SK Hynix (SKHY.US) officially breaks ground on its first HBM advanced packaging plant in the US, investing over $4 billion, with mass production set to begin in 2029

According to Zhitong Finance APP, South Korean memory chip giant SK hynix (SHKY.US) held a groundbreaking ceremony on Thursday for its advanced memory chip packaging plant in Indiana, USA. This factory, with an investment of over $4 billion, will become SK hynix’s first high-bandwidth memory (HBM) advanced packaging base in the United States and is one of the key projects promoting the localization of the critical semiconductor supply chain in the US.

As investment in artificial intelligence infrastructure continues to grow, HBM has become an indispensable core component of the most advanced AI acceleration systems for companies like Nvidia (NVDA.US). SK hynix plans to further expand HBM capacity through the Indiana project and strengthen its position in the US AI chip supply chain.

SK hynix CEO Kwak Noh-Jung stated at the ceremony that the plant’s cleanroom is expected to be operational by October 2028, with next-generation HBM products scheduled for mass production in the second half of 2029. Once fully operational, this project will become a major HBM production hub for SK hynix in the US, expected to directly employ about 1,000 people.

The company stated that wafers produced in Korea will be shipped to Indiana for advanced packaging and testing before being supplied to US customers. This means the factory is not directly responsible for front-end wafer manufacturing but assumes the increasingly critical backend advanced packaging and testing stages in the HBM production process.

High-bandwidth memory has already become one of the most crucial semiconductor products in the current global AI hardware investment boom.

As AI model scales continue to expand, GPUs and AI accelerators need to process ever-growing amounts of data, and traditional memory can no longer meet data transfer speed and bandwidth requirements. By stacking multiple DRAM chips, HBM can significantly boost data transfer bandwidth and has thus become a vital part of Nvidia’s most advanced AI acceleration systems.

The surge in AI server demand is also fueling SK hynix’s rapid growth, making the company now the second-largest in market value in Korea, second only to Samsung Electronics. Samsung is also benefiting from the rapid growth in demand for HBM and other memory chips.

SK hynix’s Indiana project is supported by the US CHIPS and Science Act. As part of the related plan, the company could receive up to $458 million in direct subsidies and up to $500 million in loans, with total potential government support reaching $958 million.

The CHIPS and Science Act was signed into law in 2022, with one of its main goals being to reduce US reliance on overseas semiconductor manufacturing, and to promote the returning of chip manufacturing, advanced packaging, and R&D capabilities to the United States.

Kwak noted that this plant will help strengthen the domestic US AI chip supply chain. SK hynix will continue to expand investment and cooperation in the US, aiming to become an important partner in the country’s AI industry development.

Compared to merely increasing chip manufacturing capacity, another significant aspect of SK hynix’s investment is its focus on advanced packaging.

As traditional process scaling becomes increasingly difficult, integrating multiple different chips into one package, or even stacking them vertically through advanced packaging, has become an important technological route for enhancing AI chip performance.

Advanced packaging has long been a relatively weak link in the US semiconductor supply chain.

SK hynix’s decision to establish an HBM packaging facility in the US means wafers produced in Korea will be shipped to the US for packaging and testing, further shifting parts of the critical AI chip supply chain to the United States. The company expects this project, through construction, operations, and related upstream and downstream industries, to ultimately create around 7,000 direct and indirect jobs.

The company is currently evaluating over 100 potential suppliers for materials, components, and semiconductor equipment. If some of these companies invest locally around the new plant, it could further form a more complete semiconductor industry cluster.

SK hynix has also signed a partnership agreement with nearby Purdue University. The two sides will collaborate on R&D for HBM, system integration, and advanced packaging technologies.

The company also plans to build an advanced packaging R&D and testing platform near the production lines, combining mass production with the development of next-generation semiconductor technologies. Additionally, SK hynix’s parent company SK Group stated it would provide new employment and career development opportunities for US veterans who previously served with US Forces Korea.