- SK Hynix is the leading supplier of high-bandwidth memory (HBM) chips, which are an essential component for OpenAI and ChatGPT.
- The plant will meet growing demand for artificial intelligence technology as Biden seeks to reestablish the United States as a semiconductor powerhouse.
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NVIDIA supplier SK Hynix will build a $4 billion chip packaging facility in West Lafayette, Indiana, to meet growing demand for artificial intelligence technology.
The South Korean company is the main supplier of high-bandwidth memory (HBM) chips, which are an essential component for complex artificial intelligence applications such as OpenAI or ChatGPT.
Operations at the new facility could begin in 2028 and will create more than 800 jobs, according to a report published in the Wall Street Journal.
The plant will handle packaging the chips and will be supported by a combination of federal and state tax incentives.
It is the latest plan to meet growing demand for artificial intelligence technology as President Joe Biden seeks to reestablish the United States as a semiconductor superpower and reduce dependence on foreign, particularly Chinese, components.
SK Chairman Chey Tae-won met virtually with President Biden in July to discuss planned investments in the US.
The South Korean company is the main supplier of high-bandwidth memory (HBM) chips
The plant would be the first major facility for large-scale HBM production in the United States.
It will be financed, in part, by government subsidies under the US Chip Act, which reserves at least $3 billion to expand such domestic production.
SK Hynix had considered Arizona for the site, but decided on Indiana because of its proximity to Purdue University, which has one of the largest semiconductor and microelectronics engineering programs in the United States.
American chipmaker SkyWater Technology also plans to open a $1.8 billion site in the area.
As an NVIDIA partner and dominant force in HBM chip production, SK Hynix has seen its profile and revenue skyrocket throughout the boom.
Its market capitalization has more than doubled in the last year to approximately $96 billion.
A SK Hynix spokeswoman told the Journal that the company still needs to make a “final decision” on the Indiana plant, but a vote is expected soon.
A growing number of data centers and AI factories in the United States have raised concerns in recent years about water supply and the strain placed on the grid.
Electricity demand projections for the next nine years have more than doubled, from 221,000 gigawatt hours last year to 564,000 gigawatt hours this year, according to North American Electric Reliability Corp.
American chipmaker SkyWater Technology also has plans to open a $1.8 billion site in the area.
The increase is largely due to advances in artificial intelligence, cloud computing and cryptocurrency mining, all of which require large data centers which, in turn, consume large amounts of energy.
The International Energy Agency (IEA) predicts that globally ‘electricity consumption by data centers, artificial intelligence (AI) and the cryptocurrency sector could double by 2026’.
By 2026, they say the energy demand of global data centers will be equal to that of all of Japan.
According to the IEA, there are currently approximately 2,700 data centers in the US, which will drain more than four percent of the country’s electricity in 2022.
They predict that by 2026 their consumption will increase to six percent.