SK hynix to invest $4 billion in Indiana for advanced chip packaging facility

SK hynix CEO Kwak Noh-jung speaks at the shareholders' meeting held Wednesday at its Icheon, Gyeonggi-based headquarters. [SK HYNIX]

SK hynix is set to invest approximately $4 billion in building an advanced chip packaging facility in West Lafayette, Indiana, the Wall Street Journal reported Tuesday. The project, which was announced in 2022, had its location unconfirmed until now.

The packaging plant, located adjacent to Purdue University — which is renowned for its notable chip engineering programs — could commence operations in 2028, per the Journal. It is expected to provide jobs for up to 1,000 people.

State and federal incentive programs will subsidize the project, the report said.

The Korean chipmaker has been scouting for a suitable location for the facility since SK Group Chairman Chey Tae-won pledged a $15 billion investment in chip research and manufacturing in the United States in 2022.

The company said on Wednesday that the final decision on the facility's location was “yet to be made.”

As a supplier to Nvidia, SK hynix is a leader in high bandwidth memory (HBM) chips, essential for AI chips that need to process vast amounts of data at higher speeds while consuming less energy. It is poised to supply its latest HBM3E chips to the American tech giant by the end of this month, a milestone that none of its rivals have achieved so far.

The packaging facility in question is expected to be dedicated to HBM chips.

Meanwhile, SK hynix CEO Kwak Noh-jung emphasized the importance of the Chinese market, where the company operates manufacturing plants in Wuxi City, Chongqing and Dalian at the chipmaker's shareholders' meeting on Wednesday.

“We are facing restrictions against China, but we have obtained VEU [verified end users] status for the Wuxi plant, which allows us to operate the plant normally by manufacturing 1a-nanometer dynamic random access memory chips there,” he told reporters.

“This year, business conditions for the Chinese market are expected to get better.”

Last year, SK hynix along with Samsung Electronics, obtained VEU status from the United States which allows the firm to bring certain chip manufacturing equipment to China without a separate approval process, mitigating major uncertainties for the Korean chipmakers, which still consider China a major market.

BY JIN EUN-SOO [jin.eunsoo@joongang.co.kr]