Abstract:
As the United States continues to promote global chip companies to invest and build factories in the United States, South Korean memory chip giant SK Hynix has been revealed to be seeking to reach a special arrangement with Washington. According to people familiar with the matter, SK Hynix hopes to obtain U.S. approval to export more U.S.-made semiconductor equipment to Chinese factories to increase local production capacity, and regards this permission as an important prerequisite for promoting the construction of new U.S. factories.
Sources said that Solidigm, a U.S. subsidiary of SK Hynix, is applying for a new export license and hopes to ship more U.S. semiconductor equipment to its NAND flash memory production base in Dalian, China. The factory mainly produces NAND flash memory products for solid-state drives in data centers, which are being widely used in artificial intelligence and cloud computing infrastructure.
Currently, the equipment used in the Dalian factory comes from major U.S. semiconductor equipment suppliers, including companies such as Lam Research, Applied Materials and KLA.
The report stated that Solidigm’s plan to seek to introduce more equipment to the Dalian factory and to tie the construction of future U.S. NAND flash memory factories to relevant export licenses has never been publicly disclosed before.
The U.S. government has continuously strengthened export restrictions on China’s semiconductor industry in recent years, especially targeting advanced chips and manufacturing equipment, hoping to slow down China’s development in artificial intelligence and military-related semiconductor fields. At the same time, the U.S. government is also actively promoting overseas semiconductor companies, including SK Hynix and Samsung Electronics, to expand their manufacturing presence in the United States to enhance U.S. manufacturing capabilities and create jobs.
Facing tight global memory chip supply and rising prices, SK Hynix hopes to make full use of the undeveloped production space at its Dalian factory. People familiar with the matter said that although the production area known as "Mod B" in the Dalian factory had been completed as early as 2023, due to the downturn in the memory chip market at that time, some equipment had not been installed, so there was still room for expansion.
In this regard, SK Hynix told the media that the equipment installation work of the Dalian Mod B project is being carried out in close consultation with the US government and with authorization. The company emphasized that it is not currently seeking to expand the design capacity of Mod B, but is improving the equipment configuration within the existing facilities.
Solidigm declined to comment on related matters. The U.S. Department of Commerce, which is responsible for export controls, did not respond to requests for comment.
Informed sources revealed that the reason why Solidigm hopes to increase the output of its Chinese factory is directly related to its U.S. expansion plan. Building a new NAND flash memory wafer fab often takes several years and billions of dollars of investment. Increasing the output of the Dalian factory can provide a more stable source of funding for future U.S. factories while undertaking transitional supply tasks before new U.S. production capacity is put into production.
Reuters has previously reported that Solidigm is evaluating the construction of a new NAND flash memory factory in the United States, and upstate New York is considered one of the potential locations.
In addition to the expansion plans, sources also said that Solidigm is studying the possibility of launching an initial public offering (IPO) as early as next year. If the listing is successful, the funds raised are also expected to be used to support the construction of new factories in the United States.
Walt Coon, an analyst at TechInsights, an industry research organization, said that after experiencing the downturn in the storage market in previous years, the current NAND flash memory industry has entered a new boom cycle. As demand for artificial intelligence data centers surges, market supply becomes tight. Prices of related products have increased approximately sevenfold since mid-2023, and the tight supply and demand situation is expected to continue in the next few years.
In this context, on the one hand, SK hynix hopes to expand China's existing production capacity to seize market opportunities, but on the other hand, it faces restrictions from the US export control policy. How to strike a balance between China's production layout and the U.S. manufacturing strategy is becoming an important issue facing the world's second-largest memory chip manufacturer.
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