SK Hynix Seeks US Approval to Expand China Chip Output in Return for US NAND Plant Investment

SK Hynix is pursuing a plan to bring additional US-made semiconductor equipment into its plant in Dalian, China, in exchange for building a NAND flash factory in the US. The idea is to raise output in China and use the cash flow to finance the US investment.

Reuters reported on October 14, citing people familiar with the matter, that Solidigm, SK Hynix's US subsidiary, had asked the US government for an export license to expand production at the Dalian plant. Solidigm is seeking to link that approval to plans for a new NAND plant in the US.

The equipment would be installed in a production area inside the Dalian plant known as “Mode B.” The space was built in 2023, but equipment installation was not completed after the memory market weakened that year. Only some tools have been moved in, leaving room for additional equipment, the sources said.

The Dalian plant uses equipment from US companies including Lam Research, Applied Materials and KLA. Expanding output requires US export approval. Washington has restricted exports of such equipment to China as part of its effort to curb the country's advanced semiconductor development.

Last year, the US also withdrew an exemption that had allowed Samsung Electronics and SK Hynix to bring US-made equipment into their China plants without individual licenses. At the time, the Commerce Department said exports needed to keep existing plants running would be allowed, but shipments intended to expand production capacity or upgrade technology would not be approved. An export license issued in December for the Dalian plant's 2026 operations also capped the volume of equipment.

Solidigm's plan is to use its US investment as leverage to ease those restrictions. One source said expanding output at the China plant would help generate funding for construction of the US factory. It would also help increase supply before production begins in the US.

A looming shortage in the NAND market is also driving the expansion push. NAND is a core component in solid-state drives used in artificial intelligence and cloud data centers. Walt Coon, a memory analyst at market research firm TechInsights, said NAND prices have risen sevenfold since mid-2023 and that supply will likely remain tight for the next several years.

Solidigm is also considering an initial public offering as early as next year to secure funding for its US factory investment. Reports last month said the company was considering building a NAND plant in the US. Separately, SK Hynix is in talks to lease part of Intel's semiconductor plant in Ohio, and it is building an advanced packaging plant for high bandwidth memory, or HBM, in Indiana.