The U.S. announced Tuesday (Aug. 6) that it has agreed to provide up to $450 million in funding to South Korean semiconductor giant SK Hynix to help it build a microchip packaging plant in Indiana.
U.S. funding for SK Hynix semiconductor plant
The agreement with SK Hynix, the world’s second-largest memory chip maker, provides the company with $450 million in direct financing and the potential for another $500 million in loans, the U.S. Commerce Department said in a statement. The SK Hynix plant, located at the Purdue University Research Center in Indiana, will house an “advanced semiconductor packaging line” to produce next-generation high-bandwidth memory (HBM) chips, filling a “critical gap” in the U.S. supply chain, according to the U.S. Commerce Department.
The U.S. Department of Commerce noted that “high-performance memory chips are an important component of graphics processing units (GPUs), whose increased processing power drives the development of artificial intelligence systems.”
Strategic investments and national security
AFP reports that the US government wants to consolidate America’s leadership in the semiconductor industry, particularly in the development of chips needed for artificial intelligence (AI), both for national security reasons and in response to competition from China.
The administration of outgoing Democratic President Joe Biden has approved billions of dollars in subsidies for South Korean conglomerate Samsung, U.S. conglomerate Intel and Taiwanese corporate giant TSMC as Washington tries to avoid a shortage of semiconductors vital to the modern global economy.
According to Yonhap News Agency, the specific amount of subsidy to SK Hynix will be finalized in the future based on the Notice of Funding Opportunity (NOFO) of the Chip and Science Act in the U.S. The percentage of subsidy funding for SK Hynix is 11.6%, which is lower than that of Samsung Electronics (14.2%) but higher than that of TSMC (10.2%) and Intel (8.5%).
SK Hynix, which dominates the HBM semiconductor market, is a major supplier to U.S.-based artificial intelligence chip specialist Nvidia, which controls about 80 percent of the global market for such chips.
Kwak Noh-Jung, SK Hynix’s chief executive, said the company is looking forward to “establishing a new AI technology center” and helping to create “a stronger and more resilient supply chain for the global semiconductor industry.”
K Hynix had announced in April that it would invest $3.87 billion to build a next-generation, high-bandwidth memory production site in West Lafayette, Indiana, with mass production scheduled to begin in the second half of 2028.
The U.S. now has major investment commitments from five leading chipmakers (TSMC, Intel, Samsung Electronics, Micron Technology and SK Hynix).
