(Bloomberg) -- Amkor Technology Inc. is in line to receive $400 million in US government grants and about $200 million in loans for an advanced chip packaging project in Arizona, marking the latest award from a program designed to boost American semiconductor manufacturing.
The funding from the 2022 Chips and Science Act will support Amkor’s $2 billion facility in the city of Peoria, which is estimated to generate about 2,000 jobs. The site is slated to package chips manufactured for Apple Inc. at Taiwan Semiconductor Manufacturing Co.’s sprawling new Phoenix complex.
The process of packaging — encasing chips to protect them and connect them to devices they power — has become increasingly important to semiconductor innovation as the chips themselves approach the limits of physics. It’s also become a major bottleneck in artificial intelligence, affecting the production of Nvidia Corp.’s market-leading AI accelerators.
Boosting US semiconductor packaging is one of four main goals the Commerce Department outlined in implementing the Chips Act, which set aside $39 billion in grants — plus $75 billion in loans and guarantees, and 25% tax credits — to help wean the US off Asian supply lines. Amkor, based in Arizona, expects to benefit from tax credits in addition to grants and loans, according to the Commerce Department.
The law also allocated $11 billion for research and development, $3 billion of which is set aside for packaging. The US has a lot of catching up to do: as of 2019, the country was home to just 2% of the world’s chip packaging capacity, compared with 38% in China.
In addition to Amkor, SK Hynix Inc. is building a $4 billion packaging factory in Indiana, Samsung Electronics Co. is adding packaging capacity in Texas and Intel Corp. opened a new packaging facility in New Mexico.
It’s an area of “necessary growth,” Peter Cleveland, vice president of global government affairs at TSMC, said at a June conference focused on foreign direct investment. “Advanced packaging must succeed in the United States.”
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