Sources say Samsung and SK Hynix are upgrading their Chinese factories to produce more advanced flash memory chips

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On October 21, Reuters reported that Samsung Electronics and SK Hynix are upgrading their Chinese factories to produce more advanced flash memory chips to fend off competition from fast-growing Chinese rivals and meet huge AI demand, four people familiar with the matter said.

SK Hynix

Since the United States began to implement export controls on some chip manufacturing equipment in 2022, regulatory obstacles have limited the two companies' ability to retrofit factories, and have also caused their market share to be eroded by Yangtze Memory. The two companies now must apply for licenses from the United States every year if they want to install American-made equipment such as etching machines in factories in China. Yangtze Memory has made strides at a time when Samsung and SK Hynix have struggled with how much they should invest in factories in China.

Data from research firm Omdia show that

Yangtze Memory accounted for 38.5% of China's NAND market in the second quarter, up from 28% for all of 2025 and surpassing Samsung

36% to 33.5%

20% to 17%

Samsung and SK Hynix confirmed in statements to Reuters that the upgrade was underway and in close consultation with Washington, but did not disclose production plan details.

However, Reuters was unable to determine how many export licenses the U.S. authorities had approved for equipment required for Samsung and SK Hynix’s upgrade plans.

According to people familiar with the matter, the two companies are working hard to produce NAND flash memory chips with more than 200 layers in Chinese factories to bring their production levels in line with South Korean factories. NAND is a memory chip that can retain data even after a power outage. It is widely used in solid-state drives used in smartphones, personal computers, and AI data centers. The more layers a single chip has, the higher the storage density and the lower the cost.

Samsung's factory in Xi'an, northwest China, currently produces about 200 layers of chips, two people familiar with the matter said. The factory's output accounts for approximately 40% of Samsung's total global NAND flash memory production. Samsung is moving forward with a project internally codenamed "Monami." The name is of French origin and means "my friend". As part of this project, Samsung is transforming this factory to produce 286-layer V9 NAND flash memory chips, with the goal of achieving a monthly production of 5,000 wafers in December this year, and significantly increasing monthly production to 40,000 wafers in December 2027.

Samsung said that the upgrade complied with U.S. export control regulations. "This upgrade is designed to meet the growing needs of global customers, including U.S. customers. The company has not expanded production capacity or built new manufacturing facilities."

SK Hynix is ​​planning to shift its factory in Dalian, northeastern China, to produce NAND flash memory products with 240 layers or more, three people familiar with the matter said. The factory currently produces 192-layer products. The company is allowed to produce chips with up to 240 layers in Dalian and may seek approval from Washington to develop chips with more than 300 layers locally, people familiar with the matter said, which would help it lay the foundation for potential future production in the United States. The company is in discussions with the Trump administration on plans to build a new NAND factory in the United States.