SK hynix nabs $450 mn in U.S. subsidies for Indiana AI chip plant

[Courtesy of SK hynix Inc.]

South Korean memory chipmaker SK hynix Inc. has secured direct semiconductor subsidies from the U.S. government.

The U.S. Department of Commerce announced on Tuesday local time, that it signed a preliminary memorandum of terms (PMT) with SK hynix to provide $450 million in subsidies in return for the chipmaker’s construction of a memory packaging plant for artificial intelligence (AI) products and an advanced packaging R&D facility in Indiana.

The PMT also includes $500 million in loan support and a 25 percent tax incentive on the investment amount.

“We deeply appreciate the U.S. Department of Commerce’s support and are excited to collaborate in seeing this transformational project fully realized,” SK hynix CEO Kwak Noh-Jung said in a press release that was released on the same day. “We are moving forward with the construction of the Indiana production base, working with the State of Indiana, Purdue University and our U.S. business partners to ultimately supply leading-edge AI memory products from West Lafayette.”

“We also look forward to forming 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,” he added.

U.S. Secretary of Commerce Gina Raimondo also said in a press release, that “today’s historic announcement with SK hynix would further solidify America’s AI hardware supply chain.”

“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,” she added.

SK hynix plans to invest $3.87 billion to build a packaging plant in Indiana. The company aims to begin producing next-generation products, such as high-bandwidth memory 4 (HBM4) and HBM4E, starting in 2028.

As the company’s investment is smaller compared to its competitors, such as Samsung Electronics Co.’s $6.4 billion and Micron Technology Inc.’s $6.1 billion, the subsidy amount is also relatively modest. But the industry expects that the alliance between SK hynix (memory), Taiwan Semiconductor Manufacturing Company Ltd. (TSMC, foundry), and Nvidia Corp. (AI accelerators) will strengthen in the United States.

SK hynix will also establish a research and development (R&D) line in Indiana.

The chipmaker’s Vice President Choi Woo-jin said earlier that the company “will use Indiana as a hub for AI collaboration with U.S. customers and contribute to the future industry by fostering semiconductor talent via R&D cooperation with local universities.”