US to award SK Hynix up to $450 million for US chips packaging facility

The U.S. Commerce Department said on Tuesday it plans to award SK Hynix up to $450 million in grants to help fund an advanced packaging plant and research and development facility for artificial intelligence products in Indiana.

In April, SK Hynix, the world’s second-largest memory chip maker, said it would invest around $3.87 billion to build the facility that will include an advanced chip production line to mass-produce next-generation high bandwidth memory chips, currently used in graphic processing units that train artificial intelligence systems, the Nvidia supplier said.

The department also plans to make available $500 million in government loans for the SK Hynix project, which is expected to qualify for a 25% investment tax credit.

The memory packaging plant for artificial intelligence products and an advanced packaging R&D facility will create 1,000 jobs and fill a key gap in the U.S. semiconductor supply chain, the department said.

Congress in August 2022 approved a $39 billion subsidy program for U.S. semiconductor manufacturing and related components along with $75 billion in government lending authority.

Commerce Secretary Gina Raimondo said the department has announced term sheets with 15 companies offering about $30 billion in funding that “will unlock another $300 billion of private capital.”

The United States now has major commitments from all five major leading edge semiconductor chip manufacturers – TSMC, Intel, Samsung Electronics, Micron and SK Hynix.

“It means we in the United States will have the most secure and diverse supply chain in the world for the advanced semiconductors that power artificial intelligence,” Raimondo told reporters. The department added no other economy in the world “has more than two of these companies producing leading-edge chips on its shores.”

SK Hynix’s West Lafayette, Indiana facility will be home to an advanced semiconductor packaging line mass producing next-generation high-bandwidth memory chips that are key components of graphics processing units that train AI systems.

SK Hynix CEO Kwak Noh-Jung said in a statement the company deeply appreciates “the U.S. Department of Commerce’s support and are excited to collaborate in seeing this transformational project fully realized.”

Commerce in May said it planned to award $75 million to Absolics for constructing a facility in Georgia to supply advanced materials to the country’s semiconductor industry. The planned award is to an affiliate of SKC Co, which in turn is part of South Korea’s second-largest conglomerate SK Group, as is SK Hynix.