CHIPS Act Funds SK hynix's $3.87 Billion Investment in U.S. Semiconductor Supply Chain

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The Biden-Harris Administration announced that the U.S. Department of Commerce awarded SK hynix up to $458 million in direct funding under the CHIPS Incentives Program’s Funding Opportunity for Commercial Fabrication Facilities. The award comes after the previously signed preliminary memorandum of terms, announced on August 6, 2024, and the completion of the Department’s due diligence. This funding supports SK hynix’s investment of approximately $3.87 billion in West Lafayette, Indiana, to build a memory packaging plant for artificial intelligence (AI) products and an advanced packaging fabrication and R&D facility, filling a critical gap in the U.S. semiconductor supply chain. The Department will disburse the funds based on the company's completion of project milestones.

“By investing in companies like SK hynix and communities like West Lafayette, the bipartisan CHIPS and Science Act continues to supercharge America’s global technology leadership,” said U.S. Secretary of Commerce Gina Raimondo. “With this investment in SK hynix – the world’s leading producer of high-bandwidth memory chips – and their partnership with Purdue University, we are solidifying America’s AI hardware supply chain in a way no other country on Earth can match, creating hundreds of jobs in Indiana, and ensuring the Hoosier State plays an important role in advancing U.S. economic and national security.”

“Today’s announcement is President Biden’s CHIPS and Science Act at work,” said Assistant to the President for Science and Technology and Director of the White House Office of Science and Technology Policy Arati Prabhakar. “This new facility will develop state-of-the-art advanced packaging, which is more and more important to U.S. semiconductor leadership.”

The CHIPS investment in SK hynix, the world’s leading producer of high-bandwidth memory (HBM), represents a significant step in advancing the security of the U.S. supply chain. AI is driving the growth and demand for HBM capacity, which is one of the core supply chain constraints for the AI industry. Because of this investment made possible by the bipartisan CHIPS and Science Act, HBM manufacturing will be available in the United States. Additionally, this investment is expected to create approximately 1,000 new facility jobs and hundreds of construction jobs and establish a research hub in Indiana through SK hynix’s partnership with Purdue University. The next generation HBM that will be researched, developed, mass-produced, and packaged in this ecosystem with Purdue University will play an important role in the U.S. semiconductor ecosystem.

“SK hynix looks forward to collaborating with the U.S. government, the State of Indiana, Purdue University, and our U.S. business partners to build a robust and resilient AI semiconductor supply chain in the U.S.,” said SK hynix CEO Kwak Noh-Jung.

In addition to the direct funding of up to $458 million, the CHIPS Program Office will provide up to $500 million in loans – which is part of the $75 billion loan authority provided by the CHIPS and Science Act – to SK hynix under the award.

As stated in the CHIPS Notice of Funding Opportunity for Commercial Fabrication Facilities, CHIPS for America will distribute direct funding to recipients for capital expenditures based on the completion of construction, technology, production, and commercial milestones. The program will track the performance of each CHIPS Incentives Award via financial and programmatic reports, in accordance with the award terms and conditions.