South Korea's SK Hynix To Build $3.87 Billion AI Chip Plant in Indiana, Fuelling US Semiconductor Drive

South Korean firm SK Hynix will invest $3.87 billion to build an advanced chip packaging fabrication plant in the state of Indiana as the Biden administration ramps up its effort to bring semiconductor manufacturing to US soil.

The world's second-largest memory chip manufacturer announced the plan at an investment agreement ceremony on 3 April at Purdue University in West Lafayette, Indiana.

Located at Purdue Research Park in West Lafayette, SK Hynix's new facility will be home to an advanced semiconductor production line that will mass-produce next-generation HBM, the highest-performing Dynamic Random Access Memory (DRAM) chips, which are critical components of graphic processing units that train AI systems such as ChatGPT.

The company plans to begin mass production in the second half of 2028, while the new facility will also develop future generations of chips and house an advanced packaging R&D line.

However, it was not immediately clear whether the company would receive CHIPS Act funds.

“The CHIPS and Science Act opened a door that Indiana has been able to sprint through, and companies like SK Hynix are helping to build our high-tech future,” US Senator Todd Young of Indiana said in a release after the ceremony.

The Creating Helpful Incentives to Produce Semiconductors (CHIPS) and Science Act of 2022 directs nearly $53 billion for semiconductor manufacturing and invests in future research and development, with another $24 billion worth of tax credits for chip production.

In March, the White House announced that Intel would receive up to $8.5 billion in grants and $11 billion in loans under the CHIPS Act to produce cutting-edge semiconductors in the biggest deployment of funds under the act.

In December 2023, the Biden Administration allocated $35 million to BAE Systems Electronic Systems for the revitalisation of its microelectronics center in Nashua, NH, crucial for producing chips integral to US security, including those used in F-35 fighter jets.

Following this, in January 2024, the administration pledged $162 million to Microchip Technology Inc. to bolster its production of microcontroller units and other speciality semiconductors, as well as to aid the modernisation and expansion of fabrication facilities in Colorado and Oregon.

In February 2024, the Biden-Harris Administration allocated $1.5 billion to GlobalFoundries to bolster the development and expansion of facilities in Malta, New York, and Burlington, Vermont.

The funding to Intel propels the US toward its goal of producing 20 per cent of the world’s leading-edge chips by the end of the decade, a significant leap from its current share of zero per cent.