SK hynix Strikes Billion Dollar Deal for HBM Memory Plant

The US Department of Commerce and SK hynix have recently inked a billion-dollar deal aimed at establishing a cutting-edge high-bandwidth memory (HBM) advanced packaging and research and development (R&D) plant. This significant agreement includes a non-binding preliminary memorandum of terms (PMT) for direct grants totaling $450 million, forming part of SK Hynix's substantial $3.87 billion investment in West Lafayette, Indiana. The primary focus of this investment is the construction of an HBM memory packaging plant for artificial intelligence (AI) products and an advanced packaging R&D facility, which is set to address a critical gap in the US semiconductor supply chain.

These incentives are a crucial component of the CHIPS and Science Act, ensuring that the US establishes preliminary agreements with all five of the world's leading-edge logic, memory, and advanced packaging providers. This move positions the US uniquely, as no other economy currently hosts more than two of these leading companies producing cutting-edge chips domestically. The collaboration between the US Department of Commerce and SK hynix signifies a significant step towards bolstering the nation's semiconductor capabilities and fostering technological innovation.

SK hynix has expressed its intention to leverage the Department of the Treasury's Investment Tax Credit, which could potentially cover up to 25% of qualified capital expenditures. In addition to the proposed direct funding of $450 million, the CHIPS Program Office is prepared to offer up to $500 million in loans to SK hynix under the non-binding PMT. This loan provision is part of the $75 billion in loan authority allocated by the CHIPS and Science Act, further supporting SK hynix's ambitious plans for its West Lafayette facility.

The state-of-the-art West Lafayette facility, situated at the Purdue University Research Park, is slated to house an advanced semiconductor packaging line that will commence mass production of next-generation HBM in the latter half of 2028. The collaborative efforts between SK hynix and Purdue University in researching, developing, and mass-producing the next generation of HBM are poised to play a pivotal role in enhancing the US semiconductor ecosystem and reinforcing the nation's technological leadership.

Commenting on this groundbreaking partnership, U.S. Secretary of Commerce Gina Raimondo emphasized the significance of the collaboration with SK hynix in fortifying America's AI hardware supply chain. The involvement of major players in advanced semiconductor manufacturing and packaging on US soil underscores the country's commitment to technological advancement and innovation. The support provided by the CHIPS and Science Act is instrumental in propelling SK hynix's contributions to the intricate computing systems vital to the nation's progress, while also fueling R&D investments for future success.