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Korean memory manufacturer SK hynix won $458 million in funding through the CHIPS Act earlier today to build a memory packaging facility in Indiana. Semiconductor packaging has emerged as a key bottleneck for production, particularly in US-based chip production. SK hynix's new plant will focus on memory packaging, and along with the $458 million in direct funding, the firm will also be able to rely on $500 million in additional loans for the new sites.
SK hynix HBM Memory Facility In Indiana Expected To Commence Production In 2028
Along with Micron, whose shares have tanked by 18% today after yesterday's earnings, SK hynix is one of the few firms in the world capable of making high bandwidth memory (HBM) chips for AI products. The market for HBM3e memory products has grown competitive, with reports claiming that Samsung is struggling with quality control. Micron and SK hynix have deepened their ties with NVIDIA.
SK hynix and Samsung are the only two major Korean memory manufacturers. Hynix secured a preliminary win of a $458 million grant from the Commerce Department under the CHIPS Act in August. The grant covered an advanced HBM packaging facility and a research and development facility as part of the firm's $3.87 billion investment in the US.
The deal with SK hynix meant that it joined TSMC, Micron, Intel and Samsung to ensure that all of the world's major semiconductor fabrication companies had a presence in the US.
SK hynix's new facilities set up under this grant will create roughly 1,000 direct jobs and generate activity in the construction industry. They will focus primarily on memory packaging, commonly referred to as a 'back-end' process in the industry. Like TSMC, all of SK hynix's chip fabrication facilities are located in Asia. In South Korea, three sites are in Icheon; another fourth facility is in Chongqing, China. Along with these, the firm also operates research and development offices in San Diego, Poland and Taiwan.
Once it starts production, which is currently planned for 2028, SK hynix's Indiana facility will be the first of its kind in the US. Given the critical role played by HBM memory in AI chips, the deal should prevent major disruption to America's AI chip supply chain. While SK hynix does not manufacture memory chips in America, Micron is investing $15 billion in Boise, Idaho, to produce the latest memory chips.
All of Micron's leading-edge production facilities are located outside the US, and the firm has invested $100 billion in New York and Idaho as part of the largest semiconductor investment in US history. The firm received $6.2 billion in CHIPS funding in December for the Idaho facility which aims to grow America's share of advanced memory manufacturing to 10% by 2035.
SK Hynix will also step up its memory packaging efforts in 2024. Reports have speculated that the firm aims to invest as much as $1 billion in its South Korean packaging facilities.
