Chip makers are diversifying production away from Taiwan. Here’s why.

Nvidia (NVDA) partner SK Hynix (000660.KS) plans to invest nearly $4 billion to build an advanced chip-packaging facility in West Lafayette, Indiana, according to a WSJ report. The investment is a boon to President Biden’s goal to bring more extensive chip production to the US. TD Cowen Managing Director Matthew Ramsay joins Yahoo Finance Live to discuss what the investment means for the semiconductor sector.

Ramsay explains many of the top chip companies driving the AI ​​and PC market manufacture most of their products in Taiwan. However, SK Hynix’s efforts to create an Indiana plant can be seen as a long-term plan to build out manufacturing and other layers of the supply chain in the US and Europe –– changes Ramsay says are “super important for the industry.”

“Everyone’s in this boat together,” Ramsay says of chip makers’ Taiwan concentration. However, Ramsay notes Intel is also pushing to diversify its manufacturing away from a single hub, having manufactured stateside “for decades.” Ramsay adds that Micron could benefit from CHIPS Act funding, a “necessary step for them to regain competitiveness with Nvidia” and other tech names.

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Editor’s Note: This article was written by Gabriel Roy.