By Hyunjoo Jin, Liam Mo and Karen Freifeld
SEOUL/BEIJING/NEW YORK, Oct 21 (Reuters) – Samsung Electronics and SK Hynix are upgrading their China factories to produce more advanced memory chips, four people familiar with the plans said, aiming to fend off competition from a fast-growing Chinese rival and meet huge AI demand.
How much to invest in their Chinese operations has become a tricky question for the South Korean semiconductor giants ever since the US began imposing export controls on some chip-making equipment in 2022 amid an effort to slow China’s technological progress.
Both companies are now required to seek US licenses annually if they want to install US-made equipment such as etching machines in China. The US Commerce Department’s Bureau of Industry and Security also said in 2025 it did not intend to grant licenses to upgrade technology and expand capacity at the foreign chipmakers’ factories in China.
The regulatory headaches have limited their ability to refit their factories and contributed to loss of market share to Yangtze Memory Technologies Co (YMTC). Executives at the South Korean chipmakers have publicly warned that geopolitical tensions are undermining their Chinese operations.
Samsung confirmed in a statement to Reuters that upgrades were underway and were being done in close consultation with Washington. SK Hynix said it has been installing equipment at its Dalian factory in northeastern China, in consultation with the US government. Neither firm disclosed details of production plans that are being reported here for the first time.
Reuters could not, however, determine to what extent US authorities have granted export licences for equipment that Samsung and SK Hynix need for their planned upgrades.
According to the people, the two companies are working to manufacture flash NAND memory chips with more than 200 layers at their Chinese plants, whose products are currently not as advanced as chips being produced in South Korea.
NAND, a type of memory chip that retains data without power, is widely used in smartphones, PCs and solid-state drives for AI data centres. More layers per chip means more storage density and lower costs.
Shares in Samsung and SK Hynix both ended 6% higher on Wednesday after publication of this article.
SAMSUNG SETS SIGHTS ON 286-LAYER CHIPS
Samsung’s plant in Xian in northwestern China, which accounts for about 40% of the company’s global NAND output, currently makes chips that have about 200 layers, according to two of the people.
As part of a project known internally as “Monami” — from the French for “my friend” — Samsung is converting the facility to make 286-layer V9 NAND chips, aiming for monthly output of 5,000 wafers in December this year and then a jump to 40,000 wafers by December 2027, one of the people said.
Samsung said its upgrade was in compliance with US export regulations, adding: “The upgrade is aimed at meeting growing demand from global customers, including those in the US. The company is not expanding production capacity or constructing new manufacturing facilities.”
SK Hynix is looking to switch to producing NAND products with 240 layers or more at its Dalian facilities, three people familiar with the matter said.
It currently makes products with 192 layers there, one person said.
SK Hynix acquired the Dalian site when it bought Intel’s NAND operations in 2021 and it remains the sole NAND chip manufacturing site for that business. Now named Solidigm, it is preparing for a US initial public offering, Reuters reported last month.
One of the people said the company is authorised to make chips with up to 240 layers at Dalian and may seek permission from Washington to conduct research and development on 300-plus-layer chips there that would help it lay the groundwork for potential production in the US. The company is in discussions with the Trump administration over plans to build a new NAND factory in the United States.
The US government’s Bureau of Industry and Security did not directly address Reuters questions on the status of approvals for the South Korean chipmakers. It referred Reuters to its 2025 statement that the bureau intended to grant license applications for them to operate their existing factories in China, but not expand capacity or upgrade technology.
YMTC MAKES PROGRESS
As Samsung and SK Hynix have wrestled with the question of how much to invest in their Chinese plants, YMTC has made great strides.
It commanded 38.5% of China’s NAND market in the second quarter, up from 28% for all of 2025 and overtaking Samsung, according to research firm Omdia. In contrast, Samsung’s share has slipped to 33.5% from 36% while SK Hynix’s share has dropped to 17% from 20%.
YMTC’s product lineup is mostly 160- and 232-layer NAND chips, but it also produces a small amount of 294-layer chips and plans to manufacture products with more than 300 layers, according to two separate people.
YMTC did not respond to a Reuters request for comment.
Outside China, Samsung sells NAND chips with up to 286 layers and it also unveiled a prototype NAND chip with more than 400 layers in August. SK Hynix sells NAND chips that are up to 321 layers.
(Reporting by Hyunjoo Jin and Heekyong Yang in Seoul, Liam Mo in Beijing, Karen Freifeld in New York; Editing by Eduardo Baptista, Miyoung Kim and Edwina Gibbs)
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