Nvidia supplier SK Hynix plans to invest $3.87 billion in U.S. chip facility

SK Hynix, one of the world's largest memory chipmakers, said it would invest $3.87 billion in its first chip packaging facility in the U.S., marking another victory for the Biden administration's efforts to onshore chip production.

The South Korean firm announced the West Lafayette, Indiana-based project at an event at Purdue University on Wednesday, with officials from Indiana State and the U.S. government in attendance. 

SK Hynix said the facility, slated for operation in 2028, will house a production line for SK Hynix's cutting-edge high-bandwidth memory chips — important components in the Nvidia GPUs used to train AI systems like ChatGPT.

"We are excited to become the first in the industry to build a state-of-the-art advanced packaging facility for AI products in the United States," said SK Hynix CEO Kwak Noh-Jung in a statement, adding it would "strengthen supply-chain resilience and develop a local semiconductor ecosystem." 

The project will also bring more than a thousand new jobs to the region and will include an R&D facility to develop future generations of chips, according to the company.

The planned Indiana facility joins a long list of new semiconductor investments announced in the U.S. since the August 2022 passage of the U.S. CHIPS and Science Act, which seeks to build up the domestic chip industry seen as critical to the economy and national security. 

The act provides billions in incentives for companies to onshore chip production in the U.S., on condition they do not expand certain semiconductor manufacturing operations in China and other countries deemed a national security risk. 

Sen. Todd Young, R-Ind., said in a statement "The CHIPS and Science Act opened a door that Indiana has been able to sprint through, and companies like SK hynix are helping to build our high-tech future."

Other Asian chipmaking giants have been drawn to the U.S. in recent years. South Korea's Samsung is building a $17 billion chip fabrication plant in Texas, and Taiwan's TSMC, the world's largest chip foundry, has committed $40 billion for two foundry chip facilities in Arizona.

While the distribution of CHIPS Act funding took over a year, last month the White House awarded Intel up to $8.5 billion in grants, with billions more in loans available. 

SK Hynix was up more than 4% in Thursday trading on the Korea Stock Exchange. The company's share price skyrocketed more than 120% over the past year amid excitement surrounding Nvidia and AI.