SK hynix (Indiana)

Project Summary

The U.S. Department of Commerce awarded SK hynix up to $458 million in direct funding under the CHIPS and Science Act to establish a high-bandwidth memory (HBM) advanced packaging fabrication and research and development (R&D) facility. This funding will support and build upon SK hynix’s investment of approximately $3.87 billion in West Lafayette, Indiana, to build a memory packaging plant for artificial intelligence (AI) products and an advanced packaging R&D facility.

Economic and National Security Impact

This investment in SK hynix, the world’s leading producer of HBM, represents a significant step in advancing the security of the U.S. AI supply chain because AI is driving the growth and demand for HBM capacity, which has historically been in low supply and is one of the core AI supply chain constraints.

SK hynix’s West Lafayette facility at the Purdue University Research Park will be home to an advanced semiconductor packaging line that will mass-produce next generation HBM, the highest performance memory chips, that are crucial components of Graphics Processing Units (GPUs) that train AI systems. HBM is important to AI training because of its processing power; and the next generation chips that will be mass-produced at the West Lafayette facility will boast a more advanced performance than the company’s latest HBM, which processes up to 1.18 terabytes of data – the equivalent of 230 full HD movies – per second. Mass production at the facility is expected to begin the second half of 2028.

This project, with its plans for a full R&D test bed and location right on the Purdue University Campus, solidifies a third sustainable semiconductor ecosystem. SK hynix will collaborate with Purdue University on R&D projects, which include working on advanced packaging, heterogenous integration, memory-centric solutions and architecture for generative AI – specifically memory design and in/near memory compute with Purdue’s Birck Nanotechnology Center and other research and institutes and industry partners.

Workforce and Community Impact

Through SK hynix’s manufacturing and facility operations, this investment is expected to support approximately 1,000 new facility jobs and hundreds of construction jobs.

To recruit, train, and retain the workforce needed for these projects, SK hynix will implement a robust workforce strategy informed by the Biden-Harris Administration’s Good Jobs Principles and will receive up to $8 million in dedicated CHIPS funding to implement workforce initiatives including worker recruitment and training. 

To advance its manufacturing workforce efforts: 

• SK hynix plans to work with Purdue University and Ivy Tech Community College, Indiana State University, K-12 and other local educational institutions and related organizations etc, to develop training programs and interdisciplinary degree curricula that will cultivate a high-tech workforce and build a reliable pipeline of new talent. 
• SK hynix plans to support the work of the Purdue University Research Foundation and other local non-profits and charities by building partnerships that provide community development, growth opportunities, and leadership training. 
• SK hynix will partner with various local educational institutions and related organizations, to establish an advanced packaging curriculum at those partners to grow the overall semiconductor workforce. In addition, the local educational institutions is providing support with the site, workforce, equipment and suppliers. 
• SK hynix will undertake efforts to include and maintain current salary and mean salary by job classification on their public website and in all job postings

For its construction workforce:

• SK hynix will, consistent with the statutory requirements of the CHIPS Act, include terms in its construction contracts requiring all construction contractors and subcontractors to comply with the Davis Bacon Act. In addition, the Department of Commerce is building a best-in-class Davis Bacon compliance program to ensure that recipients of CHIPS funding comply with the law.   
• SK hynix has committed to either carry out a project labor agreement or undertake efforts to achieve a registered apprenticeship utilization rate of 15% on the construction sites. 
• SK hynix will undertake efforts to expand access and services for construction workers by undertaking efforts: 
  • Maintain or enter into bids from contractors that make financial contributions to Registered Apprenticeship Programs, and encourage partnerships with pre-apprenticeship programs that support individuals without access to or familiarity with such Registered Apprenticeship Programs; 
  • Work with contractors to identify and recruit candidates from economically disadvantaged populations; and
  • Work with contractors to provide wraparound services and benefits to employees such as personal protective equipment, health and safety services, safety events, on-site amenities, and housing services.
• The Department strongly encourages all applicants to use a project labor agreement for the construction of its projects. Before beginning construction, SK hynix is evaluating the use of a project labor agreement.

Environmental and Worker Safety Commitments

As is required for all CHIPS projects, the SK hynix projects will comply with all applicable environmental laws, including the Clean Water Act, Clean Air Act, and the Resource Conservation and Recovery Act. 

 In connection with the CHIPS award, SK hynix is making the following environmental commitments:   

• Carbon-Free Electricity: SK hynix will undertake efforts to operate the project with carbon-free electricity to the maximum extent possible and with the goal of operating with 100% carbon-free electricity by the early 2030s.
• Water: SK hynix targets that by the early part of the 2030s, the project will conserve and reuse water onsite with a goal to achieve a reduction in water intake intensity when compared to the first year of production. 
• Greenhouse Gas Emissions Abatement: SK hynix will abate greenhouse gas (GHG) emissions, including emissions of N2O and fluorinated gases, through manufacturing process improvements and source reductions, use of alternative chemicals, vapor and process gas destruction technologies, and/or abatement systems.
• PFAS Management: SK hynix will use its best efforts to segregate known process per-and polyfluoroalkyl substances (“PFAS”) that contain chemicals from other waste streams to a closed bulk storage system for off-site management by licensed and permitted treatment and disposal facilities.
• Public Reporting: SK hynix will publicly disclose on a website or another publication the environmental responsibility goals adopted by the project.:
  • Water intake intensity
  • Reduction of greenhouse gas emissions 

 SK hynix has also committed to the following worker safety measures: 

• Worker Safety Committee: SK hynix will establish and maintain a workplace safety committee comprised of workers and management that meets regularly and is authorized to address any worker health and safety concerns.
• Adoption of Most Protective Occupational Exposure Limits: SK hynix will apply the lowest (i.e., most protective) occupational exposure limit (OEL) among all applicable published health and safety standards (including National Institute for Occupational Safety and Health and American Conference of Governmental Industrial Hygienists standards), for hazardous chemicals used in the facility’s operations.

Financial and Commercial Terms

As stated in the CHIPS Notice of Funding Opportunity for Commercial Fabrication Facilities, CHIPS for America will disburse direct funding to the company for capital expenditures spent on the projects based on the completion of construction, technology, production, and commercial milestones. The CHIPS Program Office will track the performance of each CHIPS Incentives Award via financial and programmatic reports, in accordance with the award terms and conditions. All CHIPS funding recipients are required to adhere to restrictions pursuant to the CHIPS Act and NOFO regarding stock buybacks and national security guardrails, which limit the sharing of intellectual property. SK hynix Americas Inc. and SK hynix Semiconductor West Lafayette LLC have agreed to certain restrictions on dividends and buybacks for a period of 5 years.