country is also willing to continue providing an "escort" to the innovative development of companies in China, regardless of whether they are Chinese or foreign.   

Global Times