SK Hynix plans to spend US$3.87 billion (S$5.22 billion) building an advanced packaging plant and research centre for artificial intelligence (AI) products in Indiana, marking a win for the Biden administration as it seeks to increase semiconductor output on American soil.
The world’s No. 2 memory chipmaker said on April 3 that it will build its first US facility in the city of West Lafayette, with plans to begin mass production in the second half of 2028.
The plant will centre on a production line for next-generation high-bandwidth memory chips, critical components of the graphic processors that train AI systems.
SK Hynix has evolved into a key player in the AI development boom as the leading designer and producer of so-called high-bandwidth memory chips, which work in tandem with Nvidia’s processors.
Its decision comes about two years after the company announced plans to invest in the US.
At the time, SK Group chairman Chey Tae-won said his conglomerate would set aside some US$15 billion to build chip facilities and bolster research programmes in the US.
The announcement on April 3 is part of that total commitment, the South Korean company said.
SK Hynix has also applied for grants from the Chips and Science Act, which is aimed at promoting the return of semiconductor manufacturing to the US.
SK Hynix’s project marks a significant step forward for US ambitions to add advanced packaging capacity – a bottleneck in Washington’s efforts to revitalise the domestic semiconductor industry.
The US has only 3 per cent of the world’s packaging capacity, meaning that companies manufacturing chips in America often still have to ship them to Asia to be assembled for use.
Chips have become a battleground between Washington and Beijing, with the US spending tens of billions of dollars to wean itself off Asian suppliers. It has dangled hefty financial incentives to get global chipmakers to add capacity.
Semiconductor companies have pledged to invest more than US$230 billion on American soil since President Joe Biden took office, spurred by the 2022 chips legislation.
In March, Intel won US$8.5 billion in grants and as much as US$11 billion in loans from the US to support more than US$100 billion in investments at home.
The Biden administration also plans to award more than US$6 billion to SK Hynix rival Samsung Electronics and more than US$5 billion to Taiwan Semiconductor Manufacturing Co (TSMC), Bloomberg News reported earlier.
Most of those investments have so far gone to Texas, New York and Arizona.
Arizona alone has secured more than US$60 billion in investments from TSMC, Intel, Amkor Technology and dozens of others.
SkyWater Technology in 2022 announced its plan to build a US$1.8 billion semiconductor research and development and production facility through a partnership with Indiana and Purdue. BLOOMBERG
