July 26 (Reuters) - The U.S. Commerce Department said on

Friday it plans to award Amkor Technology ( AMKR ) up to $400

million in government grants to help fund the company's planned

$2 billion advanced semiconductor packaging facility in Arizona.

The plant is set to be the largest of its kind in the U.S.

and when fully operational will package and test millions of

chips for autonomous vehicles, 5G/6G and data centers.

Apple ( AAPL ) will be its first and biggest customer with

the chips produced at a nearby Taiwanese chipmaker TSMC

facility.

Advanced packaging is a high-tech method of placing multiple

chips with a variety of functions in a densely interconnected

"package."

Commerce Secretary Gina Raimondo said the award would help

meet growing demand for AI chips.

The chips Amkor ( AMKR ) will package "are foundational to

technologies of the future that will define global economic and

national security for decades to come," she added.

The department also plans to make available $200 million in

government loans for the Amkor ( AMKR ) project, which is expected to

qualify for a 25% investment tax credit.

The Commerce Department said last year it planned to spend

$3 billion on advanced packaging. Congress in 2022 approved a

$39-billion subsidy program for U.S. semiconductor manufacturing

and related components.

The latest award, like others from the chips subsidy

program, has yet to be finalized and terms could change.

In other awards, TSMC has won $6.6 billion in expected

grants after it said it would expand planned investment by $25

billion to $65 billion and add a third Arizona chips fab by

2030.

Semiconductor packaging provider Absolics, part of the SK

Group, is also due to gain $75 million. SK Hynix ( HXSCF )

, the world's second-largest memory chip maker, plans

to invest nearly $4 billion to build an advanced packaging plant

for AI products in Indiana.