South Korean chip giant SK hynix Inc. said Tuesday it is set to receive up to $450 million in grants from the US government for its investment to build a production base for advanced semiconductor packaging in Indiana.

In April, the company announced a plan to invest $3.87 billion to build a memory packaging plant for artificial intelligence (AI) products and an advanced packaging research and development (R&D) facility in West Lafayette of the U.S. state to produce next-generation memory chips.

The chipmaker and the US Department of Commerce have signed "a nonbinding preliminary memorandum of terms" to provide up to $450 million in proposed federal incentives under the US' CHIPS and Science Act to establish a high-bandwidth memory (HBM) advanced packaging fabrication and R&D facility, the company said in a release.

Separately, Washington also plans to make available $500 million in government loans for the project, which is expected to qualify for a tax benefit equivalent of up to 25 percent of its capital expenditures, it added.

"We look forward to establishing a new hub for AI technology, creating skilled jobs for Indiana and helping build a more robust, resilient supply chain for the global semiconductor industry," company CEO Kwak Noh-jung said.

The company is moving forward with the construction in cooperation with US institutions to supply leading-edge AI memory products, he added.

U.S. Secretary of Commerce Gina Raimondo said the envisioned construction will create around 1,000 new jobs and fill "a critical gap in the US semiconductor supply chain," noting that the act is meant "to supercharge America's global technology leadership," according to her office.

"Advanced packaging is more and more critical for AI and other leading-edge systems, but it requires extremely precise manufacturing processes. With this incentive, SK hynix will make a major contribution to the complex computing systems that our nation relies on," the secretary said.

SK hynix is working to expand its lead over Samsung Electronics Co. and Micron Technology Inc. in the supply of HBM chips to Nvidia, and packaging is deemed as a key arena in the Sino-US technological rivalry. (Yonhap)