SOUTH Korean chipmaker SK Hynix is poised to choose Indiana over Arizona for its first major United States investment, a US$15 billion advanced packaging facility that would mark a win for the Midwest and for US 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 sources 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 US, which has become a bottleneck in Washington’s efforts to revitalise the domestic semiconductor industry. The US has only 3 per cent 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 US spending tens of billions of US dollars to wean itself off Asian supply lines and bolster the domestic economy. Semiconductor firms have pledged to invest more than US$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 US$60 billion in investments from Taiwan Semiconductor Manufacturing, Intel, Amkor Technology and dozens of others.

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Indiana has a very modest footprint just north of US$2 billion in recent investment. SK Hynix’s pending decision would be a boon to the state and the region, which secured a US$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 on Thursday (Feb 1) 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 such as 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 are among the key foreign firms caught in the US-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 US waivers to continue shipping some equipment to China that would otherwise be restricted, but there’s no guarantee those measures will stay in place. BLOOMBERG