The Biden administration said on Tuesday that it would award up to $450 million in grants to a South Korean chipmaker, SK Hynix, to help build its new chip facility in Indiana, in what officials described as a milestone in rebuilding the U.S. semiconductor manufacturing industry.
With the announcement, the United States now has commitments from all five of the world’s leading-edge semiconductor manufacturers to construct chip plants in the United States with financial assistance from the administration, Commerce Secretary Gina M. Raimondo said in a call with reporters on Monday. The Biden administration previously announced that it had reached agreements with Intel, Taiwan Semiconductor Manufacturing Company, Samsung and Micron to help fund investments in the United States.
“These are the only companies in the world capable of producing leading-edge chips at scale,” she said.
SK Hynix announced in April that it had committed to investing $3.87 billion in a facility in West Lafayette, Ind. Ms. Raimondo called that investment a “huge deal” because it meant that the United States would “have the most secure and diverse supply chain in the world for the advanced semiconductors that power artificial intelligence.” SK Hynix makes advanced memory chips that are an essential component for creating A.I.
Commerce Department officials said that, with the SK Hynix grant, the United States had now allocated more than $30 billion of a $39 billion pot of funding that stems from the CHIPS Act, a bipartisan law aimed at building up domestic chip manufacturing and reducing America’s dependence on Asia for vital semiconductors.
Only about 10 percent of the world’s semiconductors are manufactured in the United States, down from about 37 percent in 1990. Reversing the nation’s declining share of global chip manufacturing has been a major priority for President Biden and a key component of his economic policy agenda.
The Semiconductor Industry Association, a trade group, has estimated that the new investments will help the United States triple its domestic chip manufacturing capacity by 2032, raising America’s share of world chip manufacturing to 14 percent by 2032.
Other companies have won much larger, multibillion-dollar grants. Federal officials awarded Intel up to $8.5 billion and TSMC up to $6.6 billion this year.
The roughly $30 billion in total public investment has been accompanied by commitments from private companies to invest more than $300 billion in the United States, Commerce Department officials said. That is helping to create more than 100,000 jobs, officials said.
None of the $39 billion has been distributed to companies yet, but the funds are expected to begin going out to them before the end of the year, a senior administration official said. The Commerce Department will decide how to allocate the remaining funding it has on the same timeline, according to the official.
Longer-term questions remain about the viability of some companies. Intel said on Thursday that it would slash more than 15,000 jobs, amounting to 15 percent of its work force, as the company tries to recover from a series of stumbles. Intel said it remained committed to its plan to expand its chip factories in the United States.