South Korean chipmaker SK Hynix Inc. is poised to choose Indiana over Arizona for its first major U.S. investment, a $15 billion advanced packaging facility that would mark a win for the Midwest and for U.S. efforts to build a full semiconductor supply chain.
The firm first announced the project in 2022 and originally intended to select a site within the first half of 2023. SK Hynix is slated to pick Indiana but still has Arizona as a second choice, according to people familiar with the matter who asked not to be named discussing confidential conversations.
An SK Hynix spokesperson said that no final decision has been made, following a Financial Times report that the firm had selected Indiana.
The project will be a significant step forward for advanced packaging in the U.S., which has become a bottleneck in Washington’s efforts to revitalize the domestic semiconductor industry. The U.S. has only 3% of the world’s packaging capacity, meaning that firms manufacturing chips in America have to ship them to Asia to be assembled for use.
Critical electronic components have become a battleground between Washington and Beijing, with the U.S. spending tens of billions of dollars to wean itself off Asian supply lines and bolster the domestic economy. Semiconductor firms have pledged to invest more than $230 billion on American soil since President Joe Biden took office, spurred by the 2022 Chips Act.
Most of that investment has gone to Texas, New York and Arizona, which has alone won more than $60 billion in investments from Taiwan Semiconductor Manufacturing Co., Intel Corp., Amkor Technology Inc. and dozens of others.
Indiana has a very modest footprint just north of $2 billion in recent investment. SK Hynix’s pending decision would be a boon to the state and the region, which secured a $20 billion Intel project in Ohio.
It would also be a victory for Senator Todd Young, an Indiana Republican and an architect of the Chips Act. Young declined to comment Thursday but had confirmed in a November interview that Indiana officials and SK Hynix were in talks.
Part of his pitch, he said, would be his state’s small profile in the semiconductor industry—which comes with his undivided attention, on domestic issues like permitting and on Washington’s political climate.
“As we try and properly modulate export controls on semiconductors, they want to make sure they have access to elected officials who actually can get the ear of the president of the United States and Department of Commerce,” Young said in November.
SK Hynix and Korean rival Samsung Electronics Co. are among the key foreign firms caught in the U.S.-China technology war, as Washington tries to cut off Beijing from the most advanced semiconductors and chipmaking equipment. The two companies—along with industry giant TSMC—have received U.S. waivers to continue shipping some equipment to China that would otherwise be restricted, but there’s no guarantee those measures will stay in place.