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SK Hynix to Invest $4 Billion to Develop Semiconductor Manufacturing Facility in USA

Last Updated on 27th March 2024

South Korean chipmaker SK Hynix, a key supplier to Nvidia, has announced plans to invest approximately USD 4 billion to establish an advanced chip-packaging facility in West Lafayette, Indiana, USA. A combination of state and federal incentives will most likely support the project's financing. Furthermore, operations are expected to commence in 2028.


SK Hynix to Invest $4 Billion to Develop Semiconductor Manufacturing Facility in USA

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SK Hynix recently announced its plans to invest USD 15 billion in the semiconductor industry through research and development programs, materials, and the creation of a semiconductor manufacturing facility in the United States.


The advanced packaging facility is expected to generate around 1,000 jobs. The investment represents a strategic step for SK Hynix to enhance its advanced chip packaging capabilities and signifies SK Hynix’s entry into the US semiconductor market.


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SK Hynix's decision to expand its operations in the U.S. reflects the company's success in the high-bandwidth memory (HBM) sector, where it serves as the exclusive partner to Nvidia for its most advanced graphic processor units. 


The broader context of this investment highlights the U.S. government's efforts to advance domestic chipmaking capabilities using initiatives like the CHIPS and Science Act. This act, which recently provided USD 8.5 billion in direct government funding to Intel, is instrumental in supporting semiconductor manufacturing companies in USA.


Read: Nvidia to Spend $250 Billion for the Purchase of Data Center Equipment


CHIPS and Science Act 

The CHIPS and Science Act, enacted by the 117th United States Congress and signed into law by President Joe Biden on August 9, 2022, is landmark legislation aimed at boosting the domestic research and manufacturing of semiconductors in the United States.


The Act authorizes approximately USD 280 billion in new funding, appropriating USD 52.7 billion for programs previously authorized under the CHIPS for America Act of 2021. This makes it the largest publicly funded R&D program in the country's history.


The legislation includes USD 39 billion in subsidies for chip manufacturing on U.S. soil, along with 25% investment tax credits for the costs of manufacturing equipment. It also allocates USD 13 billion for semiconductor research and workforce training. The dual aim of these provisions is to strengthen American supply chain resilience and counter China.


In addition, the Act also grants USD 174 billion to the overall ecosystem of public sector research in science and technology.


The Act is divided into three divisions:


Division A

Division A of the Chips and Science Act is called the CHIPS Act of 2022. It focuses on investing in domestic semiconductor manufacturing and research. This division provides USD 54.2 billion in funding for incentives to manufacture semiconductors in the United States. This includes grants, loans, and tax credits for companies that build, expand, or modernize semiconductor manufacturing companies in USA.


Division B

Division B of the Chips and Science Act, also known as the Research and Development, Competition, and Innovation Act, focuses on long-term investment in research and development (R&D) across various scientific fields.


Division C

Division C of the Chips and Science Act is called the Supreme Court Security Funding Act of 2022.  This section of the legislation stands apart from the rest of the Act, which focuses on semiconductor development and scientific research. Division C addresses security concerns for the Supreme Court in the wake of threats made against the justices.


Read: Intel to Invest $100 Billion to Develop Semiconductor Fabs Across Four States in USA


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