SK Hynix, the world’s second-largest maker of memory chips and a leading supplier of semiconductors will build a $4 billion (about 5.3 trillion won) advanced chip-packaging facility in western Indiana, according to the Wall Street Journal (WSJ) report on Mar. 26 (local time). Citing unnamed sources, the WSJ said that SK Hynix plans to begin its operations in 2028, and the facility is expected to create 800 to 1,000 new jobs.
The SK Hynix facility will be a production unit specializing in manufacturing high bandwidth memory (HBM), an essential memory for artificial intelligence (AI) semiconductors. HBM vertically connects multiple DRAMs to enhance data processing speed and energy efficiency significantly. SK Hynix was the first to mass-produce HBM and currently holds the world’s No. 1 market share.
Nvidia, an American tech firm dominating the market for chips used in artificial intelligence (AI) systems is supplied with HBMs from SK Hynix and entrusts final assembly (packaging) to Taiwanese semiconductor giant TSMC. In the current situation, companies can only design semiconductors in the United States. In 2022, President Biden signed the “CHIPS and Science Act”, which seeks to bolster the US semiconductor supply chain and promote research and development of advanced technologies in the country. At least $3 billion (about 4.3 trillion won) in subsidies have been set aside for this project alone. “Recent advances in AI would not be possible without advanced packaging,” the U.S. Department of Commerce said.
If SK Hynix builds an HBM packaging production facility in Arizona, it can move much of its semiconductor production to the state. TSMC has already embarked on constructing its new semiconductor manufacturing plant in Phoenix, the capital city of Arizona. Once this supply chain is complete, leading U.S. AI semiconductor companies such as Nvidia and AMD will be able to produce semiconductors using only “made-in-USA” components. “It’s a boost to the Biden administration’s ambition to restore America’s status as a semiconductor powerhouse,” said the WSJ.
Industry insiders see that SK Hynix’s recent investment in Indiana is a “win-win strategy” The company can secure both a steady stream of HBM partners and the hefty subsidies provided by the US government through the CHIPS and Science Act. In 2022, SK Chairman Chey Tae-won visited the U.S. and held virtual talks with President Biden, pledging to invest $22 billion (about 29.5 trillion won) in the U.S. in semiconductors, electric vehicles, and biotechnology.
One strong candidate area for the production facility is West Lafayette. It is home to Purdue University, which has one of the largest semiconductor and microelectronics programs in the country. “The South Korean chip tycoon has considered Arizona, the region TSMC and Intel chose for their facilities, but the company’s final selection was Indiana because of its access to high-level semiconductor talent through Purdue University,” according to the WSJ.
SK Hynix said that ‘nothing has been finalized,’ and that the company is looking at locations across the United States. Last month, SK Hynix President and CEO Kwak Noh-jung said, “We are carefully reviewing the selection of a site for an advanced packaging facility in the United States, and it will be finalized within this year.”
