The US Department of Commerce (DOC) has signed a non-binding preliminary memorandum of terms (PMT) with SK hynix to provide the South Korean firm with up to $450m in federal incentives to set up a chip packaging facility in the US. To be granted under the CHIPS and Science Act, the financing will enable the semiconductor company to establish a high-bandwidth memory (HBM) advanced packaging fabrication and research and development (R&D) facility in Indiana.
The PMT comes after SK hynix’s announcement in April this year to commit about $3.87bn to build a memory packaging plant for artificial intelligence (AI) products and an advanced packaging R&D facility in West Lafayette, Indiana. To be developed within the Purdue University Research Park, the new chip packaging facility is expected to create nearly 1,000 jobs as well as address a crucial gap in the US semiconductor supply chain. It will house an advanced semiconductor packaging line designed to mass-produce next-generation HBM chips. These high-performance memory chips are essential for graphics processing units (GPUs) used in training AI systems.
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The new chip facility will produce HBM chips with significantly enhanced performance compared to current models, processing up to 1.18 terabytes of data per second. Production is scheduled to commence in the latter half of 2028.
According to the DOC, the proposed funding will create a research hub in Indiana, leveraging SK hynix’s partnership with Purdue University. This collaboration is also aimed at advancing the US semiconductor ecosystem and technological leadership by focusing on next-generation HBM and advanced packaging R&D.
US Secretary of Commerce Gina Raimondo said: “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.
“Because of President Biden and Vice President Harris’ leadership, we are creating hundreds of new jobs in Indiana and ensuring the Hoosier state and Purdue University will play a crucial role in advancing America’s national security and supply chains.”
SK hynix plans to work with Purdue University on future R&D projects, including memory-centric solutions for generative AI, memory design, and in/near memory computing. In addition, the South Korean company intends to develop training programmes and interdisciplinary degree curricula in partnership with Purdue University and Ivy Tech Community College to nurture a high-tech workforce and ensure a steady pipeline of new talent. Separately, SK hynix is expected to claim the US Department of the Treasury’s Investment Tax Credit, potentially up to 25% of qualified capital expenditures.
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Alongside the proposed direct funding of up to $450m, the CHIPS Program Office may offer up to $500m in loans as part of the $75bn in loan authority provided by the CHIPS and Science Act.
SK hynix CEO Kwak Noh-Jung said: “We are moving forward with the construction of the Indiana production base, working with the State of Indiana, Purdue University and our US business partners to ultimately supply leading-edge AI memory products from West Lafayette.
“We look forward to establishing a new hub for AI technology, creating skilled jobs for Indiana and helping build a more robust, resilient supply chain for the global semiconductor industry.”
In May 2024, SK hynix revealed that its entire stock of HBM chips had been sold out for the year, with no availability for customers until 2025. This announcement came amid surging demand from enterprise users for increasingly complex AI applications, highlighting the critical role of HBM chips in AI chipsets. SK hynix also alerted that even the chips available for customers next year are likely to sell out quickly.
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