New facility to bolster US competitiveness against China in the semiconductor market
SK Hynix, a leading South Korean memory chipmaker, is preparing to select a site in the United States for its new advanced chip packaging plant, with construction expected to begin in the first quarter of 2023, according to sources familiar with the plans. This move is part of the ongoing effort to strengthen the US semiconductor sector, especially as China intensifies its investments in the industry.
The new plant is expected to cost several billion dollars, with mass production projected to commence around 2025-2026. It will employ approximately 1,000 workers, one of the sources revealed, though the exact details of the project remain under wraps. The facility is likely to be built near a university with strong engineering talent, providing an ideal environment for technological development.
The plant is part of SK Group’s broader $22 billion investment package, which includes a significant allocation to semiconductor production, green energy, and bioscience projects in the US. The announcement, supported by the White House, revealed that $15 billion of this sum would go toward research and development (R&D), material procurement, and the construction of an advanced packaging and testing facility. This plant will focus on packaging SK Hynix’s memory chips alongside logic chips from other US companies, particularly for applications in machine learning and AI.
Strengthening US Semiconductor Production
SK Hynix confirmed that it aims to select a location for the plant in the first half of 2023, although the exact timeline for construction remains undecided. The company’s move is a critical part of a wider US strategy to regain a competitive edge in semiconductor manufacturing, particularly in advanced packaging. Historically, the US has outsourced most basic chip packaging to overseas facilities, mostly in Asia, but the US is now shifting its focus to advanced packaging techniques that combine different chips into a single unit, improving performance while minimizing costs.
The packaging plant will play a key role in bolstering US capabilities in this area, as China’s heavy investments in advanced packaging could potentially disrupt global markets in the coming years. The White House highlighted this risk in a 2021 report, which noted that while the US and its allies have advanced capabilities, China’s substantial investments in the field could pose a significant challenge to future market dynamics.
US Government Support and Industry Expansion
This announcement follows the recent signing of the CHIPS Act by President Biden, which allocates $52 billion in subsidies for US semiconductor manufacturing and R&D. The new plant, along with the R&D facilities, will qualify for funding under this program, providing a significant boost to SK Hynix’s efforts in the US market.
The semiconductor industry has seen a wave of expansion in the US, with major companies such as Taiwan Semiconductor Manufacturing Company, Samsung Electronics, and Intel announcing significant investments in new facilities. This increasing focus on chip production within the US is seen as a strategic move to reduce reliance on foreign markets and strengthen the country’s position in the global semiconductor supply chain.
