WASHINGTON The US Commerce Department said on Tuesday it plans to award SK Hynix up to US$450 million in grants to help fund an advanced packaging plant and research and development facility for artificial intelligence (AI) products in Indiana.

In April, SK Hynix, the world's second-largest memory chip maker, said it would invest around US$3.87 billion to build the facility that will include an advanced chip production line to mass-produce next-generation high bandwidth memory chips, currently used in graphic processing units that train AI systems, the Nvidia supplier said.

The department also plans to make available US$500 million in government loans for the SK Hynix project, which is expected to qualify for a 25% investment tax credit.

The memory packaging plant for AI products and an advanced packaging R&D facility will create 1,000 jobs and fill a key gap in the US semiconductor supply chain, the department said.

Congress in August 2022 approved a US$39 billion subsidy program for US semiconductor manufacturing and related components along with US$75 billion in government lending authority.

Commerce Secretary Gina Raimondo said the department has announced term sheets with 15 companies offering about US$30 billion in funding that "will unlock another US$300 billion of private capital".

The US now has major commitments from all five major leading edge semiconductor chip manufacturers - TSMC, Intel, Samsung Electronics, Micron and SK Hynix.

"It means we in the United States will have the most secure and diverse supply chain in the world for the advanced semiconductors that power artificial intelligence," Raimondo told reporters. The department added 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, Indiana facility will be home to an advanced semiconductor packaging line mass producing next-generation high-bandwidth memory chips that are key components of graphics processing units that train AI systems.

SK Hynix CEO Kwak Noh-Jung said in a statement the company deeply appreciates "the US Department of Commerce's support and are excited to collaborate in seeing this transformational project fully realised."

Commerce in May said it planned to award US$75 million to Absolics for constructing a facility in Georgia to supply advanced materials to the country's semiconductor industry. The planned award is to an affiliate of SKC Co, which in turn is part of South Korea's second-largest conglomerate SK Group, as is SK Hynix. 

  - Bloomberg