Micron shows no sign of leaving Boise

Posted: 12:00am on Feb 7, 2012; Modified: 8:08am on Feb 7, 2012

Micron’s Southeast Boise campus on July 29, 2011.

It’s a question that just won’t go away.

As Micron Technology expanded its Asian presence and revenue in the mid-2000s, and as it laid off thousands and ended manufacturing in Boise in 2009, some people have wondered: Will the company abandon the town where it started?

Don’t look for the moving vans anytime soon.

Micron Chairman and CEO Steve Appleton, who died in an airplane crash Friday, developed close ties to his adopted city of Boise. But so has the new CEO, Mark Durcan, said Mike Howard, a semiconductor analyst for IHS iSuppli and a former Micron employee.

“I think that bodes well for Micron and Boise,” Howard said.

Micron officials were tight-lipped Monday on the future of the company’s headquarters and research and development work here. But Jeffery Sayer, Idaho’s Department of Commerce director, said Micron “has been a great partner for our state. We fully expect that to continue.”

Just last month, Mike Reynoldson, the company’s government affairs manager, told a legislative committee that Micron increased its Idaho payroll by 12 percent in 2011. Micron now employs an estimated 5,600 people here. Moreover, Micron is at work on a multimillion-dollar research and development building on its Southeast Boise campus. Both developments speak to the company’s commitment to Idaho, Reynoldson said.

Keeping R&D next to the company’s headquarters keeps the company’s vital organs together, Howard said. Durcan “understands the benefit of that type of integration,” he said.

Vijay Rakesh, a Micron analyst in Chicago with Sterne Agee, sees no reason for the company to move. Micron has research and development in Boise and a fab plant in Manassas, Va. “They have done that well and it has worked.”

Yet Micron’s business is increasingly Asian focused. Nearly 70 percent of its revenue comes from that part of the world, according to the company. And U.S. companies have shown an appetite for going overseas where labor costs are cheaper. Micron already has thousands of employees in Asia.

But the long-held business notion that a successful company is close to its customers may not hold true in Micron’s case.

For one thing, the memory chips Micron makes are light and relatively easy to ship, Howard said, decreasing the need for basing decisions on shipping costs.

And cheap labor costs don’t tell the whole story for a company like Micron, where some of the most expensive parts of production are machinery and materials — costs that vary little no matter where a plant is based, Howard said. Moving an R&D operation halfway around the world to save half the cost of a highly paid engineer also brings other challenges, Howard said. Communication can be strained by language, time and distance. And that can be a detriment in the fast-paced, volatile world of chip making.

“You can have communications slowing you down,” Howard said.

Bill Roberts: 377-6408

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