SK Hynix to build US chip packaging plant in Indiana: FT

SK Hynix Inc., the world’s second-largest memory chip producer, is reported to have picked Indiana as the site for its advanced chip packaging plant in the US, according to the Financial Times on Thursday.

SK Hynix Chief Executive Chey Tae-won vowed to invest $22 billion to build chip packaging plants in the US during his video conference with US President Joe Biden in 2022. At that time, Arizona, Indiana and Texas were floated as strong candidates for the Korean chip maker’s US chip plant.

Advanced packaging is a back-end processing that either stacks or horizontally aligns multiple dynamic random memory chips (DRAMs) and other components to make them a single functional semiconductor. This packaging technology helps improve overall chip performance and is touted as the next-generation semiconductor technique.

Global chip makers are rushing to invest in building advanced packaging manufacturing facilities to meet growing demand for high-performance chips, such as the high-bandwidth memory (HBM) chip, a core part in running generative AI applications.

If SK Hynix builds its advanced chip packaging plant in the US, the plant is expected to produce HBM chips for Nvidia Corp.’s AI accelerator powered by the US AI chip giant’s graphics processing units.

HBM-PRODUCING FACILITIES

The world’s largest foundry operator Taiwan Semiconductor Manufacturing Company Ltd. (TSMC) produces Nvidia’s GPUs and completes AI accelerators like H100 during an advanced packaging process, using HBMs from memory suppliers such as SK Hynix.

Considering that TSMC is currently constructing two plants in Arizona, an HBM packaging plant by SK Hynix could enable Nvidia to sell US-made AI accelerators.

As the US is considered a country holding advanced packaging technologies, SK Hynix is also expected to be able to enhance its packaging research & development capabilities with the country’s outstanding local talent.

If SK Hynix adds a plant in the US, the South Korean chip maker would be closer to its key customers, not only Nvidia but also Apple Inc. and Advanced Micro Devices Inc. (AMD), raising expectations for more chip orders. 

In response to the FT report on its US plant construction plan, SK Hynix, however, said “We are currently considering a possible investment in the US but have not made a final decision yet.”

“We will be meticulous in choosing a location that can have the most benefit.”

SK HYNIX TO DOUBLE HBM OUTPUT IN 2024

Earlier last year during its annual shareholder meeting, SK Hynix Vice Chairman Park Jung-ho reiterated that the world’s No. 2 memory maker would go ahead with plans to build a semiconductor chip factory in the US to meet demand from its US customers.

SK Hynix is leading the HBM market, ahead of its archrival Samsung Electronics Co., the world’s No. 1 memory maker.

It swung to a profit in the last quarter of 2023, reversing losses over the past four quarters thanks to brisk sales of its high-performance chips such as HBM3 and double data rate 5 (DDR5) chips.

Buoyed by the stellar results, SK Hynix plans to double its production capacity for HBM, demand for which will likely surge 60% per year on average, in 2024.

The company currently produces all its HBM chips in Korea.

Write to Jeong-Soo Hwang at hjs@hankyung.com

Sookyung Seo edited this article.