Commerce, South Korean chip maker sign preliminary terms for investment in Indiana-based plant

The Department of Commerce has signed a preliminary agreement with South Korean chip producer SK hynix that would provide the company with up to $450 million in federal CHIPS and Science Act funding for its ongoing work to build a semiconductor production facility in Indiana.

That proposed agreement, announced Tuesday, would add to the roughly $3.87 billion SK hynix has already invested in the West Lafayette, Ind., plant, which will eventually package AI semiconductor products and conduct advanced packaging research and development, according to a Commerce Department release. In addition to the funding, the agreement also includes up to $500 million in proposed loans from the CHIPS Program Office.

“With this incentive from the CHIPS and Science Act, SK hynix will make a major contribution to the complex computing systems that our nation relies on. At the same time, we are making the R&D investments to win the future, too,” Arati Prabhakar, director of the Office of Science and Technology Policy and assistant to the president for science and technology, said in a written statement.

The announcement means the U.S. now has “preliminary agreements with all five of the world’s leading-edge logic, memory, and advanced packaging providers,” according to the Commerce announcement. “No other economy in the world has more than two of these companies producing leading-edge chips on its shores,” it said. 

The bipartisan CHIPS and Science Act, which was signed into law by President Joe Biden in 2022, aims to incentivize semiconductor manufacturing in the U.S. amid competition with China. 

Previously announced preliminary agreements under the CHIPS and Science Act include those with Rocket Lab, Polar Semiconductor, Micron, Samsung, Taiwan Semiconductor Manufacturing Company, Intel, GlobalFoundries, Microchip Technology Inc., and BAE Systems Electronic Systems. 

According to the release, SK hynix is the leading producer of high-bandwidth memory, or HBM, which will be the focus of the West Lafayette facility. The new facility will be located on the campus of Purdue University Research Park, where it will work with the university, including collaboration on future research projects. The new facility is expected to create roughly 1,000 new jobs, according to the release.

Kwak Noh-Jung, the CEO of SK hynix, said in a written statement that the company is excited to collaborate on the project and is moving forward with construction of the plant.

“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,” Kwak said.

The announcement was praised by Sen. Todd Young, R-Ind., who said in a written statement Tuesday that he was “thrilled” about the investment in Indiana that will “help our country continue to shore up our domestic supply chain.”

“We cannot afford to rely on China or other countries for components that are critical to our national security,” Young said.