SK hynix’s U.S. Unit Seeks Approval to Expand NAND Production in China as AI Demand Soars
SK hynix is reportedly exploring a delicate strategy to expand NAND flash memory production in China while also strengthening semiconductor manufacturing in the United States. The move comes as demand for AI infrastructure, cloud computing, and data center storage continues to surge, creating a major opportunity for memory chip producers.
At the center of the plan is Solidigm, the U.S.-based unit of SK hynix. According to people familiar with the matter, Solidigm wants to use unused space at SK hynix’s Dalian facility in China to produce NAND flash memory. These chips would be used in solid-state drives, which are increasingly important for AI servers, cloud platforms, and high-performance data centers.
However, there is one major obstacle: Solidigm reportedly needs approval from the U.S. government to export chipmaking equipment to China. That kind of approval has become much more difficult in recent years as Washington has tightened restrictions on advanced semiconductor tools and technology entering China.
The U.S. has been trying to slow China’s progress in advanced chip development by limiting access to critical manufacturing equipment. These restrictions have affected Chinese semiconductor firms and forced some manufacturers to rely on older production tools rather than the most advanced systems. As a result, any request to send chipmaking equipment into China now faces significant political and regulatory scrutiny.
Still, Solidigm’s case may be different because the company could argue that the move would also benefit the United States. The reported plan suggests that revenue generated from expanded NAND production in China could help fund a future NAND flash manufacturing facility in the U.S. Such a project would support domestic semiconductor capacity and potentially create new jobs.
Building a NAND production facility in the United States would be expensive and time-consuming. Semiconductor fabs often require years of development and billions of dollars in investment before they become operational. Because of that, using available factory space in Dalian may be the fastest way for Solidigm to take advantage of the current memory market boom.
The timing is important. NAND flash memory prices have reportedly risen sharply since mid-2023, driven by stronger demand and tighter supply. With AI data centers requiring massive storage capacity, companies that can increase NAND production quickly may be able to capture significant revenue while the market remains favorable.
For the U.S., the decision could involve a difficult balancing act. On one hand, approving exports of chipmaking equipment to China may appear to conflict with Washington’s broader effort to restrict China’s semiconductor growth. On the other hand, denying the license could limit Solidigm’s ability to generate the funding needed for a future U.S.-based NAND facility.
One possible compromise could involve granting the export license with strict conditions. U.S. officials could require regular audits to ensure that revenue from the China expansion is being used to support a domestic manufacturing project. Solidigm and SK hynix could also face deadlines for raising funds, beginning construction, or making measurable progress on a U.S. facility.
Such conditions would allow the U.S. to maintain oversight while still encouraging investment in domestic chip production. It would also reduce the risk that companies secure approval for China-based expansion without following through on commitments to build in the United States.
For SK hynix and Solidigm, the challenge is speed. If the companies wait several years to build a new U.S. NAND plant from scratch, the current memory market upswing could cool before production begins. By using existing capacity in China, Solidigm could move faster and generate the capital needed for longer-term expansion.
The situation highlights how complicated the global semiconductor supply chain has become. AI growth is pushing demand for memory chips to new levels, but geopolitical tensions are making it harder for companies to expand where capacity already exists. SK hynix and Solidigm now appear to be searching for a path that satisfies both business needs and U.S. policy goals.
For now, the key question is whether the U.S. government will approve the export license. If approval is granted, it could open the door for expanded NAND flash production in China while also accelerating plans for a future manufacturing base in the United States. If the request is denied, Solidigm may have to consider slower and more expensive alternatives at a time when the AI-driven storage market is moving quickly.
