Dive Brief:
- SK Hynix secured $450 million in CHIPS and Science Act funding and up to $500 million in proposed loans, the Commerce Department announced on Tuesday.
- The South Korea-based chipmaker will use the funds to help build a high-bandwidth memory advanced packaging fabrication plant and research and development facility in West Lafayette, Indiana. The plant will be SK Hynix’s first investment of its kind in the U.S.
- The funds build on SK Hynix's previously announced plans to build a $3.9 billion chip packaging plant in the state. With the new funding, the company is slated to create 1,000 new jobs, with production beginning in 2028.
Dive Insight:
SK Hynix's plant will focus on producing memory packaging for artificial intelligence products. The chips are key components in high-powered graphic processing units, used to train generative AI systems. The company counts Nvidia as one of its top customers for the advanced chips.
With the SK Hynix facility, the U.S. will now have awarded CHIPS funds to five of the world's biggest semiconductor manufacturers – Intel, Taiwan Semiconductor Manufacturing Co., Samsung, Micron and SK Hynix. The achievement is no small feat for the Biden administration, which has made onshoring advanced manufacturing a core tenet of its domestic policy.
SK Hynix marks the 15th company to secure CHIPS funding across 15 states. A slew of the awards have been rolled out over the last four months, as the Commerce Department has stepped up its efforts to produce 20% of the world's leading-edge chips in the U.S. by the end of the decade.
"Today’s historic announcement with SK hynix would further solidify America’s AI hardware supply chain in a way no other country on earth can match, with every major player in advanced semiconductor manufacturing and packaging building or expanding on our shores," Commerce Secretary Gina Raimondo said in a statement.
The Biden administration has now allocated $30 billion of its $39 billion pot of funding for semiconductor manufacturing, according to the Commerce Department. Raimondo has previously stated in interviews that the department intends to allocate all CHIPS funding this year.
Like other CHIPS-funded companies, SK Hynix intends to pursue the Commerce Department's up to 25% advanced manufacturing investment credit, the company said in its announcement.
The facilities will be located within a Purdue University research park, part of an ongoing collaboration between the school and SK Hynix. The two entities will work on R&D projects related to advanced packaging, and the school's research faculty and available talent pool contributed to the company's decision to locate there, according to Purdue.
Purdue has emerged as a hub for semiconductor R&D efforts. Last year, it signed a five-year agreement with Belgium-based research firm Imec to bolster semiconductor R&D in Indiana. The university also launched a semiconductor degrees program in 2022 to support workforce development in the field.
