Micron Technology (NASDAQ:MU) recently became the newest member of the $1 trillion market capitalization club. While it took many years for the technology giant to reach the milestone, it may never have been achievable without a $1 million investment from a potato farmer in Idaho.
J.R. Simplot and Boise Help Micron Out
Years after J.R. Simplot landed a handshake deal with McDonald's (NYSE:MCD) owner Ray Kroc to be the exclusive supplier of frozen potatoes, J.R. Simplot helped Micron with much needed capital.
Stories of Sega helping Nvidia and Microsoft helping Apple are legends of what could have been if some of today’s largest companies had not received investments at their time of need.
For Micron Technology, that period came in 1980 when the company wanted to build a DRAM memory chip fab in Boise, Idaho, as reported by blogger Trung Phan.
Micron was founded by twin brothers Ward Parkinson and Joe Parkinson, along with Dennis Wilson and Doug Pitman. At a 2018 event, Parkinson recalled the company needing to find early investors.
The group was able to secure $300,000 in investment from local Boise business leaders, as reported by Boise Dev. They were also able to eventually get Simplot to invest $1 million in the company.
While Simplot knew plenty about chips of the potato flavor, he had limited knowledge of memory chips. The businessman was able to recognize that DRAM had become a commodity market with Japanese competition pushing prices down and hurting margins.
Simplot gave Micron $1 million for a 40% stake in the company and helped it build the fab it wanted in Idaho. The investment paid off with Micron able to produce chips at lower costs thanks to the new facility and cheaper energy and land in Idaho.
Japan later imposed a tariff on Simplot's potatoes, prompting President Ronald Reagan to impose a tariff on Japanese chips.
Micron became one of the largest companies in the DRAM memory chip market in the 1990s alongside SK Hynix and Samsung. The growth helped Simplot's stake become worth billions. Already a billionaire from potatoes, Simplot was now a "chip" billionaire as well.
Simplot sold off portions of his stake in Micron over the years and his family and the company currently own no shares of the trillion-dollar company. The potato billionaire passed away in 2008 at the age of 99 years old, worth an estimated $3.6 billion at the time, the 89th richest person in the world. Had he held onto the Micron stake, Simplot and his family would have been worth significantly more.
Micron remains a large employer in the Boise market.
Simplot's Early Beginnings
Simplot remains one of the key suppliers of frozen potatoes to McDonald's today. His story outside of investing in Micron is equally successful.
According to Phan, Simplot left home at the age of 14, took $80 from his mom, and turned it into 600 pigs and a new way to make pig slop, which led to his pigs being fatter than those at other farms.
The entrepreneur would pivot to potatoes and never graduate from high school. It wasn't just potato farming for Simplot; it was about recreating the industry.
In the 1930s, Simplot pioneered automatic potato sorters, helping him earn his first million dollars. In the 1940s, the millionaire helped develop new potato-drying technology, which helped feed World War II soldiers. The 1960s saw Simplot invent a new freezing method for potatoes, which led to his McDonald's deal.
The McDonald's deal helped Simplot become a billionaire.
Simplot lived to be nearly 100 years old and arguably had two hugely successful careers, one in the potato sector and one in the chip sector.
Image via Shutterstock
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