U.S. Department of Commerce Announces Preliminary Terms with SK hynix to Advance U.S. AI Supply Chain Security

Biden-Harris Administration’s Bipartisan CHIPS and Science Act Attracts All Five Major Leading-Edge Logic and Memory Companies to Produce Chips on U.S. Soil

Today, the Biden-Harris Administration announced that the U.S. Department of Commerce and SK hynix have signed a non-binding preliminary memorandum of terms (PMT) to provide up to $450 million in proposed federal incentives under the CHIPS and Science Act to establish a high-bandwidth memory (HBM) advanced packaging fabrication and research and development (R&D) facility. President Biden signed the bipartisan CHIPS and Science Act to usher in a new era of semiconductor manufacturing in the United States, bringing with it a revitalized domestic supply chain, good-paying jobs, and investments in the industries of the future. The proposed CHIPS investment builds upon SK hynix’s investment of approximately $3.87 billion in West Lafayette, Indiana, to build a memory packaging plant for artificial intelligence (AI) products and an advanced packaging R&D facility, creating approximately 1,000 new jobs and filling a critical gap in the U.S. semiconductor supply chain.

“The Biden-Harris Administration’s CHIPS and Science Act is a once-in-a-generation opportunity to supercharge America’s global technology leadership and create quality jobs in the process. Today’s historic announcement with SK hynix would further solidify America’s AI hardware supply chain in a way no other country on earth can match, with every major player in advanced semiconductor manufacturing and packaging building or expanding on our shores,” said U.S. Secretary of Commerce Gina Raimondo. “Because of President Biden and Vice President Harris’ leadership, we are creating hundreds of new jobs in Indiana and ensuring the Hoosier state and Purdue University will play a crucial role in advancing America’s national security and supply chains.”

“President Biden and Vice President Harris are bringing the most advanced semiconductor manufacturing back to the United States,” said Arati Prabhakar, Assistant to the President for Science and Technology and Director of the White House Office of Science and Technology Policy. “Advanced packaging is more and more critical for AI and other leading-edge systems, but it requires extremely precise manufacturing processes. 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.”

The West Lafayette plant builds on SK Group’s previously announced multi-billion commitment to invest in American manufacturing, including EV batteries and biotechnology, which was announced during a meeting with President Biden in July 2022. Through the proposed CHIPS investment in SK hynix, the world’s leading producer of HBM, the Biden-Harris Administration would take a meaningful step in advancing the security of the U.S. AI supply chain. With this announcement, the United States will have preliminary agreements with all five of the world’s leading-edge logic, memory, and advanced packaging providers. No other economy in the world has more than two of these companies producing leading-edge chips on its shores. 

SK hynix’s West Lafayette facility, located at the Purdue University Research Park, will be home to an advanced semiconductor packaging line that will mass-produce next generation HBM. These high-performance memory chips are crucial components of graphics processing units (GPUs) that train AI systems due to their increased processing power. This next generation chip would be mass-produced at the West Lafayette facility and will boast a more advanced performance than the company’s latest HBM, which processes up to 1.18 terabytes of data – the equivalent of 230 full HD movies – per second. Mass production at the facility is expected to begin in the second half of 2028.

“The Biden-Harris Administration is dedicated to inventing and commercializing semiconductor technology in the United States and to promoting domestic semiconductor manufacturing. With President Biden and Vice President Harris’ proposed investment in SK hynix, we could advance our commitment to accomplishing both,” said Under Secretary of Commerce for Standards and Technology and National Institute of Standards and Technology Director Laurie E. Locascio. “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.”

As a result of this proposed investment, the Biden-Harris Administration would establish a research hub in Indiana because of SK hynix’s partnership with Purdue University, which hosts the largest facility of its kind at a U.S. university, while bringing next generation HBM and advanced packaging R&D to the United States. The next generation HBM that will be researched and developed, mass-produced, and packaged in this ecosystem with Purdue University will play an important role in the U.S. semiconductor ecosystem and advancing U.S. technological leadership.

“We deeply appreciate the U.S. Department of Commerce’s support and are excited to collaborate in seeing this transformational project fully realized,” said SK hynix CEO Kwak Noh-Jung. “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.”

SK hynix will collaborate with Purdue University on plans for future R&D projects, which include working on advanced packaging and heterogeneous integration with Purdue’s Birck Nanotechnology Center and other research institutes and industry partners. SK hynix plans to collaborate on projects for memory-centric solutions and architecture for generative AI – specifically memory design and in/near memory computing. As part of its workforce development efforts, SK hynix plans to work with Purdue University and Ivy Tech Community College to develop training programs and interdisciplinary degree curricula that will cultivate a high-tech workforce and build a reliable pipeline of new talent. Additionally, SK hynix plans to support the work of the Purdue Research Foundation and other local non-profits and charities by building partnerships that provide community development, growth opportunities, and leadership training.

The company has indicated that it plans to claim the Department of the Treasury’s Investment Tax Credit, which is expected to be up to 25% of qualified capital expenditures. In addition to the proposed direct funding of up to $450 million, the CHIPS Program Office would make up to $500 million of proposed loans – which is part of the $75 billion in loan authority provided by the CHIPS and Science Act – available to SK hynix under the non-binding PMT.

As explained in its first Notice of Funding Opportunity, the Department may offer applicants a PMT on a non-binding basis after satisfactory completion of the merit review of a full application. The PMT outlines key terms for a potential CHIPS incentives award, including the amount and form of the award. The award amounts are subject to due diligence and negotiation of award documents and are conditional on the achievement of certain milestones. After the PMT is signed, the Department begins a comprehensive due diligence process on the proposed projects and continues negotiating or refining certain terms with the applicant. The terms contained in any final award documents may differ from the terms of the PMT being announced today.

About CHIPS for America

Nearly two years after the passage of CHIPS and Science Act, the Biden-Harris Administration is moving full speed ahead in order to help protect our economic and national security and restore American leadership in an industry that we started decades ago. By allocating over $30 billion in proposed funding to build factories domestically and proposing to invest billions more in research and innovation, we are unlocking over $300 billion in public and private investment and creating more than 100,000 jobs, including tens of thousands of good-paying jobs that don't require a college degree. Our efforts are a meaningful step towards ensuring that the United States produces more of the world’s most advanced technologies – from AI to defense systems and everyday items like cars and medical devices. With a focus on expanding capacity, enhancing capabilities, maintaining competitiveness, and driving commercialization, CHIPS for America is working towards driving our future, securing our supply chains, and cementing America’s place at the forefront of technology.

CHIPS for America is part of President Biden’s economic plan to invest in America, stimulate private sector investment, create good-paying jobs, make more in the United States, and revitalize communities left behind. CHIPS for America includes the CHIPS Program Office, responsible for manufacturing incentives, and the CHIPS Research and Development Office, responsible for R&D programs, that both sit within the National Institute of Standards and Technology (NIST) at the Department of Commerce. Visit https://www.chips.gov to learn more.