Samsung Electronics and SK Hynix are enhancing their manufacturing facilities in China to increase the production of advanced memory chips, as reported by sources familiar with the matter. This move is aimed at competing with a rapidly growing Chinese rival and meeting the high demand for artificial intelligence technologies.
Determining the investment levels for their Chinese operations has become a challenging decision for the South Korean semiconductor giants following the United States’ implementation of export controls on certain chip-making equipment in 2022 to slow down China’s technological advancements.
Both companies now need annual US licenses to install US-manufactured equipment, such as etching machines, in their Chinese factories. The US Commerce Department’s Bureau of Industry and Security stated in 2025 that it did not plan to grant licenses for technology upgrades and capacity expansions at the foreign chipmakers’ Chinese facilities.
These regulatory hurdles have hindered their ability to upgrade their factories, leading to a market share decline to Yangtze Memory Technologies Co (YMTC). Executives from the South Korean chipmakers have raised concerns about geopolitical tensions negatively impacting their Chinese operations.
Samsung confirmed that upgrades are in progress in consultation with Washington, while SK Hynix mentioned installing equipment at its Dalian factory in northeastern China with US government consultation. However, specific details of the production plans are not disclosed publicly. Export licenses for the necessary equipment have not been fully determined by US authorities.
Sources indicate that Samsung and SK Hynix are focusing on producing flash NAND memory chips with over 200 layers at their Chinese plants, which are currently not as advanced as those produced in South Korea. NAND chips, used in smartphones, PCs, and AI data centers, store data without power. Increased layers per chip offer higher storage capacity and lower costs.
Following the publication of this news, shares in Samsung and SK Hynix both rose by 6% on Wednesday.
Samsung’s Xian plant in northwestern China, responsible for 40% of the company’s global NAND output, is transitioning to producing 286-layer V9 NAND chips under the project name “Monami.” SK Hynix aims to manufacture NAND products with 240 layers or more at its Dalian facilities, which currently produce 192-layer chips.
While Samsung is focused on meeting global customer demands, SK Hynix is considering seeking approval from Washington for research and development on chips with over 300 layers, potentially for production in the US.
YMTC has made significant progress in the Chinese NAND market, capturing a larger share compared to Samsung and SK Hynix. YMTC’s product range includes chips with up to 294 layers and plans for over 300 layers, as reported by sources. In comparison, Samsung and SK Hynix offer NAND chips with up to 286 and 321 layers, respectively.
The US Bureau of Industry and Security did not address specific approval statuses but referred to its 2025 statement regarding license applications for the South Korean chipmakers.
In summary, Samsung and SK Hynix are strategically enhancing their Chinese operations to stay competitive in the memory chip market amidst regulatory challenges and growing competition from Chinese rivals.
