(Bloomberg) — SK Hynix Inc. is set to receive an initial $450 million in US grants and $500 million in loans to build an advanced chip packaging and research facility in Indiana, a project that will bolster US capacity for a critical part of the artificial intelligence supply chain.
The $3.87 billion site will package high-bandwidth memory chips for use with AI chipmakers such as Nvidia Corp., an area that the Korean company dominates. SK Hynix is expected to ship its own memory chips from South Korea to its US facility, according to a Commerce Department official who requested anonymity to brief reporters ahead of the announcement. That site is expected to create around 1,000 jobs. In addition to grants and loans, SK Hynix expects to benefit from a 25% tax credit, like other firms building in the US.
SK Hynix is intent on expanding its lead over Samsung Electronics Co. and Micron Technology Inc. in the supply of HBM chips to Nvidia, an edge that’s helped double its market value since the end of 2022. Packaging, the process of encasing chips and preparing them to be connected to devices, has emerged as a key arena in the US-China technological conflict.
The award marks the 15th preliminary agreement under the 2022 Chips and Science Act, which set aside $39 billion in grants — plus $75 billion in loans and guarantees, and 25% tax credits — to revitalize the American chip industry after decades of production shifting abroad.
As of Tuesday, the Biden administration has announced subsidies for all five of the world’s top chip manufacturers: SK Hynix, Samsung, Micron, Intel Corp. and Taiwan Semiconductor Manufacturing Co. Other countries with their own semiconductor funding programs have secured investments from at most two of those firms.
Beyond Nvidia, SK Hynix’s major clients include Apple Inc., Microsoft Corp. and Alphabet Inc. SK Group originally said it would invest as much as $15 billion in US packaging and other research projects. When the firm unveiled their Indiana site, they said the facility marked part of that total commitment.
In addition to Indiana, the Korean company considered locating its first US facility in Arizona, a state that’s won major investments from both Intel and TSMC. Another packaging company, Amkor Technology Inc., is now building a site there.