By David Shepardson

WASHINGTON (Reuters) - The U.S. Commerce Department on Thursday finalized an award to SK Hynix (000660.KS, HXSCL) of up to $458 million in government grants to help fund an advanced chip packaging plant and research and development facility for artificial intelligence products in Indiana.

In April, the Nvidia (NVDA) supplier said it would invest $3.87 billion to build the West Lafayette facility which will include an assembly line to mass produce next-generation high bandwidth memory chips. The chips are used in graphic processing units that train artificial intelligence systems.

The department also plans to make available $500 million in government loans for the SK Hynix project. The grant funds would be distributed when SK Hynix meets project milestones.

The project will create 1,000 jobs and fill a key gap in the U.S. semiconductor supply chain, the department said.

Kwak Noh-Jung, CEO of the world's second-largest memory chip maker, said in a statement the company looks forward to working "to build a robust and resilient AI semiconductor supply chain in the U.S."

Congress in August 2022 approved a $39 billion subsidy program for U.S. semiconductor manufacturing and related components along with $75 billion in government lending authority.

The Commerce Department is awarding major grants to all five leading semiconductor manufacturers - TSMC, Intel, Samsung Electronics, Micron and SK Hynix. The department has now finalized all of those but the $6.4 billion Samsung award.

This month it finalized a $75 million award to Absolics for constructing a facility in Georgia to supply advanced materials to the country's semiconductor industry. Absolics is an affiliate of SKC, which in turn is part of South Korea's second-largest conglomerate SK Group, as is SK Hynix.

(Reporting by David Shepardson; Editing by Edwina Gibbs)