(Washington) The United States announced Tuesday that it has agreed to provide up to $450 million to South Korean semiconductor giant SK Hynix to help it build a chip packaging plant in Indiana.
The grant is the latest from the U.S. government, which seeks to consolidate the United States’ lead in the semiconductor industry, particularly for chips needed to develop artificial intelligence (AI), both for national security reasons and to counter competition with China.
The administration of outgoing Democratic President Joe Biden has already approved billions in subsidies for South Korean conglomerate Samsung, U.S.-based Intel and Taiwanese giant TSMC as Washington seeks to avert shortages of semiconductors, crucial to the modern global economy.
The deal with SK Hynix, the world’s second-largest memory chipmaker, provides the company with $450 million in direct financing, with the potential for an additional $500 million in loans, the Commerce Department said in a statement.
The SK Hynix facility, located at Purdue University’s research center in Indiana, will house “an advanced semiconductor packaging line” that will manufacture next-generation high-bandwidth memory (HBM) chips, filling “a critical gap” in the U.S. supply chain, according to the Commerce Department.
SK Hynix, which dominates the HBM semiconductor market, is a key supplier to Nvidia, a US specialist in AI chips, which controls around 80% of the global market for such chips.
“High-performance memory chips are critical components of graphics processing units (GPUs) that drive AI systems with their increased processing power,” the Commerce Department said.
SK Hynix CEO Kwak Noh-Jung said his company looks forward to “establishing a new hub for AI technology” and helping create “a more robust and resilient supply chain for the global semiconductor industry.”
The South Korean group’s new factory in Indiana is expected to create a thousand jobs, the Commerce Department said.