SK hynix could get nearly $1 billion to support $3.87 billion advanced packaging facility in the U.S.

SK hynix has inked a memorandum of understanding with the U.S. Department of Commerce to secure up to $450 million in direct funding and access to $500 million in loans under the CHIPS and Science Act to build its advanced memory packaging facility in West Lafayette, Indiana. If the project becomes a success, then the U.S. will have its own supply of high-bandwidth memory (HBM), which is crucial for AI and HPC processors.

If SK hynix proceeds with its project, the advanced packaging facility is set to begin operations in 2028 and will generate up to 1,000 jobs. With an estimated cost of $3.87 billion, this plant will rank among the largest advanced packaging facilities worldwide. But the project is impossible to complete without U.S. government support of up to $450 million in direct funding and access to $500 million in loans. Additionally, SK hynix intends to seek a tax benefit of up to 25% of the qualified capital expenditures through the Investment Tax Credit program.

Given the timeline of SK hynix's Indiana advanced packaging facility, the fab will likely produce HBM4 or rather HBM4E memory, which will require quite sophisticated packaging techniques. In particular, some HBM4/HBM4E devices will be integrated with processors using advanced interposers, others will be planted directly onto processors, which will require strong technological capabilities.

Building and integrating HBM4/HBM4E memory in the U.S. is strategically important both for SK hynix and for the U.S. government (as part of its broader initiative to bolster the U.S. semiconductor industry and to produce advanced processors in the U.S.), so both parties are inclined to build this packaging facility. It should be noted that actual memory devices (HBM4 layers) will still be made by SK hynix outside of the U.S., in South Korea.

In addition to producing HBM4 memory (and successors) in Indiana, SK hynix also plans to partner with local research institutions, including Purdue University, to advance semiconductor research and development in general and advanced chip packaging in particular.

"We deeply appreciate the U.S. Department of Commerce's support and are excited to collaborate in seeing this transformational project fully realized," said Kwak Noh-Jung, SK hynix CEO in a press release. "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 look forward to establishing 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."