SK Hynix conditions new US factory on more US chip equipment exports to China

South Korean tech giant SK Hynix is seeking permission from the US government to export advanced chipmaking equipment to China, in exchange for constructing a new factory in the United States. This development comes as part of the Trump administration's efforts to strengthen US manufacturing capabilities and generate employment opportunities.

Amidst a worldwide scarcity of memory chips that has caused prices to soar, Solidigm, the US subsidiary of SK Hynix, aims to install cutting-edge equipment at its Dalian facility in China to manufacture NAND chips. These memory chips are crucial for solid-state drives utilized in data centers for AI and cloud computing purposes.

SK Hynix has not publicly disclosed this arrangement before. The company is working in close coordination with and under authorization from the US government to install the additional equipment in its Dalian Mod B facility, which was established in 2023. However, SK Hynix has stated that no capacity expansion is being sought for the Dalian Mod B, which was completed in 2023.

The US Department of Commerce, which oversees export controls, has been engaging in discussions with semiconductor manufacturers regarding investments in manufacturing facilities. The department did not provide any comment on the matter.

The US has imposed limitations on the export of chipmaking equipment to China to impede Beijing's progress in developing advanced semiconductors used in AI and military applications, which the United States deems essential for national security. Earlier this month, Reuters reported that Solidigm was contemplating the construction of a NAND flash memory chip factory within the US. The process of constructing semiconductor fabrication plants, known as fabs, is lengthy and financially demanding.

By expanding production in China, Solidigm aims to fund a NAND flash memory facility in the US, according to sources familiar with the matter. This would serve as a transition step towards increasing production in the United States. Solidigm is also exploring the possibility of an initial public offering next year, potentially raising capital to finance its US factory.

The NAND flash memory market, which experienced a downturn a few years ago, is currently thriving and is anticipated to remain tight over the coming years, according to Walt Coon, a memory industry expert at TechInsights. Prices have surged sevenfold since mid-2023. Last year, the Commerce Department rescinded authorizations granted to Hynix and Samsung, exempting them from obtaining licenses for US equipment in their Chinese fabs.

Instead, the Commerce Department announced that it would issue export licenses to enable the companies to operate their existing fabs in China, but did not foresee approving licenses for capacity expansion or technology upgrades. In December, the department issued a 2026 license for SK Hynix's Dalian site, imposing restrictions on the quantity of equipment.

SK Hynix's Dalian facility houses a fabrication space, known as Mod B, which was constructed in 2023. While the equipment installation was not finalized due to the memory market downturn, the site still has some chipmaking tools available, with ample space for further expansion. The Commerce Department has not yet granted a license for additional US-made equipment and technology in 2027, reported Reuters. Solidigm has also applied for an export license to purchase extra tools for Mod B.