Samsung and SK Hynix Announce Upgrades to Memory Chip Facilities in China

Samsung Electronics and SK Hynix are upgrading their manufacturing operations in China to produce higher-density NAND flash memory chips, according to four sources familiar with the matter. The strategic move aims to counter fierce market competition from rapidly growing Chinese semiconductor rival Yangtze Memory Technologies Co (YMTC) while capturing massive global demand driven by artificial intelligence applications. However, navigating investment decisions in China has become increasingly complex for both South Korean tech giants due to stringent export controls imposed by the United States since 2022. Under these regulatory rules, the companies must secure annual US licenses to install American-made equipment, such as advanced etching machinery, in their Chinese plants. Furthermore, the US Commerce Department’s Bureau of Industry and Security stated in 2025 that it did not intend to approve licenses for foreign chipmakers to expand capacity or upgrade technology in China.

These regulatory constraints have hampered the South Korean companies' ability to modernise their facilities, contributing to a noticeable decline in their Chinese market share. Samsung confirmed to Reuters that technological upgrades are actively underway in close consultation with Washington, emphasizing full compliance with US export regulations. The company stressed that the initiative seeks to meet rising demand from global clients without expanding manufacturing capacity or constructing new facilities. Meanwhile, SK Hynix confirmed equipment installations at its Dalian facility in northeastern China, also under US government consultation. Reuters could not independently verify the exact extent to which American authorities have granted the necessary export licenses.

Currently, the Chinese plants of both firms produce memory products that lag behind the technological capabilities of their domestic South Korean facilities. Through a internal initiative designated "Monami," Samsung plans to transition its Xi'an facility—which currently generates around 40% of its global NAND output using 200-layer technology—to produce 286-layer V9 NAND chips. The project targets an initial monthly production of 5,000 wafers by December of this year, eventually scaling to 40,000 wafers per month by December 2027. Similarly, SK Hynix plans to upgrade its Dalian operations from 192-layer NAND chips to advanced products featuring 240 layers or more. SK Hynix acquired the Dalian site following its 2021 purchase of Intel's NAND division, which now operates as Solidigm and is preparing for an initial public offering in the United States. One source noted that SK Hynix holds authorization for 240-layer chip production at Dalian and may seek US approval for 300-plus-layer research and development to support future manufacturing expansion in America, where discussions with the Trump administration regarding a new NAND factory are ongoing.

As South Korean firms face restrictions, YMTC has rapidly expanded its market presence. According to Omdia, YMTC's share of the Chinese NAND market surged to 38.5% in the second quarter, surpassing Samsung's 33.5% and SK Hynix's 17%. YMTC primarily produces 160- and 232-layer chips, alongside limited 294-layer production, with plans to exceed 300 layers. Globally, Samsung currently markets up to 286-layer NAND chips and recently unveiled a 400-plus-layer prototype, while SK Hynix supplies chips featuring up to 321 layers.