South Korean memory manufacturer SK hynix has signed an agreement with the US government under the bipartisan CHIPS and Science Act to receive as much as $450 million in subsidies to develop advanced packaging facilities in America. This funding comes just as the global packaging industry experiences a supply crunch due to high demand for AI products. SK hynix makes advanced memory products for AI GPUs and other products, and today's announcement adds to the firm's $3.87 billion investment in building a memory packaging facility in Indiana.
SK hynix Scoops Up $450 Million In US Funding To Developed Advanced Chip Manufacturing Facility In Indiana
Under the CHIPS Act, the US government under the Commerce Department has awarded billions of dollars in funding to domestic and international companies to either set up new semiconductor fabrication plants in the US or expand their existing facilities. As of June, the top three recipients of CHIPS funding were Intel, TSMC and Samsung, with pure play memory manufacturer Micron coming in at fourth place.
While Samsung is one of the biggest memory manufacturers in the world, Intel and TSMC lead in the application processor market. Key to securing CHIPS grants is the firms also raising their own investment funds, and as part of its latest agreement with the Commerce Department, SK hynix has already earmarked $3.87 billion in investment to build a new memory packaging plant in Indiana.
This facility is geared towards making high bandwidth memory (HBM) products, which are key to AI chip development. Samsung, US memory manufacturer Micron and SK hynix have all been eyeing NVIDIA's lucrative contracts for HBM memory, with Samsung often reportedly suffering from yield issues for its products - claims that the firm has denied.
SK hynix announced its new Indiana facility in April when it revealed that the plant would collaborate with Purdue University for research and development along with mas producing next generation HBM chips. For its part, the US has big hopes for the CHIPS funding, with Commerce Secretary Gina Raimondo outlining that the funding enables America to become a one stop shop for advanced semiconductors.
“With proposed investments in companies like SK hynix, the United States has the opportunity to be the only country in the world where every company capable of producing leading-edge chips will have both a high-volume manufacturing presence and a significant research and development presence,” read Raimondo's statement.
Along with forking out grants for memory and application processor fabrication, the Commerce Department is also investing in substances - or the material on which the chips are manufactured. An SK hynix partner, Absolics, received $75 million in grants in May to fund its development of next generation glass substrates, which are easier to manufacture and offer better performance over organic materials used today. This funding will go towards building a new facility in Georgia, and the first products will be available for use in defense related chips, according to Absolics CEO.
About the author: Ramish is a seasoned technology writer and editor with more than a decade of experience. He specializes in semiconductor fabrication and market analysis. With a background in finance and supply chain management - via his bachelors in Finance and a micromasters in supply chain management from MIT - Ramish combines financial rigor with deep industry insight to deliver accurate and authoritative coverage.
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