South Korea’s SK Hynix is seeking approval from the Trump administration to export additional US-made semiconductor manufacturing equipment to China, linking its plans to expand production there with a proposed NAND flash memory factory in the United States, Reuters reports, citing two people familiar with the matter.
The request highlights a growing tension in Washington’s semiconductor policy: the US government wants foreign chipmakers to invest in domestic manufacturing and create jobs, while simultaneously restricting the transfer of advanced production equipment to China over national security concerns.
Solidigm, SK Hynix’s US subsidiary, wants to install additional equipment in unused space at the South Korean company’s Dalian facility in northeastern China. The proposed installation would allow it to increase NAND flash memory production at a time when shortages of memory chips are driving up prices, and demand from artificial intelligence infrastructure providers is growing.
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One person familiar with the matter said increased production in China would help Solidigm finance a new NAND manufacturing facility in the US while providing a bridge to higher domestic output. The company is also considering an initial public offering as early as 2027, another source said, potentially creating an additional source of funding for its American expansion.
The plans have not previously been reported together. They illustrate how semiconductor companies are attempting to balance production across markets while navigating Washington’s increasingly restrictive approach to technology exports to China.
SK Hynix said installation of equipment for the relevant production area was being conducted with US government authorization, but disputed the suggestion that it was seeking to expand capacity at the site.
“The installation of equipment for Mod B is being carried out in close consultation with and under authorization from the US government,” the company told Reuters.
“No capacity expansion is being sought for the Dalian Mod B, which was completed in 2023,” it added.
The US Department of Commerce, which oversees semiconductor export controls and has been negotiating manufacturing investment commitments, did not respond to a request for comment.
US Export Controls Collide With The Memory-Chip Boom
The dispute centers on the Dalian facility’s Mod B production area, which was built in 2023 but never fully equipped after a downturn in the memory-chip market. Two sources said the space already contains some semiconductor manufacturing tools but has room for substantially more equipment.
Solidigm has applied for a license to acquire additional US-made tools for the site, one person familiar with the matter said. The Commerce Department had not issued a license covering additional US equipment and technology for 2027, the person added.
The facility uses equipment supplied by major American semiconductor manufacturing companies, including Lam Research, Applied Materials and KLA. These companies produce tools used in different stages of chip fabrication, making access to US technology important for manufacturers seeking to install or upgrade production capacity.
Washington has progressively tightened restrictions on exports of semiconductor manufacturing equipment to China as part of a broader effort to slow Beijing’s development of advanced chips that could support artificial intelligence and military applications.
Last year, the Commerce Department revoked authorizations granted to SK Hynix and Samsung Electronics under the Biden administration that had exempted their Chinese factories from obtaining individual export licenses for US equipment. The department described the previous arrangements as a “Biden-era loophole.”
Instead, the government said it would issue licenses allowing the companies to maintain operations at their existing Chinese facilities, while signaling that approvals for capacity expansion or technology upgrades were not expected.
In December, the department issued SK Hynix a license for its Dalian facility covering 2026, with limits on the quantity of equipment permitted.
The latest application therefore presents a policy test. Solidigm wants additional equipment for a production area that was built earlier but remains incompletely equipped. The company says it is not seeking capacity expansion at Mod B, while sources familiar with the plans describe an effort to install additional tools in the unused space.
The distinction could matter to US officials assessing whether the requested equipment would simply support existing operations or enable an increase in Chinese production. The available information does not establish how the Commerce Department will classify the proposed installation or whether it will approve the application.
For SK Hynix, the outcome could influence how quickly it can use the Dalian facility to respond to demand while developing manufacturing capacity in the US.
NAND Shortages Strengthen The Investment Case
The timing is significant because the NAND flash memory market has rebounded sharply from its previous downturn. NAND is a non-volatile memory technology used in solid-state drives and other storage devices, including those deployed in data centers supporting AI workloads and cloud computing.
As AI infrastructure investment expands, demand for data storage is increasing alongside demand for processors and high-bandwidth memory. Large data centers require substantial storage capacity for training datasets, model checkpoints, and other workloads, making NAND an important component of the broader AI hardware supply chain.
Walt Coon, a memory industry expert at TechInsights, said NAND prices had increased sevenfold since mid-2023 and that the market was expected to remain tight over the next several years.
Higher prices and constrained supply improve the commercial rationale for bringing unused manufacturing space into production. They could also help Solidigm generate the revenue and cash flow needed to support a costly American factory project.
However, the opportunity depends on the duration of the current market conditions. Semiconductor fabrication plants require billions of dollars in capital and years to construct, meaning investment decisions made during a supply shortage must account for the possibility that demand, pricing, and competitive conditions will change before new facilities reach full production.
Expanding output in Dalian could provide near-term supply and revenue while a US facility is being developed. But the plan also leaves Solidigm dependent on regulatory permission to obtain equipment from American suppliers, illustrating how export controls can constrain capacity decisions even when companies are investing in manufacturing inside the United States.
An IPO could provide another financing route. A public offering would allow Solidigm to raise capital from investors, although the timing, size and terms of any listing have not been disclosed. It would also expose the business to public-market expectations about profitability, capital spending and its longer-term competitive position.
The proposed investment comes as President Donald Trump’s administration presses foreign semiconductor manufacturers, including SK Hynix and Samsung, to build more production capacity in the US. The objective is to rebuild domestic manufacturing capabilities, create jobs and reduce reliance on overseas supply chains.
SK Hynix is already pursuing a broader American manufacturing presence. Reuters reported last month that the company was in discussions with Intel about leasing part of Intel’s long-planned semiconductor manufacturing facility in Ohio. SK Hynix has also broken ground on an advanced packaging plant in Indiana focused on high-bandwidth memory, a product used in AI computing systems.
These projects demonstrate that the company’s US ambitions extend beyond the proposed NAND factory. Advanced packaging and high-bandwidth memory are central to the supply chain for AI accelerators, while NAND serves the storage requirements of data centers and other computing systems.
The proposed NAND facility would add another dimension to that expansion. Yet the relationship between investment in the US and production in China is not necessarily straightforward. A company can seek to increase American manufacturing over the long term while relying on existing overseas facilities to generate cash flow and supply products in the interim. Washington, however, must decide whether permitting additional equipment exports would support that transition or undermine its objective of limiting China’s access to semiconductor manufacturing technology.
Competitive pressures add urgency. According to Counterpoint Research, China’s Yangtze Memory Technologies Corp. (YMTC) rose to third place among global NAND suppliers in the second quarter of 2026. The development underscores the growing presence of Chinese manufacturers in a market dominated by established international producers.
For SK Hynix, maintaining its position requires investment in production capacity, technology, and supply reliability. Restricting the expansion of its Chinese facility could limit one avenue for increasing output, while approval could provide a near-term commercial advantage at a time of strong demand.