SK Hynix Links Its Proposed US Memory Factory to Export Licences for China

SK Hynix has made the construction of a new memory factory in the United States conditional on American approval to ship more chipmaking equipment to its plants in China, according to a Reuters report published on Wednesday citing two people familiar with the matter. The request lands at the centre of one of the sharpest tensions in industrial policy: Washington wants foreign chipmakers to build in America, while those chipmakers' existing Chinese operations depend on licences that Washington controls and has been tightening.

What Solidigm is asking for

The request runs through Solidigm, SK Hynix's San Jose based US subsidiary. Solidigm wants to install equipment for manufacturing NAND flash memory in unused space at the Dalian plant in northeastern China, and is seeking an export licence for additional tools from three American suppliers: Lam Research, Applied Materials and KLA. The space in question, known internally as Mod B, was completed in 2023, but its fit-out was suspended when the memory market went into its last downturn and stayed suspended ever since.

SK Hynix told Reuters that equipment installation at Mod B has been carried out under US government authorisation and in close communication with Washington, and said the work is not intended to expand the plant's overall capacity. The company did not dispute the substance of the report. What the sources describe is a deal being proposed, not a demand being issued: increased production in China would help fund the planned American factory and serve as a bridge until it is running.

Why Dalian matters to the American plan

The Dalian plant is an unusual asset. It was built by Intel, and SK Hynix acquired it as part of a nine billion dollar purchase of Intel's NAND and SSD business, split into a seven billion dollar first closing in December 2021 and a two billion dollar final closing in March 2025. The business was reorganised as Solidigm, headquartered in California, which makes it an American company by registration even though its manufacturing sits in China.

That structure explains the financial logic. Solidigm has been weighing a stock market listing as early as next year to help fund its investment plans, and a profitable, expanded Dalian operation would strengthen the case. A new US NAND factory, first reported as under consideration by Reuters in September with upstate New York as a leading candidate site, would be expensive, and NAND manufacturing earns thin margins outside periods of shortage.

The market that changed the calculus

The timing is not accidental. The spread of AI datacentres has driven enormous demand for enterprise solid state drives, the storage tier that feeds training and inference clusters, and NAND prices have risen close to tenfold in a year. SK Hynix resumed investment in Dalian's second plant in the first half of 2026 after a four year pause, with equipment arriving from November and production targeted for the first half of 2027. That restart alone would lift the site's wafer input capacity by roughly fifty percent, adding about 50,000 wafers per month to the existing 100,000.

In a shortage, every wafer of NAND sells at a premium. The same shortage that makes Dalian expansion profitable makes an American NAND fab commercially questionable once the cycle turns, which is precisely why the company is looking for a structure where Chinese cash flow underwrites American construction rather than competing with it.

The licensing regime behind the request

Every American tool entering Dalian needs a licence from the Commerce Department, and the terms have hardened. For years, Samsung and SK Hynix operated their Chinese fabs under validated end user authorisations that let them import equipment without individual licences. Washington revoked those waivers, and in December 2025 granted the two companies annual licences for 2026 shipments instead, a one year horizon rather than an open-ended one.

That change is what gives the current request its leverage. An annual licence is a renewable decision, and every renewal is a point where policy can shift. By tying a US factory to multi year equipment access for China, SK Hynix is asking Washington to trade policy certainty for industrial presence, and it is asking at a moment when the US government has shown it will use exactly that lever, having already extracted investment commitments from other foreign chipmakers through licence decisions.

The trade Washington is being asked to make

The arrangement being proposed is explicit: more capacity in China, in exchange for a commitment to build capacity in America. For Washington, the uncomfortable part is that approving the Dalian expansion means expanding a strategic competitor's memory output on Chinese soil, in a category of chip that AI datacentres consume in volume. The counterargument is that memory fabs in China produce mature, lower layer NAND for consumer and enterprise storage rather than the logic chips at the centre of export controls, and that refusing means the US factory may simply not get built.

SK Hynix is not starting from zero in America. Its 3.87 billion dollar advanced packaging plant in West Lafayette, Indiana, which packages high bandwidth memory for AI accelerators, is under construction with 450 million dollars in direct CHIPS Act support and a 2028 production target. But packaging and wafer fabrication are different commitments, and a US NAND fab would be the first memory wafer plant any Korean chipmaker has attempted on American soil in decades.

What to watch

Three decisions will determine whether this becomes a template. The first is whether Commerce grants the Dalian equipment licence at all, and on what duration. The second is whether Solidigm formalises the US factory plan, and whether any announcement includes public site, scale and timeline figures. The third is whether Samsung, which operates the larger Chinese memory business and received the same annual licence terms, follows with a similar proposal of its own. If two of the three go the same way, the annual licence will have hardened from a control instrument into a bargaining chip, and both governments will have accepted that memory capacity is now traded, not merely permitted.

A note on the sourcing. This report rests primarily on Reuters reporting attributed to two unnamed people familiar with the matter, supplemented by SK Hynix's partial on-the-record response, which confirms the licensing context but not the conditionality. Until the Commerce Department acts or the company files a public commitment, the shape and even the existence of the proposed trade remain unconfirmed.